Excerpted from How a Second Home Can Be Your Best Investment
by Tom Kelly and John Tuccillo

Finding the perfect house is a dream we all share, but it is also a goal that few of us realize. As is the case with most Americans (especially Baby Boomers), if what we find is imperfect. we work to make it perfect, whether that be people or things. The kitchen might be too old or too small or the appliances too antiquated. The bathroom might be cramped and lacking in storage space. The bedrooms might not have good bathroom access or privacy.

So what will you do to make it perfect? Or, more pragmatically, which changes offer the best potential for increasing the value of the home by more than those changes cost? We begin by looking at the process of planning for renovation and improvement. Because costs tend to increase dramatically during the project, getting a firm grip on it from the beginning serves as a protection for you. Secondly, we look at average returns nationally for typical improvements, as well as cost and return figures for specific projects in different areas of the country. Finally, we consider what you really might want to do, indoors and out, to improve the attractiveness of your property for either rental or sale.

There is no set rule as to house size or amenities. The bottom line on any decision to change your vacation or investment home is your own satisfaction and the attractiveness of the home to potential renters. In any investment property (or in a vacation home that you intend to use for retirement), however, you need to balance three important aspects:

• What features most appeal to potential renters?
• What features appeal most to you?
• What features will provide the most yield with the least bother?

The trade-offs here are not necessarily easy.

Read more about second home investment strategies in Tom Kelly's book How a Second Home Can Be Your Best Investment.

Tom Kelly is a real estate columnist and radio show host with 33 years of experience as a professional journalist. Tom also authored five books focusing on second homes, mortgage options and retirement possibilities. He targets Baby Boomers and Retirees, providing consumer tips and helpful hints as well as explaining concepts and terms in a friendly, understandable style. His award-winning and nationally syndicated radio show "Real Estate Today" provides on-air advice to callers. Learn more about Tom.