While the real estate development is showing a steady growth, investors are looking for a second home for different reasons like to get regular income by way of rentals, an investment for capital appreciation, to save income tax, to use it for holiday home or to diversify the investments. As the rental income can be a good option to get a consistent income monthly, more and more people are choosing to invest in instead of putting their hard earned money in risky stocks or mutual funds. Though the investment in property has immediate liquidity problems but still it has become the top choice of investors because it is the safest option available. Here are some tips that can be useful for an investor looking for a second home for rental purpose.1. Choosing the right location:It is wise to choose the right location if you are looking for rental purpose. There are areas which are in demand for rental purpose and the surroundings do impact a lot in demand for rental properties like proximity to education hub or IT parks or industrial areas. If you buy a second home in such a location it is easy to get tenants for the property and the rental income will also be good due to continuous demand for residential place.2. Choosing the right size of property:Size of the property does matter as the smaller houses go fast on rent instead of large 3bhk or 4 bhk. If you are buying a property for rental income then go for smaller property which has bigger tenant base as compared to big flats in the market.3. Avoid the amenities:If the property you are buying is not for self use then it is advisable to choose a property without any extra facilities like swimming pool, gymnasium, clubs and other such amenities as it will incur extra cost and the tenant won’t prefer to spend extra on things or facilities that they rarely use.4. A property do have other expenses that need to be considered like maintenance charges, property tax, real estate agent fees, etc. One should not ignore such costs as they are the owner’s liability. Sometimes you may not find any tenant for months and thus you may lose the rental income too.5. Do not buy a property in an area where the supply is in surplus as it will directly affect the demand and may lower the rental income from the property. If many new projects are coming up then people may find it better to buy instead of giving rents as the EMIs will be considered better than rents and in such a case the rented accommodation may lose its charm and it can be difficult to find tenants or you may have consider to lower the rents of property.6. Control costs:If you are buying a home for rental purpose then be wise while renovating it. Spend wisely and do all basic renovation like electricity, plumbing works, necessary woodwork, painting the house, etc. Unnecessary spending won’t help you charge more rents as you may find it difficult to find tenant if you charge more rent.7. Buying a home in the out skirts may be cheaper but difficult to monitor as you may not be able to visit it frequently and therefore it is better to invest in a second home for rental purpose in a location which is in close proximity to your residence or reachable easily.8. Always make a contract before giving your property to tenant as it will help you in making things better in future and you can avoid any unexpected situations. One should include all the terms and conditions for giving the property on rent in the lease contract and both the parties should sign it in agreement. One important thing to remember here is to renew your contract every time when the tenant is changed.9. If you want your tenant should pay the rent on time then make it a clear that you collect the rent on a fixed date instead of changing it every month. If you are not consistent then your tenant may take it lightly and it may be difficult for you to get the rent on time next month.10. If the budget is not much one can think of going for a location that is not prime but in the close vicinity of colleges or work place as we have seen now the educational institutes are opening centres in a non prime location due to cost effectiveness and the same happens with the industries or IT parks. They can get cheaper lands if they go a bit far from prime locations and thus buying a property in such area can be in budget as well as in demand for rental purpose so it can be a profitable deal.11. Changing the tenant in every two to three years is advisable as sometimes you may get stubborn tenants who may not leave the house and avoid the increment in rental charges and in such a case they become the headache for you and you may need the legal help in evicting such tenants. Always get the agreement done in writing with legal stamping along with clear terms and conditions so that the eviction process can be simplified.12. If we see the tax factor then one should know that the income from second home is not fully taxable. There is a 30 percent standard deduction. The interest paid on home loan and the municipal taxes are also deductible from the income from the house. Therefore it is a better option to invest in a second home for steady rental incomes.Ruchi Mahajan