Written by: Brittany Fisher email@example.com
There is a reason that Florida has become highly attractive for active retirees. Great weather, good food, and hundreds of miles of beautiful shore certainly play a part. And, for the most part, the Sunshine State remains affordable compared to places such as New York and Los Angeles.
But before you dive right in to second home ownership, you should take the time to understand the process and be aware of the responsibilities and obligations that go along with it. Keep reading for tips on how to make your transaction as easy as a day on the beach.
Determine How Much You Can Afford
You might fall in love with that three-bedroom waterfront condominium, but it may not be in your budget. In order to figure out how much you can afford, you’ll need to determine your income, debt-to-income ratio, outstanding debts, and whether or not you’ll pay for your vacation home in full or take out a loan for the balance minus the down payment. Most lenders require at least 20 percent down and charge a higher interest rate for second homes since they come with higher financial risks. Bankrate’s mortgage loan calculator can help you estimate affordability.
Decide Where You Want Your Vacation Property
This should be a pretty simple decision, but one that you must consider early on. Research local listings in your desired area to get a better idea of the types of properties available. While the inventory is ever-changing, this will also help you identify must-have amenities, such as access to public transportation, proximity to golf courses and restaurants, or on-site maintenance and property management.
Research Neighborhoods and Homes
When it comes to second homes, not all neighborhoods are alike. Once you know the kind of home and your budget, you must also consider whether or not you wish to live in a senior-oriented community, vacation complex, or traditional residential neighborhood. All have pros and cons. For instance, a senior community will be filled with other older adults with common interests, but they may restrict the length of time young visitors can stay. The Spruce offers more information on child restrictions in different types of senior communities.
Understand the Responsibilities
Even though your second home is your vacation property, you will still have to work to keep it maintained. Responsibilities are similar to those associated with your primary residence, but may also include special upkeep, especially if you purchase a property near the ocean. If you plan to use your second home as an income property, you will also be responsible for property management and maintenance unless you choose to hire a company to do this for you. Rented explains that an experienced rental management firm can reduce your financial risks and may offer a guaranteed income model in case of unexpected vacancies.
Keep Ongoing Costs Down
One of the biggest expenses related to owning a second home is the extra insurance you’ll be required to maintain. You can keep these costs down by getting multiple quotes, raising your deductible, and seeking discounts for installing a home security system. You can lower your electric bills by increasing your thermostat a few degrees and making sure doors and windows are properly sealed. Proper insulation will also help, as will energy-efficient appliances. It may be in your best interest to pay someone to maintain the property while you’re away so they can keep an eye out for potential problems before they become major expenses.
Your second home may serve as a part-time residence or simply a weekend getaway. But whatever your reasons for buying, take the time to research properties, and don’t get in over your head. After all, you’re supposed to enjoy your retirement, so the last thing you need is worry over how to pay a second mortgage.
Forbes offers more tips on buying a second home if you plan to move in permanently once you retire.