What does it take to buy a second home?
Our recent research into second home market trends found that Manchester and London
have seen a significant rise in second homes. We wanted to learn more about what drives people to invest in a second or even a portfolio of properties so we spoke to two women who have experience of owning multiple houses.
We spoke to Sophie,
a savvy young professional who has recently used her life savings to purchase a property in a profitable area of Manchester, and Sally, a serial property investor with an impressive portfolio of six properties, including a farmhouse and a holiday
home in Cornwall.
We asked about the ins and outs of the process, their advice for would-be investors, and where they’d purchase next.
Sophie, Manchester, 30
Sophie is a 30-year-old professional who purchased her second home in Manchester after moving up from London to pursue her career.
Where did you choose to purchase your second home?
“I was able to purchase my first home after a grandparent left me inheritance. For my second home I used my life savings and purchased a flat in a part of Manchester which is expected to increase in value over the years. I wanted to invest my money in a good place as I had worked hard for it, and after doing my research and being advised money is better invested in bricks and mortar than any other type of investment, I thought buying a second home would be a more tangible investment for me.
How did you find the process of purchasing your second property?
The process was pretty smooth, I had a mortgage broker and had spoken to people who have more than one property who advised me and helped me when it came to stamp duty and moving my first mortgage to a buy to let. However, managing the properties is a lot harder than I anticipated. Any property isn’t cheap, if anything goes wrong I have to pay and fix it very quickly especially if I have tenants in.
What advice would you give to those looking to purchase their second home?
My advice to anyone looking to purchase a second property would be to make sure you have the support you need and have a plan in place for maintenance, managing tenants and contract issues with second properties. Make sure that you aren’t relying on the tenants rent as income and that the location is in a popular location so it’s a lot easier to find and replace new tenants.
If you were to purchase another property where would it be?
If I was going to purchase another property, I would look at buying a low value property which I could do up and make money from in an area such as Liverpool or Burnley.”
Sally, Warwickshire, 64
Sally is a 64-year-old business owner who owns several (six including her farmhouse and the two rental properties on the same site) properties across the UK. She most recently bought a property in Cornwall.
Why did you buy a second home?
“I bought my flat in North Kensington in 1987 as I wanted a flat close to my work. At that time North Kensington was still a bit rough, though up-and-coming, so I could just about afford to buy there. It’s about being in the right place at the right time with the property market as prices are up and down a lot.
At first, tenants were mostly long term, from six months to several years but now I also use services for shorter stays such as Airbnb and HomeAway. I prefer investing my money in property as the equity is stronger and you get an idea of how much your property is worth from other properties in the area.
How did you find the process of purchasing your second property?
The process usually works fine but when my husband and I considered buying a Cornish property we liked as a family holiday home, we had to jump through a few hoops to get there because of our 'advanced' ages. We were earning enough to cover the mortgage
so rather than letting our money build up we decided to buy this property. To secure the mortgage we had to put a bigger deposit down; if you have good assets and no existing mortgage then mortgage brokers are more comfortable with giving a mortgage
to people our age.
What advice would you give to those who already own a second home?
My advice would be that many people choose experiences rather than things now, so it pays to make your properties fun and enjoyable for guests. If you exceed expectations, you’ll get plenty of repeat bookings. Good property reviews don’t happen
overnight, and you have to work at it to ensure your guests/tenants enjoy their stays. Generally, research buying another property very carefully.
Don’t be seduced by a gorgeous looking house; look at the price you’re paying;
imagine if things went wrong, could you afford it? My London flat had dry rot which cost £20k to fix. Think if you lost your job for six to nine months could you still afford it? And make sure you get high-quality professional photographs taken
as first impressions are important when guests use Internet platforms.
If you were to purchase another property where would it be?
If I were going to purchase again, I’d consider buying in Scotland if the right property came up in the right place as we love holidaying there - and potentially London if prices went down further because of Brexit. I’d get a good value house
to do up and improve to make profit as there’s always demand for high-quality housing in London."
If you're interested in buying a second home read our second homes market trends research or find out more about how Swinton can help
you purchase Second Home Insurance.