5 Home Buying Tips For Your Second Home

Buying a residential property, a place to call home, is often a very emotional decision. It marks the accomplishment of one of the primary financial goals that we set for ourselves. In buying our first residential property, we take into account several practical considerations such as location, budget, work commute, availability of schools, markets, medical facilities, the project's facilities and amenities etc.

Buying a second home brings other considerations, depending on the purpose of the purchase. Most of us look for a second home where we like to vacation or retreat as a family. Mumbai's Madh Island, for example, is a popular locality where people invest in a second home. The yearly holiday to enjoy the sun, sand, and sea is a great incentive. Alternatively, we may invest in a second residential property to add an income stream by renting or leasing this property. Some plan to buy a second home where they wish to retire or move to live near their children or family. Whatever your requirement, here are some home-buying tips to make the best of your investment into a second home.

1. Location is King 

Any real estate asset, even a second home, is a major financial investment. Researching the neighbourhood and property trends is just as important when buying your primary residential property. The location will determine the asset appreciation of the property and the resale value in case you need to liquidate the asset later. Understand the price trends and planned infrastructural developments in the neighbourhood before investing.

2. Income Plans 

Like any major investment, look at the ROI this property will bring you in the long run vis-à-vis your expenditure. If you plan to rent or lease out this second home, look up average rental yields in similar projects and calculate the net income after paying off the EMI, property taxes, utility bills, and maintenance costs. In major cities like Mumbai, the ROI should exceed the costs making it profitable, which is again determined by local trends.

3. Lifestyle Choices 

If you want to acquire a second home for retirement, you may want to move to the suburbs. Home-buying tips by experts recommend moving to neighbourhoods with relatively low pollution. Investing in one of the more luxurious projects of Goregaon East or Kandivali East may be a good idea in Mumbai. Apart from the expansive, breathtaking views of the Sanjay Gandhi National Park, these offer more space and amenities at affordable rates.

4. Community Rules

Again, if your second home is at a place you want to move to when you retire or if it is a place you are considering as a residential option in the long term, you may want to look up the demographics and the community lifestyle. Availability of medical facilities, social life, and entertainment activities can be important factors. Some people rent or lease a property in the neighbourhood before considering buying a second home.

5. Financial Implications

One of the major considerations when buying a second home should be your finances. Have you paid off the EMI of your primary property? What is the line of credit available for this second house? How long will the tenure be, and how long will you work to pay it off? How much will you also need to spend on doing the interiors, etc.? What are the tax benefits you can claim from this investment? Real estate experts say one of the most important home-buying tips involves elaborate financial planning.

Final Thoughts

Buying a second home may be an indulgence or prudent financial decision. Whatever your goal, it must be backed by research, planning, and a clear understanding of your and your family's needs.