Consider These five Things Before Buying Your Second Home
Buying a home is a dream for any aspiring human being. For, it's advantages are many. It is any day better to invest in a second home rather than parking your money in a bank as the interest rates are shrinking year on year. Let's see what these five key factors are.
Firm up your mind as to how much you are contemplating on investing in your second home. Apparenlty, like how you have invested in your first home, here too you will have to shell out the acquisition costs such as the mortgage payments, maintenance, taxes, insurance expenses and more. Therefore, it is a great thought for you to earmark a budget and then select the apartments that fits well within your budget. The insurance for rental homes is pretty much higher than homeowner's insurance and rightly so, before you buy your second home, you have to make a laundry list of all the potential costs you might as well incur and come up with the requisite budget.
Location of your second home plays a vital role in terms of making a real estate investment. The posh the locality you choose for your second home, the more advantageous it is for your property to have greater apprecication potential. Suppose, if your aim is to have a second home for spending vacation or post retirement living, then again, a good location with access to all modern ameneties including hospitals will make your sunset years easier.
3. Return On Investment
Be it your first or the second home, you always have to make sure that the investment you make has the potential of return on investment. It is given, that the investment made in homes in commercal spaces fetches a humongous ROI than homes located in secluded or isolated areas. Therefore, what is paramount for you is the fact that investing in a home, which provides higher long-term returns. It is prudent that you invest in fast-appreciating upmarket localities, where the investment is not very high like that of a well-established neighbourhood.
Evaluation of your long-term goals is the mantra for investing in your second home. Always prefer your second home in a residential area, as it will not only generate high revenue in the form of rent, but also while selling, you will get higher cost.
Finance for buying your home is of paramount importance. You have the choice of either paying the requisite money for buying the second home from your savings or you can opt for a home loan. While you are still working, it is always practical for opting the housing loan option as you can avail tax benefits. The Income Tax Act clearly says that you can enjoy tax benefits which is capped at Rs.2 lakh for a self-occupied or rented property. Besides that, you are also exempted from wealth tax, if your additional home is for rental purpose. It is any day less riskier than investing in stocks, mutual funds and bonds, as properties will always provide a greater long-term return.