"Stock market woes have always pushed people to look for alternate investments, and real estate is a consistent stronghold," she says. "Yes, home values are down right now but they have always rebounded. I wouldn't recommend buying a second home with the expectation of flipping it for a quick buck, but if you hang onto it for a while -- and better still, turn it into a vacation rental property -- you'll make a nice profit," Karpinski says.

On Dec. 24 Freddie Mac's Primary Mortgage Market Survey revealed 30-year fixed-rate mortgage hadn't been lower since Freddie Mac started the survey in 1971. "Rates have been reasonably low for awhile, following earlier rate cuts toward the beginning of the year. That's good news for anyone who's in the market for a mortgage," Karpinski added.

"Housing bubble or no housing bubble, you're not going to get bargain basement prices on, say, a cottage right on the ocean—but if you're willing to buy a few rows back, you'll likely find that prices have fallen substantially," notes Karpinski. "Because houses aren't flying off the shelf, there's less pressure on you to make a quick decision. You can afford to take your time, do your research, and refine your plan," she added.

Economic pressures on travel budgets are forcing those who once traveled abroad to stick closer to home. To further save travel dollars, domestic travelers want the most bang for their getaway bucks. Vacation homes provide all the comforts and options of home (eating in, game rooms, wirelessness, etc.), often at a per-person rate that's cheaper than a hotel.

Karpinski says, "Vacation homes tend to be less expensive than hotel rooms. This is especially true if you're traveling with extended family or a group of friends. Not incidentally, in many areas of the country, rental demand exceeds supply. The Sunshine State (Florida) is a prime example. Buy a vacation home in a market like Cape Coral, Daytona, Destin, Fort Lauderdale, Indian Rocks Beach, Kissimmee, Madeira Beach, Orlando, Panama City Beach, Sanibel Island, West Palm Beach, or Windsor Hills, and you can't lose."

The weak dollar makes American destinations attractive to European travelers and others holding stronger currencies. Also, business travel continues to generate vacation rental income -- especially when foreign business associates come calling.

"It's a far more comfortable option; plus many companies work out deals with homeowners whereby they can get volume discounts," said Karpinski

When your monthly mortgage payment is less than or equal to one peak week rental, twelve weeks of rental will cover your mortgage payments for the entire year. Other costs, including bills for your phone, power, cable, and association dues, may be paid out of your earnings from approximately five off-week rentals, Karpinski says.

The calculations don't consider the added cost of a property manger you may need if you are not a do-it-yourselfer. Despite the convergence of positive factors pointing to an opportunity to buy a second or vacations home, the fundamentals still apply. Strong credit, low debt, high savings and other assets are a plus.

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  Realty Times Jan 2009