Having a second home has long been a goal for many people. It’s idyllic to think that you can leave your work life behind along with the chores at home and spend time in a gorgeous mountain chalet or beach-side bungalow. The truth is usually not as idyllic.
If you choose a great area that is growing and has rising property values, sure, you may be able to enjoy quite a boost in future home equity. Keep in mind, however that the equity is locked up in your second home until you decide to sell the home. If the area becomes increasingly popular, crowds are sure to follow and your once-quiet nest could become a busy hive of activity.
In addition to equity gains, you could pass the home on to your heirs. Just know that if they don’t have a strong emotional attachment to the home and location, they will likely sell the home.
If you are thinking of buying a second home in a specific area, here are a few tips.
First, spend a lot of time renting in the area before you plunk your money down. This will give you an overview of your desired location. Visit at different times of the year to make sure you really like the weather and the changes that come with the seasons.
You also need to identify the type of property you want. Do you want a single-family residence? A condo? A planned community? An isolated mountain retreat? Will you use the property exclusively or try to rent it out to offset the cost? Does your new community even allow temporary rentals? These decisions need to be investigated and made well in advance.
Meet the neighbors. Be bold and venture out and make friends by attending local events such as the school pancake breakfast, church bazar, fire department social, and any other local event that catches your eye. Mingle with the locals as much as possible to see if you are a good fit into their community. After all, you are joining their community if you buy.
On the finance side, engage in some expense planning. For six months see if you can double all of your current expenses. Remember, in addition to a potential new mortgage you will be paying for water, gas, electric, sewage, garbage, heating & cooling, snow removal, and insurance. You may even have to pay HOA fees or a local management company to help you with the property. Some of these expenses may be considerably higher in your destination of choice than where you currently reside.
Enjoying some quality time with my nephew in a favorite destination near Mammoth Lakes, CA.
Owning a vacation home can bring a lot of joy and possibly add to your wealth over time. It can also be a way to grow and maintain relationships in a second community. It is not without extensive consideration and planning. These days, when you add up the total cost of ownership, it may be cheaper and more flexible in the long run to rent versus buy. In doing so, you can summer in Seattle and winter in Scottsdale. Plus, as a renter you can more easily switch units if you don’t like your location, view, or completely change your destination if you like, and thus avoid the on-going costs of second home ownership.
Buying or building a vacation home is a serious commitment. You should strongly consider all angles and meet with an independent Certified Financial Planner™, prior to your decision. I can help you plan for the purchase or work through whether you should consider a type of rental.Contact me and let’s get started. #talktometuesday #education #Hireaplanner #vacation #vacationhome #secondhome #stressfree #newhome #savings