Calculate cash flow for second home

A winning formula for investment properties

Let's assume home values are down in the area where you like to vacation. Truth be told, you wouldn't mind retiring there one day. If you bought an investment home now and rented it out, is there any way of knowing if it will appreciate? And, is there a break-even formula to use when considering annual cash flow? One of the better second-home rental formulas now used was developed by Christine Karpinski, author of "How to Rent Vacation Properties by Owner." Karpinski's definition of the break-even point is when all of the income (rent) from your vacation rental property is enough to pay all of the bills associated with ownership of the property. In other words, your vacation home should not cost you another dime after your downpayment. According to Karpinski, if your monthly mortgage payment is equal to or less than one "peak" week rental rate, and if you rent for 17 weeks, then you should be able to achieve positive cash flow. Consider a property that re...