Young family arriving at their holiday beach house

Many homeowners purchase a second property to use as a vacation home, rent out to tenants or even keep as a future retirement spot. (Getty Images)

Second homes and properties purchased for investment purposes are big business in the U.S. According to the National Association of Realtors' 2017 Investment & Vacation Home Buyers Survey, about 12% of all home sales in 2017 were acquired for vacation use and 19% for investment purposes. With roughly 6 million properties changing hands each year, 1.8 million are for non-primary use.

The reasons for acquiring a second property are varied – from warm-weather getaways to a consistent source of cold, hard cash – and with each objective, there are specific guidelines, mortgage requirements and tax implications. Let's take a closer look at the deciding factors of whether a second home is in your future.

Vacation Homes

When starting your search for a vacation home, location will likely be your primary focus. Whether you envision fun and sun on the beach or a peaceful mountain hideaway, keep in mind that mortgage lenders often have guidelines for the minimum distance between your primary and vacation properties (usually in the 50- to 100-mile range). According to the NAR report, water is a prime attraction with 57% of vacation homes situated near a beach or lake.

As far as the property itself, you'll want to look for a home that's easy to live in and maintain. If you're passionate about entertaining, having gracious guest quarters, plenty of bathrooms, a big open kitchen and spacious living areas are essential. If peace and seclusion are your preference, you can save on interior square footage and invest instead in a larger, more private lot.

Second homes receive the same tax deduction benefits as primary residences, but your mortgage down payment requirement will be higher. For both mortgage and tax deduction purposes, vacation homes are subject to strict rules regarding if and for how long they can be rented to others.

Of course, you must factor in all the expenses maintaining a second household entails, including all furnishings and housewares (down to two sets of toothbrushes), utilities and insurance, maintenance and caretaker fees, any homeowners association dues and don't forget the cost of travel to and from your new retreat.

[Read: 5 Ways to Keep Your Vacation Home Safe When You're Away]

Second "Primary" Homes

Whether for work or family obligations, or a just thirst for variety, many people prefer to live in two places at once. Rather than serving as a vacation getaway, their second home caters to everyday life, work and responsibilities. It's a pied-à-terre, or a "foot on the ground" as the French – and New Yorkers – would say.

Second homes used in this way are typically more modest than a primary residence, especially if they're used by just one member of the household rather than the whole family. A cozy bedroom is important, and a fully functional kitchen will save on dining expenses, but living spaces can be smaller or fewer.

Even if it's a bit simpler than your primary house, the vibe should be welcoming and relaxing – somewhere you'll be happy to arrive after long commutes between your two locations. Look for options within easy reach of your preferred transportation hub, and close to your office or local obligations. Condominiums and lock-and-leave communities are ideal for this use due to their security and maintenance provisions.

Many of the expenses, mortgage and tax ramifications for a vacation home apply in this category, but keep an eye out for any HOA or co-op board regulations that may frown upon pied-à-terre usage.

Retirement Home

Moving to a less expensive area, or one with ideal weather, is a common plan for many Americans approaching retirement. For those who know where they want to move, this can mean several years of accruing rental income or equity on a retirement home purchased well before retirement age.

Mortgage rates are still low, so securing a loan now could have significant benefits down the line. Getting approved for a home loan while still employed is also infinitely easier than when you're not. Do some serious number crunching to assess your ability to pay for the home after you retire, any changes in tax considerations between your current and future address, plus the upkeep and income taxes involved in the meantime.

[See: The Best Places to Retire in 2019.]

Areas with good weather, a reasonable cost of living, ample local shops and services, and convenient public transit are preferable. As for the type of property, whether you'll be renting it out or using it as a vacation home will have an impact on your choice. If so, make sure that usage is in line with any mortgage or HOA requirements.

Mobility and accessibility are huge concerns for older homeowners, so be sure to choose a residence in keeping with universal design standards, meaning it can be used and enjoyed with people of all ages and abilities. That includes a single-level layout or elevator access throughout, wide hallways, bathrooms with grips and wet room showers, accessible appliances and closets and so on.

Housing for Children or Students

As children go off to college or leave home to start their new lives, you may be inclined to assist with their housing costs, whether your motivations are as a caring parent or a shrewd investor. Helping your kids buy a home as young adults can impart financial lessons that will last a lifetime, and compared to throwing money at dorm fees or expensive rentals, it's a move that can actually save money over the long term or even cover tuitions costs in just a four-year stint.

