Is a second home as an investment wise or not? Here are the five biggest pitfalls in advance:

The purchase price

If you want to invest in an investment property, you need to be sure you're not overpaying. Is the state of repair good, is the location attractive? If you pay too much, it will take a very long time before your investment becomes profitable, if you ever make a profit at all. So check what comparable properties cost, whether there is a good rental market? And remember that a rented property will yield less when sold than an empty property.

Your tenants

At least as important as the purchase price of a house are the tenants. It's nice if your tenants are decent people who don't smash things up or start a pot farm in the attic. But just as important is that those tenants can pay the rent each month. Isn't it too expensive for them?

Also remember that critical tenants can cost you a lot of money. If you rent out the house for 1,000 euros a month and the tenants discover that, according to the point system, they only have to pay 600 euros, you can get ready for a long and expensive battle, and possibly hefty losses. And remember that no tenants are an even bigger risk. Vacancy costs you a lot of money. Vacancy chops it up tremendously. 1 month of vacancy will cost you 8 percent of your income.

The cost

Rent is not the same as income. Sellers of investment properties boast returns of 8 or 9 percent a year. Net is often only half that. You have to deal with maintenance, taxes and insurance. That can add up nicely, not to mention the time it takes.

Taxes

The rules for an investment property are very different than for your own home. Any mortgage loan is not deductible. You don't have to pay taxes on the rent, and maintenance costs are not deductible. But you do have to report the value of the house to your assets. And so you pay taxes on that.

Different rules per municipality

Every municipality in the Netherlands has its own rules for, for example, dividing a family home into apartments or student rooms. Sometimes this is not even allowed or converting costs a lot of money. Even if an investment property is already being used as a student house, this is no guarantee that it is allowed. So check in advance what is and what is not allowed.

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