These days, everyone is cutting back on wants & focusing mainly on needs. For this reason, the secondary home market has been hit reasonably hard during this economic recession. I believe it will make a come back as confidence in the real estate industry grows & more buyers take a leap of faith to invest once again in real estate. While the financial implications of a second home carry considerable weight, the hope is that your second home is first a place for fun, relaxation, enjoyment and quality family time. And in a world where time comes at a premium, family time is never overrated. So is the owning of a second home truly just a luxury? Let’s look at a few reasons why purchasing a second home is a wise investment & not necessarily only a luxury.
Investment
- Diversification of your portfolio
- Appreciation over time while providing life-long fun for you and your family
- Rental Income from your second home is often a good cash source, which can help pay down your mortgage
- Taxes and Mortgages on a second home may also provide federal tax deductions, tax-sheltered income, or even a reduction in property taxes. You can also file another mortgage interest write off as a second home owner. As always contact an accountant/tax preparer for further details.
- Future Investment as a way of passing on assets to the children
Retirement
What’s your number?! Seems everywhere you go these days you see or hear something concerning the huge cost of retirement. It’s good to know that by owning a second home you can get a head start on retirement living. In 5 -10 years when 73 million Baby Boomers begin retiring, odds are that your favorite location might be a lot more expensive. When you buy a second home in your favorite location, you purchase before prices become too inflated and you’re priced out of the market. Also, equity in your primary residence can help purchase a retirement home.
Enjoyment
A second home offers a release from the stress of everyday life, giving us an opportunity, relax, recharge and gain perspective. Second homes provide us quality time to spend with ourselves, family, and friends—a time to give precedence to all the things that can take a back seat in our lives, whether it is finally reading the books by your bedside table, or taking the golf lesson you’ve always wanted.”.
These are all sound & irrefutable reasons why owning a second home is not necessarily a luxury. When you’re in it for the long term, a second home becomes an investment rather than a luxury and part of a more complete & fulfilled life today. Over the next decade, vacation properties in prime retirement or Sunbelt areas will likely continue to be in high demand.
By: 
Robert John Anderson, a luxury real estate expert serving Chicago, IL
