With both real estate prices and mortgage rates as low as they have been in many years, now may be a real good time to look at investing in a second home that could become your retirement home when you decide to pack it in. If you choose the location of your investment home wisely you will be able to rent it out on a weekly, monthly, or seasonal basis to vacationers looking for accommodations in that area.

The rental income can significantly offset the cost of ownership and maybe even make your future retirement home a positive cash flow situation after taking into affect the tax write-off that you get for depreciation and the deductions for maintenance and repairs that you make on the property, all of which will make your life more comfortable at some time in the future too.

According to statistics provided by experts in the vacation rental market the average vacation home rents out for about 17 weeks of the year and generates about $28,000 in rental income. Those are average statistics of course and you’re results could vary significantly depending on the size of the home, its condition, and its location in a prime vacation spot. The good news is that the percentage of vacationers looking for rental homes instead of accommodations in hotel, motel, or resort facilities is increasing.

You will have to do your homework, however. You want to review the markets where demand for rentals is high and inventory is currently low. A few suggested areas where you could start doing your research are Sunny Isles Beach Florida, Hampton Beach New Hampshire, Atlantic City New Jersey and Dauphin Island in Alabama. There are others of course but once you get a feel for the flavor of the areas that vacationers are looking for rents you will be able to expand your search parameters rather easily.

Talk to your accountant about the tax advantages of owning and renting a vacation home and how it would affect your current tax obligations. All of the expenses of owning and operating a vacation home are deductible, and include things like insurance, utilities, maintenance, repairs, and depreciation. Of course owning a vacation home as an investment is a business too. You may have to advertise to attract renters, and you’ll either have to make yourself available, or have reliable service people on hand near the property to do repairs when the need arises.

Depending on how long you have until retirement, the amount of the mortgage on your vacation home, and the income that you can get from it, you may be able to move into your retirement home and get a reverse mortgage big enough to pay off the remaining conventional mortgage balance on the home and let you retire mortgage and rent free for the rest of your life or as long as you stay in that house.