Students will gain the stability of not having to move each year or store belongings over the summer. On the downside, they'll potentially lose the flexibility of changing schools or seeking employment in a new city, and of course, real estate investing isn't always a guaranteed success.

When seeking a home for students or young adults living on their own for the first time, you'll want to emphasize safety, proximity to school or work, long-term local employment prospects, and the potential strength of the area rental or sales market. Keep in mind that some HOAs, co-ops and condominiums don't permit parents buying for children or co-purchases.

No matter how you go about acquiring a home for your children, make sure the ownership arrangements, maintenance and financial responsibilities of all parties are clearly spelled out, both in the long and short term. Be sure to speak to a qualified attorney or financial advisor to determine how best to structure the purchase, keeping in mind the ramifications of cosigning a mortgage as well as applicable gift or estate tax regulations.

Investment Property

If you're searching for a property purely for investment purposes, look at it as just that: not as a home, but as a financial venture. For a rental, look for a property in move-in-ready condition in a strong rental market with a good likelihood of appreciation down the line. If you're planning to flip, a fixer-upper with a bargain-basement price is your target. Examine the property tax rates, the quality of the local schools and the health of the area job market, then check out how long sales or rentals are sitting on the market.

With either a rental or flip, keep a close eye on financials; investment property loans have more stringent requirements and higher down payments than primary or even secondary residential mortgages. You're responsible for short-term capital gains for your flip profits and income taxes for your rental income, plus you'll need to cover utilities until your property sells or rents and have insurance in place for the duration of your ownership.

[Read: What Airbnb Means for Your Mortgage]

In general, buyers of second homes report that their non-primary properties are smaller and less expensive than their primary homes. Second homes are also more likely to be a townhouse, condominium or other multifamily arrangements. No matter the size or location of a second home or investment property, the advice of a skilled real estate professional is still important, especially because you will not know the specific local market conditions and idiosyncrasies as well as you do where you live full-time.


The 20 Best Places to Live in the U.S. for the Weather in 2019

Avoid the extremes in these metro areas.

(Getty Images)

How you take to the weather where you live can be a major factor in how much you enjoy living there. U.S. News went on the hunt for the metro areas – out of the 125 largest in the U.S. considered for the Best Places to Live rankings – that offer the most moderate temperatures and plenty of sunshine. Data is from the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information, and it factors in the average number of cloudy days and the average number of days above 90 degrees or below 32 degrees Fahrenheit. Those with the fewest cloudy days and the most balanced temperatures made our list. Read on for the Best Places to Live in the U.S. for the Weather.

20. Little Rock, Arkansas

20. Little Rock, Arkansas

Little Rock, AR, USA - June 12, 2015: View of W Markham Street in downtown Little Rock city, Arkinsas

(Getty Images)

Best Places 2019 Rank: 88
Metro Population: 730,346
Median Home Price: $147,150
Median Annual Salary: $43,780
Days Below Freezing: 55
Days Above 90 Degrees: 75
Mean Number of Clear or Partly Cloudy Days: 219

The capital of Arkansas typically has 55 days with lows below 32 degrees and 75 days above 90 degrees during the year. With 219 days of clear or partly cloudy skies, there are plenty of opportunities for residents to enjoy the weather in Little Rock.

Learn more about Little Rock.

18. Memphis, Tennessee (tie)

18. Memphis, Tennessee (tie)

"The Historic Main Street Trolley in Memphis, Tennessee, with buildings, an elegant station, and water fountains in the background."

(Getty Images)

Best Places 2019 Rank: 118
Metro Population: 1,344,058
Median Home Price: $151,900
Median Annual Salary: $43,590
Days Below Freezing: 53
Days Above 90 Degrees: 68
Mean Number of Clear or Partly Cloudy Days: 214

Tied with the next place on the list and located along the Mississippi River in southwestern Tennessee, Memphis offers residents an average of 53 days with a low temperature below freezing and 68 days that peak above 90 degrees.

Learn more about Memphis.

18. Greenville, South Carolina (tie)

18. Greenville, South Carolina (tie)

Greenville, South Carolina, USA downtown buildings.

