Advice on buying a second home

We list a few ways following which you can plan well the purchase of a second home.Follow these and invest wisely!

Most people have an unrealised dream of buying a second home,but with some amount of logical thinking,owning it can be a reality. The finance for your second home can most often be the first problem, especially when you are already paying an EMI for your first home.  Plan your budget, naturally, but even more so – plan your buy – in terms of location,size and dcor. All of these factors are important when it comes to generating an income from your second home.
Rental properties are second home purchases made in order to make a profit.These properties can either be long-term investments or short-term flip-style purchases.Generating an income such that it pays for the upkeep of your second home is the smartest way to finance it.The most obvious is rental income from a home that you are not using on a regular basis, especially when it is bought as an investment in the same city. For a decent rental, the home should be in an accessible and maybe even up-market place in the city. Once these parameters are satisfied,the income from it can be counted on.
Arvind Krishnan, a software engineer with a major IT firm recently shifted base to Chennai from Bangalore and wanted to invest in a home in the city. Since he owns a home already back in Bangalore, the one he looks for here will primarily be an investment. “Instead of buying a home to live in while I am here in Chennai, I have decided to buy a small home that is within my budget and then rent it out,”adds the 29-year-old who is currently living in a bachelor pad, sharing a home with three other such engineers in Chengelpet. As Arvind rents his home out,over the years,capital appreciation is sure to help turn his second home into a solid investment. This can be categorised as a long-term investment as the rental property is purchased with an eye towards selling it at a point in the future,when the market value increases. Thus,his second home turns into an investment, all the while earning some kind of rental income which will help offset the loan. One can also consider buying a property in a secondary location,which will pay dividends much later, but comes cheaper at the time of buying. This is a given – buy cheap and sell high,or buy high and sell higher.
The retreat or vacation home is the other category, after the homes for investment in the city segment. With real estate investment being the present day mantra,savvy vacationers are becoming more and more interested in buying property in prime vacation spots where they can go on their yearly holidays. Buying a second home near a busy or popular vacation spot or resort will ensure that the chances of getting people interested in renting it will be higher. Buying a more isolated second home will often mean that either you will have to do a lot more work in making it known to others, or you will have to rely on your own income to finance the purchase. The biggest problem with such homes is the maintenance, since the usage is not high. In these cases,the ideal thing to do is hiring it out to a serviced apartment management company. It is a win-win situation,wherein you get rental income on a profit-sharing basis with the company and all maintenance hassles are theirs.
Star City,which runs serviced apartments across different locations in the city, takes on the maintanence of properties in places like Uthandi. Muruga Bharti, Managing Director,Star City,says, “We have now moved on to a new segment called Star Villas,where we take up independent homes and service them for guests. We handle the complete maintenance of the property and currently hold four such in T Nagar , Neelankarai, Thiruvanmiyur and Uthandi.  The owners of the home or the people who move into these places do not have to worry about hassles such as maintaining the property, furnishing,security,etc. “This way,your property can earn you a pretty decent sum for a second home. The one downside to this is that one cannot use the dream home whenever one wants,at a whim.
Another way of making money through your second home is networking through friends and portals,for a weekly rather than a yearly or even monthly rental scheme,which works out well and is quite popular abroad.
These non-conventional methods are not for all properties,but can be tapped as they have potential. So,the next time you go house hunting,for whatever purpose,keep this potential in mind