Is a second home ever a good investment?

[Stephanie Sherman]

Hi all, 

I am still very new to this and in the education/information gathering phase. I'm wondering if it's ever a good investment to buy a second home/vacation home? My family and I have a favorite town on the Oregon coast. What I'm imagining is buying a home there that we can stay in several times a year and renting it through Airbnb and/or VRBO when we aren't using it. I'm wondering how we would work up the numbers to find out how much we could spend, and how to find out what percentage of the time it would be occupied. This wouldn't be for the sole purpose of investing/wealth-building, but the combined purpose of investing in real estate while also having a place to enjoy. Give it to me straight! If this is just a bad choice investment-wise I'll keep renting.

[Daniel Smith]

Stephanie Sherman
Couple of factors here. You can use your second home for up to 14 days per year as a personal vacation home and still claim depreciation on it. Rent it out the rest of the year via Airbnb or any other outlet to help cover expenses.

Conversely you could not worry about claiming it as an investment property and simply use it as a second home. In that scenario you could deduct property taxes and interest on your tax return just as with your primary residence. You can rent it up to 14 days a year as tax-free extra income.

Good luck!