(Getty Images)

Best Places 2019 Rank: 22
Metro Population: 872,463
Median Home Price: $172,067
Median Annual Salary: $43,230
Days Below Freezing: 61
Days Above 90 Degrees: 40
Mean Number of Clear or Partly Cloudy Days: 221

Located in the northwestern portion of South Carolina, Greenville enjoys milder weather partly due to its proximity to the Blue Ridge Mountains. Of the 221 days residents can spot some sun throughout the year, a little over half are clear days, with an average of 100 partly cloudy days.

Learn more about Greenville.

17. Birmingham, Alabama

17. Birmingham, Alabama

Birmingham skyline at twilight, Birmingham, Alabama, United States of America, North America

(Getty Images)

Best Places 2019 Rank: 89
Metro Population: 1,144,097
Median Home Price: $171,450
Median Annual Salary: $47,300
Days Below Freezing: 51
Days Above 90 Degrees: 61
Mean Number of Clear or Partly Cloudy Days: 210

Birmingham comes in at No. 17 with a decent number of both hot and cold days, although residents experience, on average, 10 more days above 90 degrees during the year than they endure temperatures below 32 degrees. With 155 completely cloudy days out of the year, Birmingham residents typically see just 99 fully clear days annually.

Learn more about Birmingham.

15. Modesto, California (tie)

15. Modesto, California (tie)

Sunset light on magnificent oaks growing along Dry Creek in Modesto, California.

(Getty Images)

Best Places 2019 Rank: 120
Metro Population: 803,074
Median Home Price: $289,168
Median Annual Salary: $46,176
Days Below Freezing: 22
Days Above 90 Degrees: 82
Mean Number of Clear or Partly Cloudy Days: 261

Modesto enjoys a good deal of days above 90 degrees, with 82 hot days a year, on average. But cold nights are far less frequent. The Modesto area typically hits freezing temperatures or below 22 days throughout the year.

Learn more about Modesto.

15. Stockton, California (tie)

15. Stockton, California (tie)

Webber Point Silhoutted Red Sunset Reflection, Stockton Callifornia

(Getty Images)

Best Places 2019 Rank: 123
Metro Population: 724,153
Median Home Price: $352,350
Median Annual Salary: $46,770
Days Below Freezing: 22
Days Above 90 Degrees: 82
Mean Number of Clear or Partly Cloudy Days: 261

Similar in population size to Modesto, neighboring Stockton also occupies the No. 15 spot. With an average of only 104 cloudy days per year, residents are lucky enough to enjoy some sun more than 70 percent of the year.

Learn more about Stockton.

14. Sacramento, California

14. Sacramento, California

Clouds over cityscape of Downtown Sacramento at sunset.

(Getty Images)

Best Places 2019 Rank: 82
Metro Population: 2,268,005
Median Home Price: $389,858
Median Annual Salary: $55,010
Days Below Freezing: 18
Days Above 90 Degrees: 73
Mean Number of Clear or Partly Cloudy Days: 265

A bit milder on both the cold and hot ends of the spectrum, Sacramento is about 75 miles north of Stockton and Modesto. The Northern California metro area – and the state’s capital city – averages 265 clear or partly cloudy days per year.

Learn more about Sacramento.

13. San Juan, Puerto Rico

13. San Juan, Puerto Rico

Cheap beach vacations

(Getty Images)

Best Places 2019 Rank: 125
Metro Population: 2,193,264
Median Home Value: $124,200*
Median Annual Salary: $29,820
Days Below Freezing: 0
Days Above 90 Degrees: 65
Mean Number of Clear or Partly Cloudy Days: 276

Puerto Rico’s capital city sees 65 days that hit above 90 degrees but no days dipping below freezing temperatures. San Juan’s location in the Caribbean means it has an elevated risk of storms during hurricane season. But those storms certainly aren’t the whole story, as the San Juan area averages 276 clear or partly cloudy days annually.

Learn more about San Juan.

(*The median home price for San Juan was not available, so median home value per Data USA is listed.)

12. Myrtle Beach, South Carolina

12. Myrtle Beach, South Carolina

Myrtle Beach South Carolina aerial view at sunset

(Getty Images)

Best Places 2019 Rank: 75
Metro Population: 432,772
Median Home Price: $181,800
Median Annual Salary: $35,890
Days Below Freezing: 41
Days Above 90 Degrees: 44
Mean Number of Clear or Partly Cloudy Days: 215

The popular tourist destination in coastal South Carolina doesn’t reach above 90 degrees more than 44 days a year, on average. Still, residents and visitors don’t have to worry about too many gloomy days – typically 215 days per year are either clear or partly cloudy.

