You’ve been dreaming about purchasing a vacation home for decades. And now that you’ve retired, it’s time to make your dream a reality.
Yes, there are many perks to owning a second home where you can retreat during your golden years. But there are also many details to sort out before signing the dotted line, and it’s critical to prepare thoroughly. From sifting through your budget to determining who will maintain it, here are some practical tips from Samantha Bauman for buying a vacation home during retirement:
Make Sure You Can Afford It
If you rush into buying a vacation home before confirming that you can afford the payments, you can get yourself into a poor financial situation and put a severe damper on your golden years. Even if your second home is smaller than your primary residence, it can cost more.
Fight the temptation to dip into your retirement savings to purchase a vacation home. It only makes sense to buy a second home if you have paid off your primary residence and can afford a decent down payment.
There are many costs associated with owning a vacation property, and you don’t want to overlook any of them. Here are a few to keep in mind:
- Moving expenses
- Homeowner’s Insurance
- Property taxes (and higher taxes on the purchase)
- Property management
Work with an agents like Sam and Raul to find a beautiful property within your budget!
Consider Renting It Out Your Vacation Home
One common way to offset ownership costs is to rent your vacation home out to short-term tenants. While this requires a significant amount of time and money, it can be an intelligent decision.
There are some considerations to make before going this route. For example, you will need to hire a property manager, landscaping company, and cleaning service if you do not live near the vacation property.
Also, you will need to consider how renting out your second home will impact your family’s plans for using the property. For instance, if you hope to stay in the home during all of the most popular travel weekends throughout the year, you probably don’t want to rent it out.
If you choose to rent out your second home, it is wise to form an LLC. This will help protect you from litigation and potentially yield tax benefits. You can hire an attorney or use a formation service to establish your Illinois LLC. The best route will depend on your budget and needs.
Secure the Property
Burglars tend to seek out vacation homes because they know they are frequently empty. Just because it’s your second home doesn’t mean you don’t need to bolster its security. Since you will not be staying there all the time, you must have a reliable security system to protect it from property crime and other criminal activity.
Go with a smart home security system with a professional monitoring service. As initial costs and subscription fees vary across brands, take time to research different setups. You may also consider installing smart smoke detectors, leak detectors, and key padlocks.
Decide Who Will Manage It
As discussed, you will need to hire professional property managers if you don’t live nearby. Even if your vacation home is close to your primary residence, you could benefit from hiring a property manager because maintaining a vacation home requires ample time and energy.
You not only must keep the property’s interior and exterior well maintained and attractive, but you also must manage guest stays, payments, and special requests. And if the HVAC goes out or another problem occurs during a guest’s stay, you will need someone on call to fix the issue immediately!
Make Your Vacation Home a Reality
Now could be the time to buy the vacation home you’ve always dreamed about. But before you sign the contract, evaluate your financial standing and do your research to make sure you can comfortably afford a second home.
Also, weigh the pros and cons of using your vacation home as a short-term rental, and make sure the property is well-secured. Finally, find a reputable property manager who will keep the home in top-notch condition and keep your guests happy throughout the year.
Are you looking to buy or sell a home in the Wheaton area? Contact Samantha Bauman today! (630) 967-8068
