Is a Second Home a Wise Financial Choice?

By Craig Levine


With financial markets tumbling and corporate uncertainty looming, you may be looking for other places to invest your money other than the stock market. I can empathize with you. In the past two years, my Science and Technology mutual fund has depreciated approximately 80% in value. At the same time, I purchased 4 townhomes in Smyrna. The properties together cost about $228,000 with an initial investment of $16,000. Just recently, I sold the last of these 4 townhomes which I had rented out over the last two years. I turned that $16,000 into almost $90,000 with minimal effort. Iím not saying that this can be done on a regular basis, but wise investing in real estate has always proven more bountiful for me than investing in the stock markets.

In November of 2001, I purchased a 1 Bedroom 1 Bath condominium in Destin, Florida as a second home. A second home has significant financial as well as tangible benefits to the owner. Not only do I get to go down to Destin, one of the most beautiful beaches in the United States, any time I desire (when I need a little break from selling real estate), but I have the financial advantages of an additional mortgage for interest deductions on my tax returns. Additionally, the property is on a rental program, which we manage, for the weeks that the condo is not utilized by us, thereby creating cash flow to help out with the mortgage. The condo is advertised with pictures and information in a couple of Destin web sites that specialize in rentals. It is very inexpensive and very effective. If you want to be more hands off, however, you can enlist the aid of a real estate company to manage the property for you. Depending on the services offered, they will charge anywhere from 20-40% of the gross rental amount collected. Itís a lot to pay, but any bit of extra income generated from rentals will help to defray the condoís expenses. It may even turn out to be more beneficial to have a real estate company handle the rental because the chances of them keeping it rented are far greater than the chances that you will have it leased up by yourself.

The condo that I purchased in Destin is only a 1 Bedroom 1 Bath unit, however, it is directly across the street from the beach in one of Destinís most convenient locations. The unit only cost $78,000, was bought utilizing a loan that gave me a par interest rate that would have been the same as if I was buying a primary residence, was furnished, and has a view (or a glimpse) of the ocean and the neighboring golf course. The monthly mortgage is about $530 and the monthly association fee is $170, giving a total monthly outlay of about $900 when maid service and utilities are taken into account. Presently, the unit is rented out for about $2,000 a month in the summertime and will be rented out to snowbirds who come down from the north in the winter for about $500 per month during the remainder of the year (November-March). Itís only the first year of my experimenting with the market, so there is a lot to be learned and perfected, but I feel confident that this second home will turn out to be a great investment, especially now that the real estate market is booming there and the chances of appreciation, not depreciation, are abundant.


Note: Not all second home situations are the same. Check with your accountant or tax advisor in regards to all of the benefits and risks associated with any real estate investment.



Craig Levine, a top producing realtor with Remax Greater Atlantaís Levine Team, will be licensed, shortly, in Florida to help out with all of your second home investment needs and questions. He has been writing real estate columns for Cobb Living Magazine, The Gazette, Cobbonline, The Seasonal Magazine, and various real estate related web sites since 1995. Craig can be reached at 770-222-7406 or by emailing him at You can also visit his award-winning web site at