This week's guest post deals with the pros and cons of owning a second home, including some important facts which everyone needs to consider before making this decision. It will be very helpful information for anyone considering making such a significant purchase during their retirement years. If you plan to rent out your second home, either permanently or part of the year, you may also want to read the book "First-Time Landlord: Your Guide to Renting Out a Single Family Home." (Ad)
A New Career For Your Golden Years
Retirement has always been portrayed as a carefree time with nothing to do, a time when seniors get to kick back and relax at home. But for some seniors, that may not sound as wonderful as it seems. After all, you may be used to working hard and not ready to simply kick back.
In fact, you may have come to enjoy the satisfaction of a hard day’s work, not to mention the feeling of accomplishment you get every night when you come home. And if you have just recently found yourself retired, chances are you miss that feeling and want to get it back in some form.
While the daily grind of a 9 to 5 job may no longer be appealing to you, that does not mean you are out of options to feel accomplished in retirement. In addition to trying out new hobbies and learning how to relax, one popular trend for seniors is owning a second home.
Second Homes 101
What is the purpose of buying a second home, you might ask? It’s a great question and, depending on the type of home you buy, there are a lot of options for what you can accomplish.
First, you could buy a vacation home. Look into the prices at your favorite vacation spot, whether it is on the coast or near the mountains, to see if it is something you can afford. If you can swing it, owning a home which is entirely your own to escape to every now and then can be a huge blessing. Plus, it is a great place to host family reunions or invite friends over for an extended vacation.
The other option which is a perfect fit for more active seniors is buying a second home to rent out to others. This home will need to be in a popular area for renters, perhaps near a big city or by a tourist attraction that sees a consistent flow of visitors. This way, you can ensure you will get enough rental interest in your property to make a profit.
For rental homes, you can choose to list your property on short-term rental sites like Airbnb or VRBO. With these sites, you can take advantage of rent hikes during peak seasons and see a high turnover rate with new renters. You can also choose to find long-term renters and become the landlord of your second property. And though rates are usually set for the duration of their lease, renting to long-term tenants requires less work on your end in terms of cleaning and securing the property after each guest.
Should I Buy Another Property?
Deciding whether or not to buy a second property is a big decision, and there are a lot of factors to consider. Your personality is a big indicator of whether you will be happy with this decision. For example, if you do not like the idea of having any commitments during retirement and you want to travel freely, this may not be the right move for you. But if you love meeting new people and want to make a steady income in your golden years, a rental property can be the perfect way to achieve both of those goals.
Still unsure if this is the right move for you? Check out the breakdown of second home pros and cons below.
Pros of a Second Home
Weighing the pros and cons of buying a second home is crucial to ensuring you make the decision that best fits your lifestyle. After you have taken a look at how you want to live out your golden years, take a look at the benefits below.
- A way to make steady money during retirement
- Flexibility to have either long or short term tenants
- Having a rent-free place to vacation
- Being able to host family gatherings between tenants
- A great way to meet new people
- Can help combat boredom often experienced in retirement
- Activity increases mental and physical wellbeing
While the list above makes owning a second home seem pretty great, it’s worth noting that it is not all sunshine and rainbows. Renting out a home (whether long-term or short-term) takes a lot of work, and that (as well as the following cons) should be taken into consideration before signing any paperwork.
- Takes a while to see a profit
- Having to purchase landlord or second home insurance
- Higher interest rate
- Cost of maintenance and property upkeep
Ultimately, whether or not you should buy a second home is up to you. You need to take into account what will bring you the most happiness during retirement and follow that path, because that is what retirement is all about, after all! For more help deciding if this is the right move for you, check out the infographic in this article from Hippo Insurance.
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Photo credit: Sarah Hollenbeck and Hippo Insurance