Learn more about Myrtle Beach.

11. Fayetteville, Arkansas

11. Fayetteville, Arkansas

Houses in a neighborhood in Arkansas

(Getty Images)

Best Places 2019 Rank: 4
Metro Population: 514,166
Median Home Price: $177,942
Median Annual Salary: $45,830
Days Below Freezing: 72
Days Above 90 Degrees: 77
Mean Number of Clear or Partly Cloudy Days: 218

This Arkansas metro area has roughly 30 more cold and hot days per year than Myrtle Beach, but the weather extremes balance each other out. Additionally, Fayetteville sees three more clear or partly cloudy days per year.

Learn more about Fayetteville.

10. Atlanta

10. Atlanta

Atlanta, Georgia, USA downtown city skyline.

(Getty Images)

Best Places 2019 Rank: 57
Metro Population: 5,700,990
Median Home Price: $209,658
Median Annual Salary: $51,390
Days Below Freezing: 44
Days Above 90 Degrees: 43
Mean Number of Clear or Partly Cloudy Days: 217

Atlanta gets some cool nights and its fair share of hot days, but those almost completely cancel each other out across an entire year. With an average of 149 cloudy days per year, Georgia’s capital has more gloomy days than others on the list, but the sun is certainly present most days.

Read more about Atlanta.

9. Tulsa, Oklahoma

9. Tulsa, Oklahoma

Tulsa downtown skyline with trees and the Arkansas river in the foreground.

(Getty Images)

Best Places 2019 Rank: 83
Metro Population: 977,869
Median Home Price: $149,000
Median Annual Salary: $45,260
Days Below Freezing: 76
Days Above 90 Degrees: 73
Mean Number of Clear or Partly Cloudy Days: 235

The first of two Oklahoma metro areas on the list, Tulsa comes in at No. 9 with a difference of just three days between the average nights dipping below freezing and average days peaking at 90 degrees or above.

Learn more about Tulsa.

8. Oklahoma City

8. Oklahoma City

(Getty Images)

Best Places 2019 Rank: 68
Metro Population: 1,353,504
Median Home Price: $150,925
Median Annual Salary: $46,070
Days Below Freezing: 76
Days Above 90 Degrees: 71
Mean Number of Clear or Partly Cloudy Days: 235

While Oklahoma City experiences plenty of cold nights and hot days, a near-even balance between the two makes either extreme seem more tolerable for a full year. Of those 235 days where residents see at least some sun, 139 of those, on average, are completely clear.

Learn more about Oklahoma City.

7. Los Angeles

7. Los Angeles

Downtown Los Angeles at sunset.

(Getty Images)

Best Places 2019 Rank: 107
Metro Population: 18,585,594
Median Home Price: $526,214
Median Annual Salary: $53,803
Days Below Freezing: 0
Days Above 90 Degrees: 21
Mean Number of Clear or Partly Cloudy Days: 263

Not the only SoCal metro area on the list, Los Angeles averages just 103 cloudy days per year. With no nights of freezing temperatures and 21 days over 90 degrees, the City of Angels makes for a great place to enjoy warm weather without extremes.

Learn more about Los Angeles.

6. Honolulu

6. Honolulu

Typical picturesque sunset along Waikiki Beach with hundreds gathering to watch

(Getty Images)

Best Places 2019 Rank: 60
Metro Population: 990,060
Median Home Price: $581,658
Median Annual Salary: $54,030
Days Below Freezing: 0
Days Above 90 Degrees: 24
Mean Number of Clear or Partly Cloudy Days: 271

That tropical vacation wasn’t too good to be true – Hawaii’s weather really is that nice all the time. Honolulu’s island location is the perfect spot if you want to avoid freezing lows at night while experiencing just a handful of days above 90 degrees.

Learn more about Honolulu.

4. San Jose, California (tie)

4. San Jose, California (tie)

Mixed-use european style buildings of the upscale Santa Row shopping district in San Jose, California.

(Getty Images)

Best Places 2019 Rank: 14
Metro Population: 1,969,897
Median Home Price: $1,080,017
Median Annual Salary: $77,180
Days Below Freezing: 0
Days Above 90 Degrees: 2
Mean Number of Clear or Partly Cloudy Days: 260

Tied for fourth place with a close Bay Area neighbor, San Jose averages only two days above 90 degrees per year and doesn’t experience any freezing temperatures. It’s no wonder the city is the capital of Silicon Valley – tech startups can’t resist the ideal weather.

