Lastly, be aware of the added costs associated with owning a second home. You may need to pay a handyman, for example, if you don’t live close enough to fix leaky pipes or leaf blow yourself, and flood insurance is often required for properties near the water.
“I am not a huge fan of buying second homes, but I am a big advocate of investment properties,” Bera said. “Usually people don’t use their second homes enough to justify the costs. It would be cheaper for them to rent a furnished apartment for a few months a year and then change locations if they decide to try a different country, city or apartment for a while.”
3. The value investment play may have already peaked, so scrutinize deal pricing closely.
With interest rates still historically low, buyers who can afford the costs of owning a rental property may be wise to act now before rates and prices head higher, Bera said.
Yet despite strong rental demand in many markets, investment-home sales have been less robust.
The sale of residential properties purchased primarily to produce rental income, or for potential price appreciation, declined in 2014 for the fourth straight year as rising home prices and fewer distressed properties coming onto the market have reduced the number of bargains available to turn into profitable rentals.
Even so, 68 percent of investment buyers surveyed by NAR indicated they are “very” or “somewhat likely” to buy another investment property in the next two years.
So the iron may be hot for buying a second home, but that doesn’t mean it’s right for you. Before you saddle yourself with another mortgage, make sure you factor in your other financial goals, research the market carefully, and crunch the numbers to be sure you can comfortably afford the costs.
“What’s more important is what’s going on in your personal economy rather than the U.S. economy,” Bera said.
—By Shelly Schwartz, special to CNBC.com