This is a guest blog written by James Hale.
Owning a second property is a common aspiration for many homeowners. The notion of having a second home for weekend retreats, or for holidays abroad - or even as a potential source of income - is endlessly tantalising. There are many benefits a second property can provide, but the process of choosing a second home can be daunting, and it’s easy to overlook important considerations.
There are many pressing things to think about, like finances and locations, but aside from the obvious, there are a number of things to be considered which might not immediately spring to mind. Taking the time to think about these factors could make all the difference, and could help you realise your dreams for your second home.
Why are you buying the property?
It might seem a trite thing to mention, but it can be easy to get swept away in the romantic notion of a holiday home, or a property to retreat to on a whim. Having a clear, defined reason for purchasing a second home is essential, and is surprisingly easy to lose sight of. It’s all too tempting to fall into the trap of simply thinking ‘having a second home would be so nice…’, which can be a significant risk.
Your reasons behind buying the home will significantly affect your options when it comes to location, financing, and the nature of the property itself. Whether you’re planning to rent the property out, use it as a regular (or infrequent) holiday home, or even refurbish it and then sell it on, a clear plan is crucial.
You don’t need to be stubborn about this, and in fact, it’s important to be a little flexible, but you should keep a general vision in mind to ensure you don’t incur unnecessary or unmanageable responsibilities. Having a clear notion of what you hope to achieve overall will help you make the best choice as to which property/location is most suitable for you.
Choosing the right location
The location of a second home is often one of the first things that is discussed and decided. Many people looking to buy a holiday property already have a particular location in mind and know the area fairly well. Your reason for investing in a second home can make a big difference to a location’s suitability, and it’s a vital factor to think about.
If you’re planning to rent the property out, you will need to think about things like proximity to schools, local services etc. What are the crime statistics like? How easy will it be to find a reliable tenant? Is there a potential student market, and therefore might you have to think about communal spaces, or multiple bedroom properties?
If you’re planning on spending significant time in the property, it’s important to consider how well the local community will respond? Certain towns/villages have expressed concern over the impact second homes have had on their communities, and while it’s not likely a deciding factor, if your relationship with your new neighbours is important to you, it’s something to think about.
Crucially, bear in mind how well you really know the location you’re looking into. Are there any geographic risks you might not be aware of, like floods or earthquakes? You’ll potentially be tied to this location for a long time, so it’s important to do some homework. Put some effort into getting to know the area you’re considering - visit it multiple times if possible, and don’t make any hasty decisions.
Travelling to and fro
Depending on your plans for your second home, you might be intending to travel there fairly frequently. Once you’ve decided exactly what type of property you’d like, if you don’t have a very specific location in mind, it can be tempting to widen the net geographically, to find the perfect home.
This can speed up the process, and give you more variety of options, but it will potentially have an effect on one important factor - travel. Once you’ve found a potential property, look into how easy it will be to travel there, realistically. If you intend to drive, are the roads susceptible to long traffic jams or incidents? If you’ll be taking trains or public transport, how easy and regular are the travel links?
If you’re looking for somewhere suitable for weekend getaways, a property that will take a full day to travel to and from might not be ideal. Similarly, if you’re letting out the home to tenants and a problem arises, how quickly will you be able to get there and respond?
Unforeseen costs
Aside from things like mortgages and taxes, a second home can incur many costs you might not immediately think of, particularly those associated with maintenance.
If you’re going to be leaving the property vacant throughout portions of the year, you’ll need to bear in mind how much upkeep will be required on the property. If the home is in a location that gets cold over winter, and there is a risk of pipes freezing (and bursting!), you may need to employ a property manager for continued maintenance.
Are there any fixtures or facilities that will need looking after? Things like swimming pools and even ponds will need tending to on occasion, to prevent algae and other damages.
Other unforeseen costs can include things like decorations or repair - which can sometimes be difficult to estimate at the early stages of the process. It might seem romantic to invest in a ‘fixer-upper’, but extraneous charges can rack up fast - decisions like this should be thought over in detail, and conservative estimates drawn up.
Know your alternatives
Even if you have your heart set on second home ownership, it’s always a good idea to do a bit of research into potential alternatives - as sometimes you can discover options that are even more suitable. If you enjoy travel and exploring new locations, for instance, a property investment fund, or other fractional ownership opportunities, might suit you - rather than tying yourself to a single location.
Similarly, if you’re more income-driven when it comes to second property ownership, it’s easy to assume that you will need to invest large sums of capital in a single property; but there are plenty of opportunities for investors on even a small budget. If you’re thinking of becoming a landlord or are looking to make a passive income from your property, crowdfunding opportunities like the ones offered by Property Moose can offer an alternative for those on a range of budgets.
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
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