Investing in a second home is the trend that is quickly catching pace increasing the demand for real estate in Tier II and Tier III towns. There is a tremendous rise in the percentage of people in India investing in more than one residential property mostly in the luxurious properties in suburbs. This trend is not only restricted to the upper segment but is now being extended to the middle-class segment. While earlier the main purpose of buying a second home was limited as a retirement benefit or for re-sale, however, now second home serves multiple purposes like generating rental income or a vacation home.
Let’s take a look at the various benefits of investing in the residential real estate market for the second time:
Diversification of investment
If you are planning for a long term investment and looking forward to diversifying your investment portfolio then purchasing a second home is the apt choice. As per the market trends investing in real estate fetch a better rate of return as compared to any other class of asset.
As per the latest trend, a second home is being purchased by buyers for the purpose of generating revenue through monthly rental income. It is the most sought out way to get the best return on your investment and pay off the home loan smoothly. It is a shield against the fluctuating interest rates in the market.
Buying a second home comes with certain tax benefits. You can avail of tax benefits on the interest payment of your home loan for the second home.
A second home not only provides a return on investment but also gives you a sense of security and an option to rely on in-case of future emergencies. It gives extra financial support to your family and you could easily liquidate this asset in future events.
Owning a second home could be an enriching experience if you are sure about the purpose of buying a home. Consider the below points before buying another property:
- Location of the home is the top most factors to be considered at the time of your second buy. For example, investing in subs would be cheaper than buying another home in the city. Investing in a location away from the overcrowded city offers a clean environment and has the potential of capital appreciation in the near future.
- Decide on the overall amount you want to spend on buying another house. Consider all the hidden costs like maintenance, repair and renovation required base on the age of the property.
- Select the type of property based on your requirements and the objective of buying the property. Whether you want to invest in a compact home for generating rental income or a luxurious apartment for your retirement back up or a villa for a vacation home, make the final decision based on what suits your needs the best.
With careful market research and planning, you can invest in the right property and reap the benefits of having a second home. Go ahead and be part of the new world of second homeowners!