Thinking to buy another real estate property but still not sure when is the right time to buy a second home? There is a lot to consider while making this investment decision. But buying a second home is not as difficult as investing in your first home. Also, the COVID-19 crisis has made many realize the need and value of buying a second home, especially in other cities.

Second homes, if for investment, are mainly rent oriented. On the other hand, if for vacation, are recreation-oriented. Both are quite different in terms of size, value, amenities and location. Here is a quick help to consider when and how to buy a second home before rushing into any decision.

Affordability

 

The Budget

It is a smart decision to buy a second home that realistically fits in your long term affordability plan. Buying a second home must not affect your finances and be burdensome for you, as it is one of the significant financial decisions. With reduced repo rate and a huge infusion capital in infrastructure, the whole market is quite attractive to opt for. Many real estate developers have either reduced prices or are offering incentive scheme to lure customers.

So if you were thinking “when is the right time to buy a second home“, this is the right time to buy a second home! Estimate your purchase price, and accordingly, you can start looking for a perfect investment option in your budget. 

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Tax implications

To enjoy the benefits of the second home it is required to check investment portfolios and make smart plans with proper finances.

Calculate your monthly EMIs and estimate the maintenance cost to ensure appropriate management of funds. The tax implications depend on various aspects. If you have a home loan on the first house or if you have rented out your second home. Check on fixed rates or floating rates of home loans for better decision making. Choose your downpayment and loan terms wisely. 

Second-home types

Villa house model, key and drawing on retro desktop (real estate sale concept)

Whether it be residential or vacation, there is an increasing demand for larger homes. 3 BHK homes or villas will have a drastic increase in demand, satisfying the spacious needs of the buyers. Tier 2 and tier 3 cities also have wonderful investment options for second-home buyers looking for a gateway away from the city. People do not hesitate to pay more amount if they are provided with luxury and necessary amenities. 

An added advantage of gyms, swimming pools, jogging tracks, recreational facilities, airy balconies would draw the attention of most of the home buyers. The coronavirus pandemic has been an eye-opener for most people living in compact spaces and apartments. There urge and search for a healthy lifestyle will make them look for second home buying options.

Return on Investment prospects on a second home

Buying a second home can help investors in various ways. If you decide to rent out the property, monthly rent can be one of the major and wise decisions to earn extra income over the kind of property investment made.

If you are buying it for sole purposes, as a weekend getaway or just as an investment option, you will definitely observe capital appreciation. Suburban areas can be the best option to gain capital appreciation on your second home investment. City properties hold their own restrictions compared to the growth of the suburb properties holding quicker appreciation.  

What to consider while buying a second home?

Documents for home loan

First things first, consider the real estate builder’s credibility. Consult smart portfolio management services to ease your second home buying decision. Make sure you have enough emergency liquid funds. Get into location details and compare unit sizes, tax implications, maintenance costs with different properties.

The primary purpose of buying a second home should be fulfilled, instead of rushing it is better to consider a number of options in various locations for investment. Choosing a growing area with less population and a lush green environment with adequate medical facilities in the vicinity is the right option for investment. 

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Conclusion

In a post-COVID era, buyers will rather opt for an open and spacious home providing recreational amenities and adequate facilities of a better riskfree and healthy lifestyle. Considering the second home as an investment option is really trendy considering all the sole, financial, and longterm benefits with RBI, GST, and RERA coming into the picture.

So, rather than missing out on this great opportunity by procrastinating over when is the right time to buy a second home, go out there and explore! Whether it be an investment option or recreational space, second homes are always an excellent investment for the future of your growing family.

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