As people shift into their 40s and 50s, they sometimes find they have a little extra cash burning a hole in their pocket each month. The children have moved out, which leaves the parents with extra time to pursue personal interests.
Purchasing a second home in a beloved vacation spot can often be a smart investment for older couples, but mixing travel and real estate is a proposition you need to evaluated carefully. Though that condominium in Hawaii may look appealing, you have to fly there from California or Seattle.
Substantial savings
Before you even look at new properties, shore up your savings account. The 401(k) account should be nearly full, and you should have six to 12 months of savings for any emergencies. Grown children could still need help with higher education. Consider all your possible monetary responsibilities before venturing out for a new home loan. You can offset your costs if you rent the property out when you’re not using it. Charging vacation home rental rates can sometimes pay the entire second mortgage if you’re in a popular area.
Insist on a local Realtor
If homeowners have traveled the world a lot in the past, they may already know the location for their perfect second home. Instead of bringing a Realtor from the primary neighborhood, take some time in the target region to look for a local agent.
Because of their proximity to the area, local agents are more apt to have inside knowledge about community leadership, events, crime, and recreational activities. You should go to the desired area to meet with the agent in person.
Figure in travel expenses
If you live in New York but want to purchase a second home in Arizona, you might want to calculate travel costs over time. Add up frequent flyer miles and other personal discounts.
If the place is too difficult to reach on a regular basis, it might be wiser to choose an area closer to home. Whether the purchase is strictly for personal vacations or a rental property, you should be relatively close to respond to any emergencies, including locked-out tenants.
Visit the neighborhood often
If homeowners are planning on retiring to the second home, instead of selling it, they should visit the neighborhood frequently in the mean time. Even if you have renters in that home, you still need to stay in touch with neighbors and friends.
Neighborhoods can change dramatically in just 10 years. What started as a quiet street might soon turn into a loud area with music pounding from passing vehicles. By visiting the area, you can evaluate whether it will suit your personality when you retire.
Consider selling the primary residence
Once you’re satisfied with your second home purchase and you enter retirement, you’ll probably want to consider selling your primary residence. To reduce travel and home expenses, the second property can become the primary residence. It’s much easier to handle monthly bills in retirement if you have only one mortgage.
Evaluate all your properties and personal needs when you consider purchasing an out-of-state second residence. With ample motivation to travel, you can benefit from increasing property values and equity.