Why You Should Be Buying A Second Home?
Do you have plans of investing in a second home? Then you probably are on course to making an excellent investment decision. Buying a second home may be a difficult task if the approach to the investment isn’t researched and organized. Additionally, the second home must have the potential of fetching a moderate return on investment (if not higher), in terms of an incremental rise in property value or a regular monthly rental income.
Keeping a few of these mentioned aspects will ensure that you will be on course to making the right purchase decision.
You don’t have any overhead debts:
An existing debt or an existing mortgage can affect your repayment capabilities because when buying real estate, you could end up getting a bank loan for it. So an existing loan will just add up the monthly mortgages.
You have enough funds for emergencies:
It is crucial to have sufficient funds tucked away for emergencies and even to conserve funds before purchasing further investing in real estate. Emergency funds are a nice comfort to rely upon and works as a reassurance, giving you peace of mind. There’s no sense in expanding in real estate and making new investments unless you put aside some money for any unforeseen circumstances.
You need to have a stable primary source of income:
It is necessary to have a secure and strong primary income source in order for two homes to sustain themselves. This would make sure you can effectively handle the household expenses and sustain payments on the investment made in real estate. Of course, when the investment accrues rental the assets begin generating a return, but until then it would be your primary income from which these expenses would be managed.
When you opt for a second mortgage, in addition to making monthly mortgage payments there will also be additional recurring costs that add-up such as maintenance of the property, power and electricity bills, and general up-keep expenses that need to be accounted in the monthly and annual expenses that need to be paid for.
Once all these aspects are considered and budgeted for, you should be in a strong position to purchase a second property without facing any financial difficulties.
There are a variety of investment opportunities and returns on investments that can be anticipated from a real estate investment perspective, however, none of it is in the short term. Typically a comfortable time horizon would be at least 8 to 10 years. Here are a few reasons why it would be good to move invest in real estate:
- Benefit from the rental income: Rental income has increased significantly during a period of time with increasing real estate prices. This makes buying a second house a good option for a stable regular income stream.
- The ownership of an asset you own means adding to your wealth: The value of the house would also grow over time as historically property value in Goa has always been growing significantly. From an investment perspective, an investment in real estate will lead to a long-term high-value asset. It could then be sold to liquidate the asset at a higher price while receiving additional rental benefits as well.
- The Tax deductions under Section 24: When a loan is acquired for purchase you may receive tax deductions up to Rs2 lakh (when the asset is not rented) for interest paid on the loan and a deduction of interest up to the amount paid to interest where the house is rented. That saves you a loan tax and adds a high-value asset at the same time.
- In order to improve your assets and earn additional income opportunities, it’s always a great idea to invest in real estate if you have sufficient backing.