If you enjoy an annual vacation but are not thrilled with the prospect of blowing oodles of cash on lodging each year, you might want to consider buying your own vacation property. More and more homeowners are using the equity accumulated during the recent bull market in real estate to purchase second homes. Leveraging one asset to acquire another can be a solid investment strategy, and lenders are more flexible than ever before about financing those who want to purchase another home.

Banks tend to scrutinize credit reports and income documentation more stringently when you borrow to buy a second home because they want to ensure that both of your mortgage obligations can be met without a problem. And they may require a larger down payment and charge higher loan origination fees than they did when you bought your primary residence. Nevertheless, many homeowners qualify easily, especially if they have a high credit score. And with the potential to profit from your purchase through equity appreciation, the purchase can be a savvy investment.

You may also have a chance to earn monthly rental income, even if your tenants are within your own circle of friends and known business associates. By buying a nice vacation property, you can solve your own vacation lodging problems immediately, and then share the location with people you know, by renting to them as their landlord when you aren’t using it. For those who plan to use the second home as an income-producing property, there are also available tax deductions. As a landlord, you can usually deduct such things as repairs, utilities and even routine trips you take to visit your property and check on its upkeep.

Many investors combine their use of the second home, so that it is rented or leased sometimes, and at other times it is used as a personal vacation home. At times your beachfront condo is a vacation rental property, and at other times it is your own private getaway. When you aren’t making money by leasing it to others, you save money by not having to pay for hotel lodging at vacation time. A qualified tax planner can help you find all of the various tax advantages to spending your vacations in your own second home.

For example, a woman who owns a vacation condo might decide to synchronize her travel schedule to and from the property. She might fly to her vacation destination in order to oversee her landlord-related business (inspecting repairs or checking on condo tenants, for instance). And at the end of her work-related visit, her girlfriend might fly into town to join her for the start of a long vacation, at the same condo, after the tenants move out and turn over the keys. In that way it might be possible to offset the cost of some of her vacation travel, by taking legitimate business travel deductions.

To help you get a loan for an income-producing second home, it is a good idea to present your lender with a thorough business plan and any documentation that illustrates the practical income potential of the property. If the previous owner made a profit each year by renting it out as a holiday retreat in the summertime, your lender will be more inclined to have confidence in your own ability to manage the property for extra income. One good way to show income potential is to hire a professional appraiser, who can do a market analysis of your property by comparing it to similar income-producing properties in the same area.

One popular way to finance a second home purchase is by using an equity line of credit based on the value of one’s first home. Banks typically charge more interest for these loans, but you are able to avoid many of the closing costs that are associated with originating a separate mortgage. And regardless of whether you apply for a mortgage or an equity loan, you may be eligible for tax deductions of interest payments and other related expenses.

While some of the perks of second home ownership are related to questions that can only be adequately answered by your tax planner or financial advisor, there are others advantages you can derive from owning another home, even if you don’t consider any of the tax consequences. For one thing, you can help to diversify your real estate holdings and investments. A second home can often help to pay for your primary residence, in fact.

And the satisfaction and peace of mind derived from knowing that you have your private vacation property is priceless, especially when a holiday is right around the corner and you don’t have to fool with making difficult hotel reservations. You can even leave your clothes in a closet in your second home, and travel luggage-free, for a truly luxurious experience.