The new millennium has not been good to stocks, bonds, mutual funds and other financial investments. Most investors have found that the best performing asset in their portfolio is their home. Real estate has been a safe haven for investors with appreciation far outpacing other investments. With the security and growing values of residential real estate, a growing number of home owners are now investing in a second home.

There are a wide variety of reasons why people built or buy second homes. City dwellers may want a home in the country for weekends and holidays. Northern may want a home in the sun where they can golf year round; Southerners may want a home in the mountains close to a ski resort. A large number of Baby Boomers are eyeing retirement and are building second homes anticipating it will become their main residence.

The primary reason for owning a second home is still lifestyle, however, the investment consideration comes in a strong second place. There are several reasons why owning a second home makes good financial sense. First, the appreciation of vacation residential property is expected to continue to rise for several years into the future. The changing demographics are a good predictor that second home ownership will continue to be strong for the foreseeable future. Baby Boomers reaching retirement age have more wealth than any previous generation and surveys show that ownership of a second home consistently ranks in the top one or two priorities for this group.

There are also tax benefits to second home ownership. Mortgage interest is deductible for first and second homes making home ownership one of the best leveraged investments. Any profit on the sell of a second home is subject to capital gains, or better yet, if you move into your second home and live there for at least two years, you can avoid any tax on the sell of your property.

With cell phones and high speed Internet, conducting business in a remote location is now a common occurrence. Being at the office full time is not as important as it once was and allows many executives and managers the luxury of using their second home more frequently than once was possible. Real estate has always been a safe investment. With a growing number of reasons why second home ownership makes sense, the demand for good locations and quality homes will rise. It is expected that second home ownership will be as common in the future as two cars are today for most household. Investment in a second home today will certainly be viewed as a wise decision in the future.

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