HOW TO: AFFORD A SECOND HOME

McClatchy Newspapers

Published Sunday, September 21, 2008

When Curtis Stanley bought a second home as a vacation property, he had no intention of renting it out. But two mortgages can cramp a style in even the best economy. “I quickly realized that if I wanted to fix it up and make improvements, I would have to rent it out to offset the cost of remodeling,” he said.

Ted LeVin rents out his vacation lake home near Hayward, Wis., about two hours from the Twin Cities. “This year we were almost fully booked for the peak summer season by January,” said LeVin. “Normally, it’s not rented until March.”

LeVin and his wife, Jill, visited many bed-and-breakfast inns for inspiration and tried to furnish their place comfortably and in an upscale manner. “We want people to feel as if they’re stepping into a real house, not a sterile rental,” said Ted. That meant furnishing the kitchen with a lot of utensils and a double convection oven. The couple has had renters say it’s better equipped than what they’re used to at home.

POTENTIAL PROBLEMS

For many owners who have furnished their second homes as nicely or even nicer than their primary ones, surrendering it to strangers is a big leap of faith. Anyone new to being a landlord worries about the “trash” factor. Vacation-home owners assume that strangers will trash their property.

Both the Stanleys and the LeVins stress that they “pre-qualify” their renters. Potential guests find their properties listed on VRBO.com or Homeaway.com, two of the most popular vacation home rental sites. Interested renters send an e-mail inquiry, but conscientious property owners have learned to pick up the phone and talk to the potential guests.

For Lynn Cattrysse of Mounds View, Minn., the problem wasn’t the renters, it was the management company. She and her husband bought a condo in Cocoa Beach, Fla., for their daughter while she was in school. One management company said a first-floor condo was undesirable, so they settled for 30 percent occupancy.

LESSONS LEARNED

The Cattrysses eventually found a property manager they liked, but many second-home owners list their properties on sites such as Homeaway.com and then handle the rentals themselves.

Are owners quitting their jobs and living off rental income? Hardly. Don’t expect to make tons of money renting out your second home, owners say, but with a solid rental history and tax benefits, many owners should be able to break even or go slightly into the black.