Why invest in a second home?

Thinking of investing in a second home? Spain is the best destination to invest in a second home according to a study.

According to a study by Savills and HomeAway, Spain is the most attractive destination for future investments in second homes. This is held by 19.3% of respondents. Then, second, Portugal (13.2%) and France (13.1%) are in third place. 44% of the owners of second homes located in Spain are foreigners.

The second home market is the second reason that leads Spaniards to interact with the housing market. In fact, in the last year, the first reason why the Spanish people bought or sought to buy a house was for a first residence (75%), the second reason for buying a home was for a second residence (13 %). This follows from the report “Profile of the second home buyer in Spain” prepared by the real estate portal Fotocasa. In addition, the report also analyzes the rental market.

But, what are the advantages of having a second home?

1. Cost effectiveness. Having a second home allows you to rent it when you are not there. In addition, you can generate extra income that gives you profitability to the months that you do not use it. And also, it will be an easy task, because many foreigners are interested in coming to the Spanish coast in the winter months fleeing the low temperatures of their countries.
2. The area is key. It is important that if you know the most profitable areas of the autonomous community where you want to acquire housing, you can have a high profit margin.
3. Extra Revenue. Make sure you get extra revenue in retirement. Investing money into a pension fund generates a very low return. However, if you have a second home you will have an extra salary every month.
4. Holidays insured. An option to go on vacation. By investing in a second home you are guaranteed to have a property where you can always go on vacation.

What should you value before investing in the purchase of a second home?

• Assess the elements that determine the attractiveness of an investment: profitability, liquidity, volatility and transaction costs.
• Do a long-term exercise and do not let yourself be guided only by the current attractiveness that the purchase of a second home can have compared to other products designed for savings such as fixed income.
• Remember that the profitability of buying a property depends on many factors and that it is not a stable market, but is subject to economic fluctuations. Opting for a good area or cities with high demand for housing such as Madrid or Barcelona, are key factors that will vary the profitability of investment assets.