Investments in real estate can indeed amount to lakhs of rupees, and the added financial pressure of purchasing a second home can be overwhelming. So, let’s explore some tips and tricks to follow when buying a second home. As equity markets around the globe suffer as a result of the Coronavirus global epidemic, investors’ sentiment is shifting in pursuit of property. Only 16%, on the other hand, said they desired stock markets. While first-time buyers will remain dominant in the market due to the substantial house prices, demand for second homes may rise due to the pandemic. Individuals are looking for second homes in budget-friendly markets in suburban areas as social distancing becomes the norm. Buyers must, however, take some basic precautions to ensure that the investment does not become unprofitable.
Location of the home
When it comes to real estate investment, location is one of the most critical factors. Suppose you are purchasing a second home as a source of income. In that case, a great location with easy access to numerous amenities and entertainment options can increase the demand for your home. The property’s location can also help you determine its potential for appreciation.
You could also buy your second home as a vacation or retirement home, in which case a villa or row house in a peaceful, quiet neighborhood would be ideal. However, the house must still be close to hospitals and convenience stores. When it comes to buying a second home, you have an infinite number of options, so make sure the location is ideal.
Take out a mortgage/loan
Buyers who cannot afford to pay cash for a second home should consider obtaining a home loan. Interest rates have reached an all-time low due to the COVID-19 crisis. Following the RBI’s reduction of the repo rate to 4%, public lender SBI now offers housing loans at 6.65% per annum. Because deposit rates are currently low, keeping the money in fixed or recurring deposits makes no sense, especially since you will have to pay taxes on your earnings. If the loan is taken out in joint names, buyers can save up to Rs 7 lakhs in taxes on purchasing their second home.
Look for ready-to-move-in properties
Even though construction work has resumed across India, within the confines of social distancing norms, housing projects are likely to face delays due to labor shortages caused by the reverse migration of construction workers. In such a case, there may be better options than investing in an under-construction property, even if you choose a reputable developer brand. Because there is no shortage of ready-to-move-in options, these should be a buyer’s first choice when purchasing a second home if their financial situation allows them to spend in a ready property, which will invariably be more expensive than an under-construction property.
Source of Funds
When buying a second home, one of the most critical factors is arranging your finances. In accordance with a significant amendment, taxpayers can declare two houses as self-occupied and claim tax benefits on a second Home Loan in addition to their first Home Loan. You can claim a deduction of up to Rs. 1.5 lacs on the principal loan amount, such as registration fees and stamp duty.
The rate of return on investment
One of the most critical factors to consider when purchasing a second home is the potential return on investment. Many factors come into play, including the home’s location, the demand for rental properties, and its connectivity to nearby places. The proximity to the highway and bus stand are essential factors when evaluating new flats in Pallavaram. This area is rapidly developing, and the value of properties is constantly rising. The flats for sale would earn an excellent rental income due to their proximity to the IT hubs and the industrial corridors.
Examine your long-term objectives
Is your second home a vacation home or an investment to diversify your portfolio?
If the investment is the primary motivation, the location should be chosen accordingly. A well-connected residential area to business hubs will generate regular rental income and appreciate significantly more quickly. New flats in Pallavaram are ideal due to their proximity to the prime location and the ideal living conditions. Apartments for sale in Pallavaram provide consistent rental returns and an excellent ROI due to their proximity to the industrial corridor.
If a vacation or retirement home is desired, consider the proximity to healthcare facilities, entertainment centers, and other necessary amenities. Apartments for sale in Pallavaram and other areas of the IT corridor offer a serene and green environment and access to an excellent social infrastructure that includes hospitals and entertainment venues. Finally, your long-term goals will determine the location of your second home.
Examine Your Financial Situation
Before you invest in a second home, you should evaluate your financial situation. Allocate funds for the downpayment and consider the EMI feasibility, especially if you already have an EMI on your first home. When it comes to property prices, under-construction properties are much more affordable than ready-to-move-in homes. These also provide pre-EMI benefits and, if located in a developing area, provide an excellent rental income that can be used to pay the EMI. This category includes properties under construction along the houses for sale in Pallavaram. These properties are in high demand among the IT professionals who work in this area because they are located along the IT Corridor. Apartments in this area are well-equipped with modern amenities, generate a high rental income, and appreciate rapidly.
Conclusion
Purchasing your next home is an extremely exciting and significant step. Whether it is a vacation home or an investment property, the demand for real estate properties is increasing. Many believe that real estate is safer than stocks and bonds because it provides a higher long-term return. Seek the advice of your family members too, after discussing all of the above with your advisor. Doing your research before buying a second home can guarantee that you continue seeing it as a benefit rather than a financial burden. Although purchasing a second home has costs and maintenance requirements, the benefits of owning a second home are far more significant.
