If your career is going well – a second or third promotion under the belt – and your bank balance is looking healthy, you may be considering buying a second home. You would be joining a great many people who have decided on the same thing – it is a fun and exciting way to spend your hard-earned money, and of course there is a lot to be said for investing money that would otherwise be sitting unspent and uninvested in property. But of course, it is worth considering the financial implications of buying property in the long term.
Here are a few things worth considering, and a few answers to questions you may already be asking yourself.
First of all, there is the question of whether your potential second property is actually an astute investment in the long term – in other words, will the value rise comfortably above inflation, or would an investment in safe-bet stocks or even a savings account be a better way to grow your money? Of course this isn’t the only consideration when thinking about buying a property, but it matters. It is indeed very much worth your while to look into property markets before you buy, and if you can identify areas where property prices are strong or are expected to grow healthily, that might be a wise place to look for properties. You may already have an area in mind, of course, and I will come back to ways of making your purchase work financially later on. But it is worth a bit of thought.
Then there is the question of how often you imagine you would actually be occupying a second home. If you are looking for houses on the French Riviera or in the Andalusian mountains, for example, you may only be able to get away to enjoy it once or twice a year. This hardly seems worth your while unless you can get away often enough to enjoy the place more often, or can find a way to make your property work financially while you are working. If you choose a property closer to home, on the other hand, you might be able to get away to it more often – but if it ends up being down the road, would you really want to? There is a balance to be struck here between being realistic and finding somewhere you would really love to go to, and often.
Coming back to the question of making a strong investment, there are a number of things to think of. If you have found an area that you love being in and that has a strong property market, you might be onto something. But you can do even better. Consider letting your holiday property out when you’re not using it – this is remarkably easy to do and can actually bring you quite a respectable return. There are plenty of websites out there on which to list your property, but there’s a better option still. Consider buying a piece of short let property management software with which to manage your lettings. This is a relatively new – and very good – idea, namely a program that will enable you to easily design a professional looking website, synchronise your offline paperwork with your online bookings and keep management to a minimum. Shopping around can uncover some very good products, which can do everything from showing potential guests when your house is free to making sure the cleaners know when to come. It’s a great way to enjoy the benefits of a second home while at the same time knowing that it’s actually paying for itself.
In fact, with a bit of organisation and a good piece of software, a second property could be not an indulgence – it could be a good financial move, too. Feel free to check out this article on Wikipedia for a comparison of property management software.