OK, this is sort of a “left field” type of question. First, you must have established credit. Did you get your credit report from each of the three major credit bureaus at www.AnnualCreditReport.com. Do that first. Then check in at CreditKarma.com to see your credit score. I’m betting that you haven’t escaped creating some kind of credit trail in your lifetime — despite owning your home free and clear.
If you really don’t have much of a history, it will be difficult to purchase a rental property. You’ll need to put a larger amount of down payment — likely at least 20 percent — and you’ll pay a higher mortgage rate. If you don’t have enough savings. you could take out a mortgage or home equity loan on your house. But this kind of “leverage” can be dangerous — especially if your tenants don’t pay rent, or you run into unexpected expenses on the rental property.
And if you combine your own “vacation home” with a rental goal, you’ll need to know the rules requiring how much of the time it can be rented in order to take some deductions.
So, be sure to consider all these issues — and consult your tax advisor. The property taxes won’t be deductible on this property in the same way your home property taxes are. And you’ll need to create an “accounting system” to track income and expenses on a rental property.