Are You Planning to Buy a Second Home?

Bangalore: Owning a second home is not much different from owning a first home. Investors look at the investment aspect more, rather than looking at the emotional aspect when buying a second home. Below are some steps to consider before buying a second home:

1) Things to consider before buying:

There are certain aspects to look into when you are planning to buy a second home.  First and the foremost, you have to decide whether you are considering the second home as an investment or for holiday home purpose. But if you consider the second home only as an investment then you need to plan out properly on how you will use it for long-term investment and make profit out of it. You can also plan on renting out the second home or using it for retirement purpose.

2) Affordability factor:

A home that is financially affordable, always make you feel comfortable to reside in. This is one of the important steps to plan out precisely before buying a second home. Investors have to keep aside their emotions and rather look at the affordability aspects before buying a second home. They also need to invest carefully before buying as it involves massive investment. Before investing there are some other factors as well to look at, apart from the actual cost of the second home, such as maintenance costs, municipal tax, electricity bills, water bills, insurances and utilities. Planning out all these things in advance will make it easier for investors to invest in a better way.

3) Decide on location and home you like:

Be realistic to choose the location and the type of home you want to buy as it involves long-term investment. Every investor has their own personal choice of location and the type of home they want to reside in. Finding a good location is another prime factor for investors before buying a second home. This step needs lot of survey, as the activity of buying a second home happens rarely to the investors. Aspects to look into for location are like the taxes of that particular location, convenience and facilities, nearby education institutions, medical care etc.

4) Tax connotations:

Second home owners need to consider both property taxes that differ by state and location, and income tax, at the time of renting your second home. Terms related to taxes can undoubtedly fetch trouble if you do not plan properly during home-searching process.

5) Serve as retirement income:

Investing on a second home can always fetch you good return after retirement too. For instance, if you plan on renting out the second home, you can expect some amount of rental income which you can use as pension plan. And if the rental income is insufficient then you can choose the alternative option to sell the second house and gain cash.