What About Owning a Second Home?

Because technology affords the freedom of telecommuting and "working where you play," the decision to own a second home or resort property has been made easier than ever before.

If purchasing a second-home is in your future, whether as an investment or for personal use, now is the time to get the information you need to make an informed decision. A qualified real estate professional can help guide you through financial considerations, assist you in finding the right community and even refer you to a resort property specialist for the destination of your dreams. Your real estate professional may even be able to get you the information and advice you need to use the equity in your current home to finance the down payment on a second home.

If you are planning to use your second-home as a vacation retreat, make sure you consider your needs. Are you looking for a secluded location in the woods or somewhere with an active community? Natural beauty is great, but don't forget about cultural and social resources, as well as first-rate golf, tennis and other popular sports facilities when scouting locations.

And what about location? For example, buyers from the Northeast are the biggest feeder market for second homes in the South. Many San Franciscans retreat to Lake Tahoe, while Bostonians gravitate to Cape Cod. However, there may be many great locations not more than two to three hours away from your home. You will likely get more enjoyment out of a property you can get to quickly and frequently. Since you know the area, chances are you'll make a better real estate investment closer to home.

If your second home is mostly for investment purposes, ask your real estate professional about property management options, which can be a crucial financial factor, as well as important to peace-of-mind.

Location is also a factor for those buying a second home as investment property, especially if appreciation or rental value is your goal. According to the NAR survey, the median distance between the primary residence and the investment property is 18 miles; and 44 percent are in the suburbs.

There are also tax implications to consider with your investment. If you rent your home for 15 days or more in a year, you may have to declare the rental income. However, your expenses may be deductible. You'll want to confer with your tax advisor to learn how your purchase will affect you financially.

How you use a second home is up to you, but make sure you look at each property with an eye toward tomorrow, because the vacation homes likely to appreciate the most are the ones that Baby Boomers can play in today and retire in tomorrow.