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Four things you must consider before buying a vacation home

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Deciding to invest in a vacation home is usually driven by emotions, but there is some solid math you have to do before taking the plunge.

Four things you must consider before buying a vacation home
For long, the husband and I have been locked into the romantic dream of buying a sea facing apartment/tiny villa in Goa and promised each other, once we’re done with buying our basic home in the city-of-work, we would definitely get down to making the second home a reality.
We were well into our late 30s before we could muster up the courage to break our small pot of savings and put up a down payment for an overpriced Delhi Builder Flat, one of those vertical box like structures mushrooming all over the Capital.
Now, 10 years after paying up a big fat loan, the longing is back.  In fact, it’s been lurking since our last Goa vacation in December when the family’s romance with the sea was rekindled. By now several of our friends who have done marvelously well in their careers are all dashing to their getaways in Goa or the Himalayas. We are even invited to some of these haunts, which only makes us yearn a bit more.
Being a hardcore baniya (don’t be fooled by my South Indian surname), we got down to doing a bit of homework — me with a pen and paper and the management hubby with an excel sheet. And guess what, the math simply didn’t add up. Believe me, we tried to pad the numbers with every emotional spiel to make it happen. Ultimately, we buried the dream. Here are four reasons why:
It’s a money guzzler
Sure, we could afford to buy it today; the down payment is pretty modest, especially in most of the drool-worthy Goa property advertisements our Facebook pages throw up  regularly. Builders are offering a complete EMI holiday and all sorts of freebies until possession to entice potential buyers.
But an EMI holiday doesn’t mean you don’t have to  someday pay up. You do. And a lot once you start stacking up the fit-out costs, maintenance costs, the caretaker costs and more importantly, the property tax.
It sucks up time and energy
The same people we envied, who described their lovely downtime at their vacation homes and made us go green with awesome photo posts are advising us NOT to take the plunge.  Their take: you have to commit going down at least twice a year if not more, to check on the property, fix the leaks and make sure the caretaker is not throwing parties for all his friends and sundry. One long distance owner decided to land up  with no prior notice, only to find that the wily caretaker was merrily renting the property out to vacationers. With full-time jobs and teenagers to manage, did we really want more worries, more work? The answer was an easy NO!
It’s Not Going to be a Moneymaker  
We never fooled ourselves into believing that this would be a good investment. It was always an emotional need. But I’m glad we did the math because instead of any returns, a vacation home actually ends up creating a big hole in your pocket. And no amount of optimism that you can expect a half decent return 10 years down the road, holds much ground.
Vacation homes don’t appreciate much and have fewer takers, however gorgeous their location is.  Capital value of real estate increases when there are many takers and renters — and both happen to be in cities where jobs are getting created.
Get rich & footloose first! 
If vacation homes aren’t about returns, but are all about owning a home away from home, go for them only if you’re done with every other financial milestone. You’re kosher on your retirement corpus, your kids are working adults and no longer your responsibility and you still have extra cash. Otherwise, book a villa anywhere in the world, for an entire month — and it works out financially smarter and doesn’t shackle your holidays to the same seaside.
So we’ve made peace. The day will come when we will own our seaside home with our own bed to sleep in and books to read. But that day is not this summer!
Manisha Natarajan is Group Editor, Real Estate and Urban Development, CNBCTV18.com

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