Tom, I just bought a second and third home as an investment. At this time, we are going to rent them out but in the future, when we are both retired, we would love to live in the middle of the new hottest center city on the planet.

The cost was very low - studio condos in a renovated circa 1922 hotel and they are in high demand by students at three medical schools in the neighborhood as well as three major universities within two miles. Its location is in the middle of all of the theaters, concert halls, restaurants, clubs and high-end bars in a city that is enjoying a renaissance and is surging in property values while real estate taxes remain among the lowest in the Northeast per $1000 assessed value. We were thinking of buying a third one but when I figured out the cost of a mortgage plus expenses, it didn't make the sense that buying for cash did. So, we will stop at two for now. A drop in the mortgage rate could reverse that decision.

It is funny how this purchase takes me full circle. The view from the window of one of the units is Philadelphia's Academy of Music, the City's old orchestra and opera venue. Over fifty years ago, I performed there with the children's orchestra and was captivated by its nineteenth century opulence. Today, it has been replaced by a new and marvelous venue that will never have the same aura. It is simply a building.

From the window of the other unit, you can see the spot on the street where a famous murder of a police officer took place. It occurred about two dozen years ago but still makes the headlines every time the perpetrator appeals and wins a new hearing. The street was like the OK Corral back then but is fully gentrified now. Now, only the best people would be murdered there.

Milt - sounds like you have a very good plan in place. Getting income on these condos until you are ready to retire is very savvy.

I bought a second home in the Sierra Nevada foothills ten years ago at the bottom of the housing market. It's right on a private golf course, of which I am now a member, and 26 miles from skiing in the winter. The only problem is that it's a three+ hour drive to get there.

Regarding the appreciation, it's hard to tell, of course, what a home is worth until you try to actually sell it. And with the sub-prime problems, I don't know how well second homes have held up locally. But at one point it was up nearly 4X over my purchase price, according to Zillow. Not bad considering that I own it free and clear after refinancing my primary residence.

To early to say yet, currently have a management company trying to rent it...

Just herd from our management company that our 2nd home is now rented! The new tenants move in on the 1st and have signed a 1yr lease. The home was listed for a little over a month and I will keep everyone posted as things unfold...

UPDATE 4-20-09

Things are going ok so far. Tenants have been in the home since Jan. 1st and the rent checks are arriving on time from my management company. Not quite flowing positive on the cash flow but I intend to raise the rent next year and use the negative at tax time.

Do poeople think now is a good time to purchase a second home? If yes, Why?

I had a second home - actually a duplex for twenty years and made very little money on it. It would have been better to buy a single family home. It would have appreciated a lot faster, but that is history.

We are always looking a real estate and about five years ago we found a 2 bedroom year around house on a lake for 55k. It was a great price and we love it and may retire there some day. Best of all it is only 15 minutes away - a great advantage in these high fuel price times. We use it and our kids use it and it has been great. There have been some expenses. We had to put in city sewer a few years ago, but now we do not have to worry about a septic system We added a gas fireplace insert and a new roof. In all, we probably have spent 15k on upgrades. The house itself should sell now for about 150k. Not a bad return over 5 years.