Buying a second home as rental property makes a great
centerpiece to your retirement plan. It forces you to make regular savings in
the form of mortgage payments that become your equity.
You only need cash for the down payment, and you should make sure that
your monthly rental payments will cover the mortgage and any additional
expenses. This is a real possibility if you buy the right house at the right
price because a good single-family house should always stay rented. Your
investment money is subject to less income tax, and the interest and property
taxes may be deductible.
Housing has appreciated in value all over the country in recent years,
making a second home an important hedge against inflation. Most experts predict
that interest rates for fixed-rate and adjustable mortgages should remain in
single digits for the foreseeable future, so it should be easy to acquire
financing with a small down payment.