BANGALORE: Property is invariably the single-most rewarding investment many people make in their lifetime. This Akshay Tritiya, make the most of the auspicious time to own your dream home. It certainly pays to stay invested in the real estate market. It cannot be disputed that property is an interesting investment commodity, which yields both, the rental income and capital gains. These days, it is not uncommon to find investors owning more than two homes. It is for this reason that an increasing number of people are investing in more than one property to create wealth.
Whether you want to diversify your investments, or are looking at a rental income, buying a second home is a good proposition. The second home also serves as a good source of income after retirement.
“When we set out to buy our dream home, it was undertaken after much deliberation and spade work,” says IT professional Sameer Mehra. “We looked at factors, such as proximity to my workplace, access to the key infrastructure projects and quality of construction,” informs Mehra. Often, location is a key factor that determines where you want to buy your property. Whether this is your first home or second, you will want to ensure that the investment yields good returns in the long-term. Here are the three most important factors that will make your investment reap rich dividends in the longterm:
Location: Location is a key factor. The location is usually chosen based on proximity to the workplace, children’s school and social infra-structure, such as malls, hospitals and other amenities. These parameters will however differ, when investing in a second home.
When investing in a second home, the search for the property should be handled in a completely different way, from the process to purchase a residence to live in. When buying a second home, you should view the real estate asset as an income-generating commodity rather than a home for yourself. This is why the entire purchase process differs.
For example, if you expect monthly returns, the location should be suitable so that prospective tenants can be found. Ideally, the second home need not be in the same location as the first. After evaluating the pros and cons of the location of your first home, locate areas that are coming under the new expansion plans for the city. Usually, investors prefer the peripheral areas of the city when they are looking at investing for the second time.
Infrastructure: Keep yourself updated with the latest city development plans through the media or by visiting the website of the city municipal corporation. Study the map of the city carefully and look for connectivity and accessibility. Mega infrastructure projects, such as international airports, metro rail projects, Bus Rapid Transit Systems, monorail, Outer Ring Road and the Peripheral Ring Road, are some of the major infrastructure projects to look out for. Along with this, keep track of the development plans for Special Economic Zones and satellite towns. “Many villages are now getting added on to the city development plans and are coming under the jurisdiction of urban development, opening up large land parcels for the realty development,” shares Praneetha Ranade, a homemaker, who is looking at buying a second home in the city.
Financial goals: A house is a commendable asset. This is due to the fact that no other investment option assures such healthy returns. Hence, investing in real estate is sure to keep your investment portfolio flying high. According to experts in the field and realtors, the age group of those investing in a home or even a second home, is now down to a surprising 26-30 age bracket. This is due to the higher pay scales, both partners earning six-digit pay cheques and this money being pooled in to be invested for greater returns. “Obtaining a home loan and getting tax deduction is a boon for many of us, coming under the higher income tax bracket,” states Amith Trivedi, an investment banker.
“When you crunch the numbers between initial investment in the form of down payment, EMIs and current market valuation of the home you live in, you will discover that this was the most profitable investment you made,” explains Trivedi. In the case of a second home, after evaluating your credit-worthiness, you can approach the same bank from where you took your first home loan. Offer the existing property as security. The EMIs can be calculated after assessing the rental returns you are likely to expect in that area. Let your tenants help pay off your loans. Keep your money parked in real estate while keeping a close watch on these trends to watch your money grow.