Your Colorado Mountain Home as an Investment

Second home investment should be viewed as a way to make money over the long-term. Real estate is very cyclical with housing “bubbles” expanding, sometimes rapidly, and then just as suddenly decompressing. If you highly leverage the purchase expecting a fast profit, you can really blow yourself up.

You need to understand the investment you’re making with a second home and have a clear plan of how that new property will be paid for and possibly generate income for you.

Second homes can earn steady, though probably modest, income – allowing you to hold a tangible asset that will most likely rebound.

Keep these points in mind:

1. Enjoyment of your second home should take precedence over any profit potential.

2. Taking a long-term approach to real estate investing will protect you from the volatility of both the real estate market and other, riskier investment vehicles.

3. Do your homework. It’s possible to find a second home that will provide income and likely appreciate in value for that day when you decide to sell it or retire and move to it.

This may not be the best time to ask this question, but for those who bought your second home as an investment – how has that worked out for you?

–Editor’s note: Tom Harris is the principal of Colorado Lifestyle Real Estate, which connects second home buyers and sellers with the top Realtors in Colorado resort towns. He will be blogging about Colorado’s real estate market for CH&L each week.