Owning a vacation home sounds like a dream, but choosing the right location is just as important as finding the right property. Where you buy can impact everything from affordability and financing to your ability to generate rental income. Factors like home prices, cost of living, rental demand, and cap rate (your potential return on investment) can make or break your second-home strategy. While some markets offer strong returns, like North Myrtle Beach, Dauphin Island, and Hatteras Island, others may look appealing but come with hidden costs or limited rental potential if you plan to use it to help generate income eventually.

High-demand destinations can justify premium prices with steady short-term rental income, especially during peak travel seasons. But second homes also come with location-specific challenges: higher down payments, limited tax benefits, seasonal price fluctuations, and varying infrastructure to support tourism. Ultimately, buyers should weigh upfront costs, ongoing expenses, and local rental dynamics before jumping in. A dream vacation home for your family that can be used to generate income down the road is possible, but only if the numbers (and the neighborhood) add up. It is important to talk to trusted real estate experts in the area that you plan to purchase in and also talk to your wealth advisor about how a vacation home could affect your overall financial plan. Read more on this topic from Kiplinger here.

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