Do’s and Don’ts for Buying a Second Home: Dos and don’ts for buying a second home
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10 May 2019 - 8:00, by , in Property Trends, No comments

Owing a second home can be a gratifying experience. However, house buyers should be clear about the aim of investing in the house & choose a location & property in line with their needs. We review the points that one should take into account.

The main purpose of a weekend house/second home is to supply an avenue for recreation and to spend time far away from one’s regular routine. Consequently, weekend houses are usually located far away from urban areas.

A home buyer invests in a second house for 2 main reasons:

  • To use the house for one’s own purpose or to lease it out.
  • As a further investment over the long-term.

Sometimes, the aim is to spend quality time with family or pursue hobbies like reading, enjoying sports or participating in different activities that may be related to the location of the weekend house.

For example, weekend houses close to golf courses give recreational worth to the buyer, while a house in the hills or on a beach provides a serene view, all while living in a house far away from home.

Why buy the second home?

Specialists believe that one should purchase a second house for self-use, on condition that they can commit themselves to spending a decent deal of time at that house. The advantage of buying a house for self-use is that the home buyer can move into or occupy the property at his/her discretion. The house could be a picnic spot, or in a hill station that has a pleasant climate and far away from droning urban areas, or in a location where the family can get along for parties. However, there’s also a section of buyers, who tend to use the property as a source of income generation.

ROI prospects of a second home

The ROI prospects of the second house depend on factors such as:

  • The location of the second home.
  • Rental demand in the area.
  • Social and physical infrastructure in the region.
  • Overhead cost, like maintenance charges, automobile parking charges, etc.
  • Availability of public transport

For instance, the value of a second house in the Mumbai’s suburban area like Navi Mumbai will be moderate, as compared to a house in Mumbai city. While a home of 1,200 sqft in Navi Mumbai, would value about Rs 90 lakhs to Rs 1.1 crores, a similar-sized house in Mumbai city can value around Rs 1.5-1.8 crores. However, the rental return for the second house in Navi Mumbai is around 3%-4%, whereas the same for the first home in Mumbai is near 5-hitter of the capital value. The maintenance and other variable costs will also be higher for a first house within the city area, compared to the second house at a distant location.

Moreover, within the second home segment itself, a property that’s close to commercial areas and offices, is probably going to offer higher ROI than a second home in a secluded location.

How to select a second home that suits your needs

One of the foremost necessary things, when you decide to buy a second house, is to pick the proper location. The second house shouldn’t be too far-off from the city. Another major factor is to work out how much the second home would cost.

Buyers should also study the demand and supply in the desired neighbourhood and choose a second house that’s easy to rent out and earn rental income, as well as provide capital appreciation over the years.

 

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