Guest Post By: Jim McKinley
Retired and Looking to Buy a VacationHome? Here Are 4 Best Tips on How to Do It Right
Where better to retire to than a vacation home of your own? However, investing in a vacation home is a pricey venture that quickly becomes even pricier when you don’t go about it the right way. To help make sure you buy the perfect retirement home, save money, and enjoy your investment long term, check out these tested and trusted tips.
Tip 1: Have a Budget and Stick with It
As a retiree, you probably don’t have as much income as you did before retirement. To avoid financial troubles, it’s important that you set a realistic budget, one which defines and limits how much you spend on a vacation home. Your budget must cover not just the cost of buying a home but also how much it’ll cost to make it retirement ready. Once you’ve determined your budget, the next step is determining how you’ll finance it.
Since you’ll likely bepaying for the home with a bank loan or mortgage, your budget will help make sure you don’t take a loan that exceeds your financial needs. This saves you from paying interest for years on a loan amount you didn’t need. Alternatively, look intoless expensive financing optionsto fund your vacation home plans.
Part of your budget should also account for moving expenses and the cost to hire a moving company, especially if this will be an interstate move, which can quickly become expensive. Look for creative ways to avoid overspending by considering a hybrid move where you hire a local company to load the truck, a separate company to transport your belongings and then local movers in your vacation home city to unload. It might sound logistically challenging, but with the right planning you can make it happen and save several hundred dollars.
Tip 2: Destination Location
The location of your vacation home is the key to actually enjoying the property. Ideally, for a retiree, the location of your vacation home should be affordable and have:
- Great weather
- A safe neighborhood
- Easy access with good roads
- Close by medical facilities
- Infrequent disasters (flooding, fires and such)
- Necessary amenities like water, power and so on.
To determine if the location of a vacation home is right for you, it’s best to rent the property for a few months before buying. This allows you to fully experience the property, identify its shortcomings, and better decide if it’s actually worth buying.
Avoid compromising! If during the rent period, the location doesn’t satisfy your vision of a restful and enjoyable vacation home, it’s best you keep looking until you find a better one.
Tip 3: Aim to Make the Property a Rentable One
Let’s be realistic: Your vacation home isn’t a place you’re going to be in all year round. So, instead of the house sitting empty and useless while you aren’t using it, have the house pay for itself by putting it up for rent.
Make sure that the property has all the amenities that’ll attract an ideal renter. For instance, update the vacation home’s bathrooms and kitchen. The cost of such a renovation will vary from location to location. For instance, remodeling a bathroom in the Middletown area averages around $10,930, while the kitchen can cost between $4,000 and $50,000.
Some pocket-friendly remodeling ideasthat save money and deliver a significant return on investment include:
- Repaint the kitchen and bathroom. This cost-effective renovation makes the room look brand new at little cost.
- Update fixtures such as faucets, lights, heaters, towel racks and so on.To save money, opt for secondhand fixtures instead of brand new ones. Also, opt for green upgrades such as an energy-efficient water heater.
Also, someone’s going to have to maintain your vacation home when it’s not in use. You can hire a caretaker for this or arrange with a local service to act as your house sitter.
Tip 4: Take Steps to Keep Insurance Costs Down
If you hope to keep your premiums to a minimum,installing a home security system helps. Insurance companies believe a vacation home with optimized security reduces the risk of something happening to it, which, in turn, reduces the likelihood of a policyholder filing a claim. This makes an insurer more amenable to reducing insurance premiums.
The most important thing to remember is to never invest in a vacation home — or any other real estate venture — on a whim. Instead, know what you want, define your budget, do your market research, and buy accordingly. It’s the best way to ensure you end up with a vacation home that makes you happy and guarantees peace of mind throughout your retirement years.
For more information:
Moneywithjim.org
jmckinley@moneywithjim.org
