In India, many people are hesitant to delve into second home buying, fearing several implications that follow the purchase of such. Working professionals find it difficult to navigate the market given its intricacies and neoteric trend. On the other hand, people investing in the same have come across it as a long-term financial plan, life enhancement, and even emotional well-being.
Let us look at the latest trends on second-home investments in India.
Second homes realty market trends
In an era witnessing substantial growth in housing markets, it has become vital for individuals to invest in a second home to secure their future. In recent years, this move has transitioned from a status symbol to a well-thought strategic planning decision. The second home market in India is projected to exceed USD 4 billion by 2026. In cosmopolitan cities like Bangalore, people within central business districts are moving out and investing more towards the north, renting out these invested spaces to generate passive income. In recent years, we have observed a dramatic shift in the connotations surrounding second home buying; from being luxury indulgences, they have become a strategic investment for a better life.
In the wake of the post-covid work-from-home lifestyle, working persons find their primary residences hindering their personal lives. This anxiety-inducing culture has driven many to invest in second homes that can serve as vacation spots for retreat and rejuvenation and also provide steady rental income whilst earning their work pay. Bangalore has become a preferred destination for investors to capitalise on real estate, attracting USD 403 million in residential private equity investments in 2024, ranking second after Mumbai. The city has proved to be a goldmine for investors, with more and more people migrating due to the booming tech industry.
Where do homebuyers prefer buying second homes?
Traditionally, second homes were bought in hill stations as summer getaways or vacation retreats. However, people are increasingly purchasing second homes in beach towns, pilgrimage destinations, corporate cities, and others. The choice is that of the buyers to treat their purchase as they wish. They can be bought for personal use or leased and rented to others by listing them on online websites. These offer space for private time with family while offering high rentals and passive income when in city areas. Aside from these apparent benefits, second homes can be the perfect retirement plan for relaxing and unwinding from the busy city life. They can also benefit the buyer’s future generation by cementing passive income.
Although the initial few steps can be daunting, with the right planning and decision, second homes can be one of the most rewarding financial decisions.
Second homes can be bought anywhere, depending on their future use. If the purchase is made so as to receive immediate rental income, the sought-after place would be in corporate cities like Bangalore, Hyderabad, Mumbai, Delhi, etc. However, a vacation hotspot purchase would also give a good ROI and could be used as a retreat centre for the buyers. A purchase near pilgrimage places has its ups and downs, where the buyer would receive income mostly during peak religious festivals and maybe less during regular days.
Buying a second home involves substantial money for the purchase and a significant amount for property taxes, down payment, maintenance charges, brokerage fees, insurance, legal fees, interests on home loans taken, GST tax, etc. However, the investment will provide passive income that could help recover most of these costs.
What do you need to look into while buying a second home?
- Connectivity: Look at the proximity of your home to the destination that you are targeting.
- Corporate and education sectors: Cosmopolitan cities like Bangalore are witnessing a massive surge of individuals for work and education, leading to the growth of the housing market.
- Legal procedures: It is best to hire a financial expert that specialises in real estate to smoothly traverse through the legalities.
Underlying costs involved
Includes down payments, monthly maintenance charges, property taxes, brokerage and registration fees, home insurance, goods and service tax and legal and documentation costs. If planning to live, there might be other aspects like the interior design and furnishing of the house.
How should you go about investing in a second home?
Any huge investment would inevitably imply emotional and psychological stress; it can be either stressful or not, depending upon the financial and familial conditions of the buyer. Therefore, it is highly necessary that the buyer be sure and stable at the time of purchase. Avoid over-leveraging. Planning is the most crucial step in investing. Considering the financial situation and purpose, one should purchase an apartment, villa or plotted development. Accordingly, the buyer should evaluate and prepare a well-defined budget to go ahead with their investment. Seeking help from professionals would help lighten the burden and provide clarity. It is also better to always have a backup plan in case things go haywire since the market fluctuates on a regular basis. If planning to invest in an under-construction property, it is important to check if the company ensures on-time delivery of projects and if the builder is RERA registered.
By investing in a second home, you are essentially securing a balanced and fulfilling future for your family and yourself.
Keep in mind that buying a second home is a long-term commitment to your financial and personal development, not merely a real estate investment. Don’t rush things and don’t mindlessly follow trends. You might not benefit from what others find effective. Rather, match the purchase to your financial means, emotional preparedness and life objectives. Always do thorough diligence, be truthful about your needs, and get competent advice. A well-chosen second home can serve as more than just a contingency plan; it might be your most dependable first step toward stability and peace of mind in the future.
Why hire a legal expert in real estate?
- Handling complicated laws: State and local property laws can be complex and differ greatly from one another. An expert in your preferred location will be well-versed with these rules.
- Due diligence: They will perform extensive due diligence on the property in order to identify any possible legal concerns that can cause problems down the road. Verifying the seller’s ownership, looking for liens or other claims, and making sure the property complies with zoning laws are all part of this process.
- Examining documents: The purchase process involves a number of legal documents, including the sales agreement, title deeds, and registration paperwork. These documents can be carefully examined by a professional to guarantee their legality and safeguard your interests.
In a time when personal prosperity and financial savvy go hand in hand, purchasing a second house is becoming a potent means of achieving both. A second property is no longer only an option for the wealthy due to changing work cultures, changing lifestyles, and growing real estate potential; anyone with the right planning and vision may take advantage of this opportunity. A second home can be a reliable asset for life, whether your goals are to establish a tranquil retreat, increase retirement security or generate passive income. Take the time to carefully consider, plan and invest because, with the correct strategy, your second home can be the best place to start along the path to a more stable and satisfying future.
(The author is founder & CEO, Bricks & Milestones)