Learn more about San Jose.

4. San Francisco (tie)

4. San Francisco (tie)

Aerial view of San Francisco and the Oakland Bay Bridge. See other photos from USA:

(Getty Images)

Best Places 2019 Rank: 7
Metro Population: 4,641,820
Median Home Price: $768,517
Median Annual Salary: $69,700
Days Below Freezing: 0
Days Above 90 Degrees: 2
Mean Number of Clear or Partly Cloudy Days: 260

Known for its rolling fog, San Francisco coming in at No. 4 may be a surprise. But that fog often burns off by the afternoon – and 260 days out of the year are typically clear or partly cloudy.

Learn more about San Francisco.

3. San Diego

3. San Diego

Last minute vacation in San Diego, United States

(Getty Images)

Best Places 2019 Rank: 36
Metro Population: 3,283,665
Median Home Price: $555,325
Median Annual Salary: $56,410
Days Below Freezing: 0
Days Above 90 Degrees: 3
Mean Number of Clear or Partly Cloudy Days: 263

With no freezing days and an average of just three days over 90 degrees, San Diego is No. 3 on the list of Best Places to Live in the U.S. for the Weather. And with just 102 cloudy days per year on average, you’ll be spending plenty of time on the beach enjoying the blue skies and sunshine.

Learn more about San Diego.

2. Salinas, California

2. Salinas, California

"Agricultural lands ready to be planted in the Salinas Valley, California USA"

(Getty Images)

Best Places 2019 Rank: 117
Metro Population: 433,168
Median Home Price: $581,342
Median Annual Salary: $48,290
Days Below Freezing: 6
Days Above 90 Degrees: 3
Mean Number of Clear or Partly Cloudy Days: 267

Located just inland from Monterey Bay and south of the San Francisco Bay Area, Salinas offers residents only six nights below freezing and three above 90 degrees, on average, throughout the year.

Learn more about Salinas.

1. Santa Barbara, California

1. Santa Barbara, California

Girls getaway

(Getty Images)

Best Places 2019 Rank: 73
Metro Population: 442,996
Median Home Price: $463,750
Median Annual Salary: $54,320
Days Below Freezing: 6
Days Above 90 Degrees: 3
Mean Number of Clear or Partly Cloudy Days: 286

A little northwest of Los Angeles along the California coast, Santa Barbara benefits from beach breezes and the beauty of Los Padres National Forest. With as few as 79 cloudy days per year, on average, Santa Barbara tops the list of Best Places to Live in the U.S. for the Weather.

Learn more about Santa Barbara.

The Best Places to Live in the U.S. for the Weather include:

The Best Places to Live in the U.S. for the Weather include:

USA, Florida, Stuart, Aerial view of suburbs

(Getty Images)

  • Santa Barbara, California
  • Salinas, California
  • San Diego
  • San Francisco
  • San Jose, California
  • Honolulu
  • Los Angeles
  • Oklahoma City
  • Tulsa, Oklahoma
  • Atlanta
  • Fayetteville, Arkansas
  • Myrtle Beach, South Carolina
  • San Juan, Puerto Rico
  • Sacramento, California
  • Stockton, California
  • Modesto, California
  • Birmingham, Alabama
  • Greenville, South Carolina
  • Memphis, Tennessee
  • Little Rock, Arkansas

Read More

Tags: real estate, housing, housing market, home prices, existing home sales, pending home sales, new home sales, vacations, vacation rentals, investing


Lisa Larson is a licensed associate real estate broker for Warburg Realty in New York City. Ranking as a Top 5 broker firm-wide for each of the past four years, including Warburg Realty's No. 1 Top Producer in 2017, her strong command of the market has led her to sell an average of $50 million in residential sales per year.

Larson has appeared in The New York Times, Wall Street Journal, The Real Deal and other top-tier outlets for her industry insights and expertise. Recognized among her peers for her eye for design, she has bought, renovated and sold apartments and homes in New York City, San Francisco, Chicago and Nantucket, providing her an acute insight into the needs of buyers and sellers alike.

Lisa holds a Master's degree in History and was a member of the Division I cross-country and track teams at the University of California, Berkeley. Larson also remains actively involved with various charitable foundations, neighborhood associations and at both of her children's schools, and serves as a director on the board of the USA Track & Field Association.

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