What to consider while buying a second house

economictimes.indiatimes.com:

buying a second house, and has been getting suggestions from friends and advisers. He is a senior management professional with a good salary, which includes a sizeable performance-linked variable pay. He has a portfolio of stocks, mutual funds, deposits and bonds, and is comfortably placed in terms of his financial goals.

He thinks that it may be a good idea to buy a second property for price appreciation. His family thinks that a holiday home would be a good idea. His close friend thinks that he should buy a flat in the city for rental income.

His brother advises him to buy into a retirement settlement that can be used if he were to spend his retirement years alone. What factors should Akshay consider while making a choice?

The key driving factor for Akshay has to be the purpose for which he wants to make an investment in the second house. If the intent is to have a holiday home primarily for weekend getaways for the family, investment returns can be earned only if he is willing to rent out the place, even if he does so occasionally.

It may be emotionally tough to sell a property bought as a family getaway. Therefore, this choice should be seen as an indulgence, rather than an investment.

Buying a flat in the city can generate a decent rental yield over the years, and can serve as a good source of retirement income in later years. If the objective is only investment returns for the present, and he plans to buy and sell, he needs a more careful consideration for the choice of place and property.