The Pros and Cons of Buying a Second Home in Minnesota’s Lake Country

Key Takeaways

• Conventional second home loans typically require at least 10% down and may carry rates above primary residence rates.
• Lenders expect a second home to be one you use personally, so heavy rental plans can change your loan type and terms.
• Costs continue year-round, including insurance, taxes, and seasonal upkeep such as docks, septic, and well systems.
• The main advantages are a dedicated family retreat, long-term equity potential, and a possible future retirement home.

Should You Invest in a Second Home in Minnesota?

Minnesota’s landscape, with its thousands of lakes and wooded shorelines, makes it an appealing destination for second-home buyers. At Excelsior Real Estate, we interact with hundreds of community members looking at areas around Gull Lake, Lake Minnetonka, and beyond. According to Minnesota Realtors, private waterfront home sales rose 2.5% in 2025, while sales of homes with water access increased 8.5% in the Twin Cities market.

Buying a second home still requires careful financial planning. Mortgage qualification can be more demanding for a property that is not your primary residence, and property taxes, insurance, and maintenance can add considerably to the cost of ownership. Understanding these trade-offs can help as you look at homes for sale in Minnetonka.

Let’s discuss the pros and cons of buying a second home in Minnesota’s lake country.

What Are the Advantages of Buying a Second Home in Lake Country?

Buying a second home in Minnesota’s Lake Country offers opportunities for outdoor recreation and a place to spend time with family. With more than 10,000 lakes across the state, Minnesota offers a range of lake properties to suit different lifestyles and budgets. Here are the key benefits of owning a second home in Lake Country:

• Family retreat: A private base for summers and holidays (or even weekends!) with no booking or packing for a rental.
• Equity potential: Lakefront properties are limited, which can help support demand and property values. The Star Tribune reported that Minnesota lake home prices continued to climb even as the broader housing market slowed. However, remember that past price growth does not guarantee future appreciation.
• Retirement flexibility: At Excelsior, we speak with many buyers who use the home seasonally now and plan to settle in full time later.
• Rental income potential: Renting during peak summer weeks can offset ongoing and initial costs. This is, of course, subject to lender rules and local ordinances.

What Are the Disadvantages of Buying a Second Home?

The disadvantages of buying a second home mostly show up after closing, and they involve money and time more than the purchase.

• Two sets of costs: A second mortgage, insurance, utilities, and taxes for a home that may sit empty for months.
• Seasonal upkeep: Winterizing plumbing, installing and removing docks, and maintaining private well and septic systems all fall to you, often from a distance.
• Less use than planned: It is easy to overestimate how many weekends you will spend there once you consider work and travel.
• Slower resale: Lake homes may take longer to sell when buyer demand weakens, particularly if they have higher asking prices or appeal to a smaller pool of buyers. Be prepared to hold the property for several years.

Buying a Second Home in Minnesota: Financing and Taxes

Financing a second home can be more demanding than financing your primary residence. Conventional mortgage lenders may need a down payment of at least 10%, a strong credit history, and enough savings to cover mortgage payments after closing.

The property must also qualify as a second home. If you plan to rent it out regularly or plan to use the rental income to qualify for the mortgage, check the lender’s requirements before buying. The property may need to be financed as an investment property instead, which can mean different qualification standards and costs.

The Minnesota Department of Revenue mandates that homestead properties be your sole or primary residence and allows only one homestead per married couple. Your lake home will therefore be taxed as non-homestead property. This generally carries a higher rate. The pros and cons of buying a second home also depend on location: shoreland rules, septic requirements, and dock permits vary by county.

Second Home Pros and Cons: Is It Worth It?

The pros and cons of a second home are unique to how you plan on using the property. If you can visit often, plan to hold for several years, and have cash set aside beyond the down payment, the lifestyle and equity benefits usually justify the costs. If you would visit only a few weekends a year, renting a cabin may cost less.

We suggest weighing the pros and cons of buying a second home during a quieter stretch to give you more room to negotiate and inspect carefully, but it doesn’t replace a realistic budget. Agents at Excelsior Realty, a boutique Lake Minnetonka brokerage, often encourage buyers to map out a full-year ownership budget, including a repair cushion, before touring.

Find a Home on the Lake with Excelsior Realty.

Excelsior Realty has helped buyers around Lake Minnetonka since 2004, and we would be glad to talk through your goals. Call (952) 474-2999, email hello@excelsiorrealty.com, or browse homes for sale in Excelsior to see what’s available.

Address: 386 Oak St, Excelsior, MN 55331, United States
Phone: +1 952-474-2999

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