Should You Invest In Vacation Homes?

Did you ever feel the urge to buy a home away from the hustle-bustle of the city? Chances are high that you might have even considered buying at your favourite holiday destination. Investing in holiday homes is a trend that is gaining momentum in India. People with high disposable incomes are seen investing in a second home at popular vacation spots. While the purpose of the investment is majorly end-use, these locations tend to give good returns if retained for the long term.

Popular locations for second home investment

The second home investment is a popular concept in western part of India. Goa, Karjat, Alibaug, Lonavla, Lavasa are some of the prominent holiday destinations where buyers are flocking to for their second investment. Looking at the demand, major developers have come up with their range of housing projects to cater to this segment. Row houses, bungalows, studio apartments and multi-storey flats — these hotspots have developed real estate market which is promising, but only if it is held for a long period of time. Ooty, Mysore, Pondicherry, Connor, Coorg, Ketti are other areas which are attracting investor interest. 

Picking up the options

Since the growing demand has attracted a flurry of supply from large and small scale developers alike, a buyer has varied options to choose from. Minimum investment in these locations starts at Rs 5 lakh and can go up to a crore. In fact, many people prefer the city's outskirts as a second home for self-use, which they can visit even during weekends. For instance, Kharghar in Navi Mumbai is still serving as a second-home destination to Mumbaikars, away from the city but still close to modern conveniences. Since these locations offer a bouquet of property options, that too in a wide price range, they are being considered equally good as a holiday destination.

But what are the challenges facing you while investing in vacation homes?

Also read: Are Apartment Hotels Similar To Vacation Homes?

The maintenance

The biggest challenge of buying a second property is its maintenance. The cost of upkeep of a property adds up to your monthly budget. If you are considering buying a bungalow or a row house, you might need to pay extra for the upkeep and regular cleaning.

The purpose

Do you wish to invest in a second home for a vacation purpose or to build an asset while saving tax? Assess your needs and understand how often you would like to come to the same destination again. Ideally, pick a location which is not too far from the city but still close enough to not feel absolutely deserted. 

The growth prospects

Before investing in any property, it is important to assess the growth prospect of the location. But when the location is not so conventional, it becomes imperative to understand the real estate market of the town. For instance, it is not necessary that the destination you are investing in will remain popular 10 years from now as well so that it can fetch you good returns or rental income. It is advisable to study the future of real estate in the area before signing the deal.

The connectivity

Since you will be travelling to the location frequently, connectivity is the key to enjoy the benefits of your new home.  You must also keep in mind the safety the area would offer you. Since you will not be living here regularly, security becomes a key concern.

Also read

7 Things To Consider Before Renting Your Vacation Home