If you are thinking about buying a second or vacation home, first read Tom Kelly and John Tuccillo’s “How a Second Home Can Be Your Best Investment.” This new book is filled with ideas and alternatives you might never have considered.

The book’s basic approach is to look at the purchase of a second or vacation home primarily as an investment property and secondarily as a property for personal enjoyment. Throughout the book there are dozens of examples to illustrate the considerations involved in second or vacation house or condo investments.

Purchase Bob Bruss reports online.

But don’t get discouraged by the out-of-place second chapter. After the first chapter gets off to a great start explaining the benefits of owning a second or vacation home, the next chapter makes a sharp 45-degree turn by unexpectedly switching to a discussion of tax-deferred exchanges (incorrectly called tax-free exchanges) and tax-free principal residence sales.

What were the authors thinking? Fortunately, the book then gets back on track in the next chapter discussing how to find and acquire a potentially profitable and affordable second or vacation home. Because the book’s emphasis is on investment potential, Kelly and Tuccillo focus on making money rather than buying for personal enjoyment.

The authors emphasize the importance of renting the property to help pay the expenses when the owners aren’t using it. Then they warn of the possible rental pitfalls and how to minimize them.

My favorite line in the entire book is: “The renters are paying for your asset, but remember, nobody ever washed a rented car.” In other words, don’t expect too much of your renters.

But Kelly and Tuccillo gloss-over the critical tax laws affecting the tax benefits the second-home investor can enjoy. More clarity would have been welcome as to the critical rental and personal use tax categories.

Because the book’s emphasis is on investment benefits of second or vacation homes, about one-fourth of the book is devoted to market-value appreciation strategies. In addition to choosing a location that is likely to appreciate over time, attention is paid to improvements that are likely to add market value and even advice for subdividing the property.

The book concludes with a discussion of why 75 million “baby boomers” are almost certain to increase demand for second or vacation homes, thus likely increasing investor’s profits. The Appendix contains useful Internet resources for second- and vacation-home buyers.

Chapter topics include “A Lifelong, Tax-Free, Second-Home Ownership Strategy”; “Linking the Key Ingredients: Tax-Free Exchanges and Exemptions Can Save You Thousands”; “Balancing Dreams, Affordability, and Investment Potential”; “Proven How-To Avenues for Finding a Good Deal on Your New Second Home”; “Can’t Afford That Getaway? Eleven Overlooked Financing Options”; “Realty Check: What to Look for in a Community”; “Turning Your Vacation Home into a Cash-Cow Rental”; “Seven Methods for Marketing and Advertising”; “Choosing a Location That Will Appreciate Over Time”; and “Improvements That Will Pay for Themselves Over Time.”

Although this new book is far from perfect, it offers valuable insight into the many considerations of buying a second or vacation home both for personal use and as an investment. The abundant examples add realism lacking from many real estate books. It is a profitable read for individuals considering a second or vacation home purchase. On my scale of one to 10, this provocative book rates a 10.

“How a Second Home Can Be Your Best Investment,” by Tom Kelly and John Tuccillo (McGraw-Hill, New York), 2004, $16.95, 199 pages; available in stock or by special order at local bookstores, public libraries and www.amazon.com.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

Send tips, feedback or a letter to the editor to newsroom@inman.com or call (510) 658-9252, ext. 124.

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