People are generally quite skeptical of the benefits of owning a second home. But actually, it’s essential if you want to get on the path to riches. A second home is another store of wealth and, also, something that can generate a second income for you in the future.
What’s more, owning a second home isn’t as challenging as you might think. In fact, the number of people who do it is growing every year, particularly as the property market takes off.
Working out whether you should buy a second home isn’t always easy, though. Doubts can creep into your mind.
Fortunately, we’re here to help. In this post, we take a look at some of the reasons why you should buy a second home and how it could improve your life.
You Can Rent Out Your City Home
Most people live in cities. The urbanization rate in most developed economies is between 60 and 75 percent.
But why do people live in cities? For some, it is the entertainment, opportunities to meet new people and work and they genuinely love it. However, many others would prefer to live in beautiful surroundings instead.
If you own a second home, you can. All you do is buy the property and then rent out your city home. Usually, the rent from your urban-dwelling is substantially higher than your out-of-town home (because of the increased demand for rent) more than covering your living costs. In other words, sometimes you can actually leave your original home, live somewhere you actually want to live, and avoid having to work at the same time.
Most people do the reverse. They rent their city home because they believe that they need to work and then get a second income from vacation rental on the side. But that’s a topsy-turvy way of doing things. It makes much more sense to prioritize your own lifestyle first.
Owning a second home is also a lot of fun. You’re not just stuck in the same place year-round. Instead, you can switch between multiple locations, friends, and activities, depending on the season.
They say that variety is the spice of life, and that’s certainly true when it comes to where you live. If you’re in the mood for fresh air and beautiful surroundings, you can head on over to your country retreat and enjoy a stay in more tranquil surroundings. However, if you miss the hustle and bustle of city life, you can return to your apartment and carry on as normal. In other words, when you own a second home, you have options.
You Can Rent It Out To Vacationers
The vacation rental market is an attractive one. Property owners who rent out their second homes to people can make a lot of money – often more than they could to full-time tenants.
The reason is that vacationers are usually willing to spend a lot more on housing services during a one-week break than they are year-round.
Furthermore, buying a vacation home is one of the few property decisions where emotions and investment decisions align. Usually, if you love the property because of the way it looks and its location, the chances are that other people will too. If it’s in the middle of a forest, on the side of a mountain, or close to waterfalls, it really does matter. Those are the sorts of perks that vacationers want when they choose to rent a vacation home.
Setting up a vacation home is also easier than ever before, thanks to accommodation rental platforms, such as Airbnb. They take care of all the taxes and technical details for you, allowing you to rent out your second home legally, and collect payment. In some cases, they will even provide you with support in servicing the accommodation.
It Can Improve Your Retirement
If you go on sites like Simply Living Homes, you’ll see a bunch of homes all offering different properties for people ranging from first-time buyers to retirees. These homes typically offer multiple options. Yes, you can live in them if you want. But you can also temporarily rent them out until the time comes to retire. Then, once retirement hits, you’re free to move into the property yourself. You can then sell your original home to provide you with even more cash to fund your activities.
It’s A Good Investment
Finding good investments in today’s world is a challenge. There are so many issues with practically every asset class. However, even if the property sector is riding high right now, it is still a relatively safe investment. That’s because even if prices fall in the future, people will still need to rent accommodation.
Second homes, particularly vacation homes, make for exceptional rentals. The reason has to do with destinations themselves. We’re now living in an era where most tourist hotspots are locked in. Accommodation in these areas will continue to benefit from the tourist trade, no matter what happens to the rest of the housing sector. In fact, vacation rentals are decoupled from the property in some areas.
Buying a second home is a major decision and not one that you should take lightly. However, it is also the first step on the rung to genuine property wealth.
Ask yourself, what makes people rich? It isn’t usually the stock market. Very few people have the courage and longevity to remain in stocks over the long run. Instead, it’s how they leverage debt, either in the form of business loans or mortgages.
Think about it: when you take out a loan on a property, you’re essentially getting free capital from the bank. You can then use that money to buy homes and rent them out to other people. What’s interesting about this situation is that you couldn’t have made that kind of return without the help of the bank. However, once you have their money (paying only low-interest rates), you can then leverage it to make bigger returns on your initial deposit.
Second homes allow you to take advantage of this phenomenon, making them a powerful wealth builder.