Going Snowbird: Can I Afford a Second Home? A Guide to Making the Right Decision
If you're retired or nearing retirement, you may already be dreaming of your escape to a winter paradise. Many retirees prefer to stick close to home, especially if they have loved ones they’d like to remain close to in their current community. However, some retirees look forward to relocating to warmer pastures when the weather turns frosty. Snowbirds opt to live near family during the warmer months, then escape the snow by purchasing a second home they can relocate to during winter. Here are a few tips to help you decide if you should purchase a second home for retirement.
Can I afford a second home?
You’ll need to consider and add up all your spending habits then reconfigure your budget that incorporates the additional expenses as well as potential savings. We recommend spending some time visiting the place you plan on living in during the winter to absorb the change in lifestyle and routine.
Managing the financials
Additionally, if you stress over filing your taxes every year, it would be ideal to hire a tax preparer. If you plan on purchasing a second home, your taxes will almost certainly become more complicated. As time goes on, if you end up renovating or renting out your property, it's easy to overpay or not pay enough in taxes. Whatever you do, keep good records on both homes.
While you may be able to swing two mortgage payments, remember you’ll also be slapped with two sets of property taxes, two homeowner’s insurance policies, two houses to furnish, and two homes to maintain year-round. There may also be additional or different expenses you didn't have to contend with in your first home. For example, condo fees are typically higher than most people anticipate. If you’re thinking of buying in Florida, brace yourself for the high cost of flood insurance.
The bottom line
Owning a second home in retirement works wonders for some, but the expenses and high upkeep costs aren't worthwhile for everyone. If you decide to purchase a second home, we recommend renting for a season to become familiarized with the community and culture in your dream area before you commit to buying. Brainstorm a plan for financing, maintaining and even renting your second home well before you purchase it. If a second home is not in the cards for you, it's much easier for those who rent first to walk away.
If you need help weighing your options for a second home, reach out to our team for help!