Buying A Second Home
TJ and Mrs TJ are walking along the beach loving the sand, surf, and sun. They’ve enjoyed their first nap in 6 months and have recharged their relationship…(wink, wink!)
It’s a picture post card twilight. The kids are racing each other, jumping nimbly on brightly painted boards, golden in the fading light. The bottle of Pinot Grigio is almost empty. Begun earlier with the spicy boiled shrimp on the deck at sunset- it’s been a delightful and relaxing evening.
As they walk back to their condo holding hands like the young lovers they used to be, they both start to speak at the same time. “You go first, Honey.” “No you!”
“OK, I saw there are a lot of these condos on the market-this has been so much fun and we both work so hard, do you think we could see what they cost!” ” My friend Mary and her husband bought a beach place on a short sale a few weeks ago, and they don’t make near the money we do.”
Sand Between Their Toes.
As my Realtor friends at the coast call it, another tourist has “sand between their toes.” The only other thing you can count on during a week at the beach is that last day when all you have time for is packing.
It’s always a gorgeous day when that beach is in your rear view mirror, with a siren song playing in your head-”you too can own a piece of me….” as you drive back to your home and job.
“These times they are a tempting” to make that second home purchase, whether for investment or just family fun.
What makes me think so?
These Second Home Buying Positives
- The economy seems to be stabilizing.
- The value of my dollars in the bank are plummeting as fast as my Atlanta Braves in their Division.
- The stock market is tanking, gold is dropping, Europe is fast becoming like a third world investing environment.
- Interest rates are at multi-generational lows.
- Real estate prices have bottomed.
These are all wonderful reasons to think this may be an ideal time to jump into a second home, huh?
Before you let yourself be drawn into this second home dream that can quickly turn into a nightmare, let’s look at the negatives to buying a second home/vacation home/investment property.
- Life changes. Moving, divorce, ill parents or children-the number of potential life changes are immense. Owning another home limits your flexibility and nimbleness to respond to big life alterations. If you need to move, you’ll have to sell your current home and oops, you’ve got this vacation home to deal with too! Rent it? Try to keep using it though you’ll be on the other side of the country?
- Finances change. Layoffs, downsizing, retirement, oh my. What may be easy to afford today may be a big strain on your retirement income.
- Fixed vacation site-having owned several second homes over the past twenty years-it does limit your ability to see the world. You’ll feel the need to go to your own place.
- Upkeep-yes you have to clean toilets at your second home, too….Hooray! I love cleaning toilets…(Cil is thinking “the only time you hold a toilet brush is to try to save your cellphone that fell in.” I knew I shouldn’t have confessed that story to her.) Even if you can afford to pay a housekeeping service and maintenance service, you’ve got to spend time and thought arranging all that, it doesn’t happen on autopilot.
- Costs. I don’t care if you are the master manipulator of Excel and can make it do things that would make your CPA proud-you’re going to underestimate the costs. The next hurricane can cause insurance to triple.
- Less relaxing vacations. When you’re vacationing at your own place, you’ll be noticing what needs painting rather than making goo goo eyes with your partner during that sunset on the deck.
- Financial uncertainty: If you finance at a variable rate, you’ll have rate increasing risks to deal with.
I’m not against second homes. We’ve enjoyed all our past properties, but as I’ve gotten older it is much easier to see how much money we’ve spent on ‘em that could be still sitting in our retirement account. Could our memories have been just as good without the hassles of ownership? Who knows, I’m not spending time worrying about things I can’t change.
I’m here, though, to help you make these big financial decisions, to decrease your chances of making a mistake. It’s what I do here…
If you’re in the market for a second home, or on vacation and get tempted by those time-share offers or Realtor brochures, take a few minutes to re-read this article. If you jump in the deep end, at least wear your life jacket made of careful, meticulous planning and projections of costs and of your future-as least as much as possible.
See you at the beach-I’ll be the old guy wearing black socks with his sandals and wielding a metal detector!
{photo credit:DVitoriano}
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