Coast into Retirement with the Smart Addition of a Great a Vacation Home

Casey F.

When you finally hit retirement, you want to take things a little bit easier. After all, you worked hard to reach this point so it’s time to enjoy life! A well-chosen vacation home can be the perfect addition to your new lifestyle.

Money first. Truth be told, you put a lot into reaching this stage of life. It’s vital to take care of your financial situation so you can enjoy security and comfort through your golden years. With that in mind, you want your vacation home to be a dreamy addition to your life, not an anchor. To help with your decision, CBS News explains you should keep in mind how you plan to use your second home. Will it be a vacation destination? Do you expect to spend whole seasons there, getting away from foul weather? Will your vacation property be an investment, making money for you when you aren’t using it?

Put money down. Some experts recommend saving as much cash as possible to make your purchase. The average person buying a vacation home puts 32 percent down, which is well above the 20 percent standard for a down payment on a mortgage. It’s particularly wise to put as much down as possible for your vacation home, especially if you have a mortgage already. Remember you are responsible for meeting both payments, and if you don’t rent out the vacation property, or weather, repairs or other issues prevents it from staying rented, you’re responsible for making that mortgage payment still. Add to that the costs involved with tending both properties, and you need as much wiggle room in your budget as possible.

Taxes and such. Since your vacation property is a second home, you might decide to rent it out when you aren’t using it. In that case, the taxes, insurance costs, and interest are all deductible against the income from the rental. Any depreciation associated with the property is also deductible. If you choose a property in a location where you can keep it earning enough income, it might pay for itself. With some luck, you might even make money on the rentals.

Location matters. As Nolo points out, a well-chosen location is a key to success if you’re trying to earn income from your vacation property. It’s not just about how desirable the spot is to you; you need it to be desirable to renters. Also note in certain locations, costs associated with the home can be more than others. For instance, some beachfront properties might be easy to keep rented most of the time, but rates for insurance could be especially high due to risk of hurricanes or flooding. Some properties require association fees or local permits for renting them. Do your homework before making a commitment.

Creature comforts. Furnishing your vacation home is another consideration. Are you planning to rent the property out? In that case, some professionals feel a neutral decor is the smartest choice, ensuring visiting parties will feel right at home. Offer comforts where your dollar will allow. For example, considering purchasing a new mattress vs. reusing an old one you found tucked away in your attic. We’ve all had the bad experience of spending the night in a bed that wouldn’t let us get any rest. You’ll want your renters to have an all-around positive experience, which includes getting a good night’s sleep. Choose a mattress that fits your budget and maximizes quality of sleep.

Maintenance. Will you maintain your vacation home yourself? Many people do to cut costs, but this can be challenging if you live far away. It’s also important to be handy and own a variety of tools. If you elect to pay for someone else to keep your vacation home maintained, you need to weigh that into the costs. However U.S. News points out, empty vacation homes can be a target for thieves, so hiring someone nearby to keep an eye on things can be smart in many ways. It’s also convenient to have someone local tending the paperwork and arrangements involved with renting.

Your retirement should be easy and breezy. Do your homework and choose wisely when purchasing a vacation property. Smart decisions mean your second home will be a pleasure and not a burden!