NEW YORK (TheStreet) -- Sales of second homes are up -- way up -- as vacation homebuyers look to profit from what they see as an improving U.S. economy.
Last year, vacation home sales rose by 29.7%, mostly from affluent buyers looking either for a second home to live in or rent out.
"Growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property," says Lawrence Yun, chief economist at the National Association of Realtors. "However, vacation-home sales are still about one-third below the peak activity seen in 2006."
What Yun doesn't say is that mortgage rates continue to be low relative to historical terms, giving buyers another good reason to invest in a home rental property. Thirty-year fixed mortgage rates fell again this week, to 4.26% from 4.29%, according to BankingMyWay.com.
If you take advantage of a growing economy and lower mortgage rates to buy a vacation home, make sure you go into the deal with your eyes wide open. In other words, just because you buy a vacation property doesn't mean you'll necessarily make money on it.
You can improve your profit potential dramatically by taking a few key steps in the homebuying and the management process.
So says Tom Gilmore, founder and chief executive at VacationHomeRentals.com, who offers five tips to maximizing profits from a vacation home rental: