Second home: How to secure a substantial return on investment

Planning for potential profit

The profit potential of your second home can take different forms, depending on the location and use of the property. A city flat in a thriving market such as Munich, for example, has excellent potential in terms of capital appreciation and rental income, although foreign buyers need to carefully consider the costs and limitations of Germany's rigid purchase market.

Even if you intend to use your second home on a regular basis, you can capitalise profits beyond mere capital appreciation. Renting exclusively during holidays is still a good option, especially in rural and coastal areas, while beautiful homes near large cities are ideal for hosting large events such as weddings. For homes in teeming financial districts, renting out the driveway as a parking possibility is also an option, a practice that is very popular in the UK and Australia.

Identify the ideal location for your investment

Recognising market trends is a key aspect of choosing a second home; however, this does not only mean finding a profitable city. Experts such as the investment consultants Engel & Völkers are constantly on the lookout in every city for the ideal properties to invest in, whether in the new neighbourhoods under construction in Milan, o in the luxury buildings that are making a comeback in Parisand thanks to their work, you too can find the right location.

Try also to identify criteria for your own choice. Do not underestimate, for example, the importance of a beautiful view. According to TripAdvisor, for 82 per cent of holidaymakers the possibility to admire a beautiful view is the most important part of their trip; to attract visitors and buyers looking for holiday homes, therefore, choose only the best. On the other hand, urban flats have the advantage of proximity to amenities, prestigious buildings or local transport.

Choose the right features for your new home

Whether you want to rent out the property or simply prepare it for a future future salealways choose each individual element carefully.You can for example add a touch of appeal to your holiday home with the help of modern technology such as high-speed Wi-Fi or HD television, or with elegant bathrooms and common areas. In warmer areas, outdoor elements such as lounges, mood lighting or extra rooms add even more value to your property.

In addition to finding the most attractive elements, don't forget to carefully evaluate maintenance costs so you get the ROI you want. Therefore, consider aspects such as cleaning, maintenance, gardening and minor repairs.

Rely on experts

We have repeatedly mentioned the importance of an experienced real estate agent, but there are also other professionals to whom investors should turn. An on-site lawyer will be able to assist you with all legal aspects of a purchase or sale, and a financial advisor can provide useful information on interest rates, the rental market and construction events or developments that might affect these aspects.

If you are thinking about how to maximise the return on your investment, you will need to know exactly who to ask for help. Local property management companies, for example, can make sure that your home is always in good condition when you are away and even manage the letting of the property on your behalf. Take the time to find the right partner, as this can really make a difference.