Buying a Second Home - Vacation or Rental?

by : Nancy Gleason

Second homes have always been a good investment. With real estate holding its value as well as it does and the appreciation of the U.S. home market, the addition of a second home to your investment portfolio makes good sense. However there are some things that you may want to consider before jumping into a purchase. A home is an expensive thing as you well know and you will have to have the capital available or the ability to deal with mortgage payments, property taxes and upkeep.

When buying a vacation home, many investors have chosen to rent the property on a weekly basis when they are not using the house. This is a great way to help pay the bills and usually a property management company can be retained to handle the upkeep if you live out of state or a long distance away from the home. Vacation rentals have developed into a huge business in the U.S. and more investors are gaining equity at a rapid rate than ever before. This is enabling them to purchase additional properties and further develop their investing interests. Part of the reason that vacation rentals have become so popular is that they offer a cheaper alternative to high-priced hotels and resorts. They also offer the ability to cook meals and do laundry shaving precious dollars off any traveler's vacation budget.

The other usual option for the purchase of a second property is long-term rentals. This type of rental is more substantial than vacation rentals as it offers a more secure and dependable income. There is one thing to keep in mind about this kind of investment; you need to have the right tenants. How to attract the right tenants? well, that can be achieved by upgrading the appliances and fixtures and making the home the kind of place that you would live in yourself. After that, make sure that you get references and check them for every applicant. It is important to find tenants that will respect the property as if it is their own. No matter which kind of investment appeals to you, make sure that you are prepared for all eventualities both in terms of tenants and finances.