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Investing in a Vacation Home isn’t Without Risk

(News Item #0192, Published: 12/28/03, Author: Shirley Ruedy, Cedar City Iowa GazetteOnline.com)

Real estate and financial experts say it takes a savvy homeowner to make a vacation home work as an investment. Nationwide, only about 15-22% of people who own second homes do so for the investment. (Most of those homes are in resort areas, with beaches being the favorite site.)

"If a client came to me with this idea, I would have to caution them about all the risks involved" - Janet Beal, certified financial planner with Securian Advisors of Hiawatha.

Beal says she lived in Florida for almost 20 yrs. And managed a vacation condo for a group of investors.

"The revenue fluctuated from year to year, depending on the national economy, and expenses were much higher than originally thought" Upkeep was pretty significant.

Lynda Traverso of VIP Realty on Sanibel Island, Florida., says that up to 80% of her clients buy "for vacation home, but rent out the rest of the year."

"You make money when you sell, not on a monthly basis," . . "The key is keeping it mice, staying in touch with past renters and having a presence on the Internet. If you want to make top dollar, you make your own bookings."

Mike Esker, commercial Realtor with Coldwell Banker Hedges in Cedar Rapids, points to examples closer to home. He says that private individuals who own vacation rental homes at such popular Midwest spots as Lake Okoboji in NW Iowa and Galena, IL are successful, too.

"The percentage of retirement funds you should invest depends on your overall goals and your risk tolerance", he says (Mike Esker)

"In the past two to three years, secondary home prices have gone up much quicker than primary homes," says William May, director of the Vacation Rental Industry Association, a trade group based in Seattle.

"People are buying and finding they can make a profit". . " The underlying rationale for owners is they can have their cake and eat it, too. It makes time shares pale in comparison." -- William May