Wealth Insights
Is a second home worth the investment?

Article 6 min read Published October 23, 2025

From rental income potential to hidden costs, here’s what to consider before diving into the vacation home market.

Real estate has long been considered a cornerstone of wealth creation, offering investors a unique combination of stability, income generation, and long-term growth. Investing in a second home may serve as a nice vacation getaway while quietly helping grow your financial future. With the right timing and mindset, turning property into prosperity may be a powerful investment opportunity.

Whether you are thinking about purchasing real estate or have inherited a familial property, there is a lot to consider as it relates to adding real estate to your financial portfolio.

Real estate investment: Is it for you?

“The answer in planning often is, it depends. Your intent and goals must be aligned. Second property considerations include maintenance, property taxes, rental potential, and possibly making a second home into the primary home over time,” says John Chrispens IV, Wealth Planner in Fort Worth, Texas. “Common questions would be: Could this eventually be my primary home? Is this a long-term or short-term investment? If this is going to be legacy, do I want it to be a vacation home or income to future generations?”

Considerations for a second home

Perhaps you’ve been planning to purchase a vacation home for many years, or as we’ve seen more frequently as a result of the Great Wealth Transfer, you’ve inherited money and are considering buying a second home. As Chrispens mentions, there are many considerations when deciding how to invest your money—and it all starts with defining and understanding your unique financial goals.

“Real estate can be a powerful long-term investment, but it also comes with potential risks: interest rate, market, geographic and leverage risks. All should be considered carefully,” Chrispens notes.

Patrick Perry, Wealth Strategist, agrees—and suggests that anyone purchasing a property outside of their primary home consider placing the asset in a separate entity such as a limited liability corporation (LLC), especially if your plans include renting out the property.

If you’re using it as a vacation home with the goal to keep it in the family for generations, Perry asks clients to consider—what does that look like? “This can also be done in an LLC,” he says. “When the time comes to gift interest or pass the property to the next generation, it can offer tax benefits including certain types of valuation discounts, lack of marketability, lack of control discounts. High-net-worth individuals may be able to pass along more to avoid eating into the tax exemption amounts defined by the IRS.”

The downside to holding a vacation property in LLC is in the long-time horizon. “Once dividing into interests through the next generations—from four owners to 20—that can potentially create a problem,” says Perry.

If you are inheriting a second home, some considerations remain the same. But this asset transfer comes with financial questions. How the property was inherited, was it in a separate financial entity, will you be sole owner, does it have to go through probate, and more.

Chrispens notes additional considerations when inheriting a property, which he sees happening fairly frequently. You have to do your due diligence first and foremost, he notes.

“Cost, location, weather—these are all contextual items to understand if you are inheriting a property,” Chrispens says. “The case can be made that selling an inherited property might be a far better decision for the client than to keep it.”

If you intend to keep the property and use it to create passive income, are you seeking long-term renters or short-term renters? Will you manage the property yourself or bring in a management company to handle marketing and maintenance? And can you reasonably afford the costs of the property during down times with little to no rentals?

Engaging with your Regions Wealth team

If you are considering adding a vacation home or second home to your financial portfolio, planners and strategists like Chrispens and Perry can help you navigate the journey by developing and implementing customized financial strategies as a part of an overall plan.