One of the dreams of retirement is to purchase a vacation home to enjoy in your newly acquired and hard-earned downtime. There are some important things to consider when purchasing your second home to make sure that you are making a good investment.
Location, Location, Location
The first step to purchasing a vacation home is to decide where you’d like to vacation! If you want a house that you can visit on the weekends, then you need to make sure it is within a close driving distance. At some point during your retirement, if you plan on spending an entire season at your vacation home, then you could really go anywhere. If you enjoy fishing and boating, on the other hand, you may prefer to purchase a lake house nearby. Maybe you enjoy the peace and serenity of nature and a good hike, in which case a wooded cabin would be the best choice. You could even choose a snowy mountain home to enjoy winter hobbies such as skiing.
Whatever your decision, make sure this is somewhere that you know you will want to keep coming back year after year. If you aren’t sure where to go, spend some time in different areas until you know for sure.
Renovations and Repairs
When you are ready to purchase your vacation home, there are some things to consider when looking for a house to purchase. One of the biggest upfront costs to consider when comparing homes is to take note of potential renovations and repairs that will be needed. New homes are move-in ready but are often much more expensive. It can be a good investment to purchase an older home and put in some money to fix up the areas that need it. Bathrooms and kitchens are often two areas that need updating, and they can both be quite pricey. In Denver, for example, it can be anywhere from $4,648 to $11,558 to remodel your bathroom alone. If you don’t have the extra money for renovations and repairs, you can take out a renovation loan to finance the cost. Otherwise, you can fix one thing at a time, focusing on prioritizing the greatest needs first.
Affordability and Total Cost
When considering whether you can afford your vacation home, you will have to consider the renovation costs and the purchase cost of the home. Additionally, you need to research the cost of taxes in the area and insurance requirements. Vacation locations can have additional home insurance requirements that you may not have considered. For example, some homes may require flood insurance in addition to your regular policy. You can help cut costs on your secondary insurance policy by bundling policies, raising your deductible, or paying your policy in full upfront. Of course, do your research to ensure that you are aware of all the costs prior to making the purchase.
Profitability and Ease of Renting
If your heart is set on this house but you feel that the cost is going to make your budget too tight, you may want to consider renting out your property when you are not using it. The advantage of renting out your home is the possibility to make additional income as well as ensuring that your home is never left vacant for long. Renting out your home can be challenging to manage the property and the guests, especially if you don’t live locally. You may want to consider hiring a property manager to take care of all the details for you. According to the Balance, it’s important to do your research to find the best affordable and reliable company. However, keep in mind that you can expect to pay between 8 and 12 percent of your property’s value for this service, though some property managers do charge flat rates (around $100).
With the right management company to help you rent out your property, some necessary home renovations, and the right location, you can enjoy the rest of your retirement in your new vacation home. All you have to do is get the ball rolling!