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The Expert in Baby Boomer Travel

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.It’s often fun to fantasize about buying a vacation home.

Where I live now in the desert, my thoughts sometimes turn to owning beachfront property. When I lived in upstate New York, with its cold, snowy winters, I found myself dreaming about snapping up a little vacation spot in the tropics.

I never took the plunge into actually purchasing, but many baby boomers have — or are seriously considering it.

Today’s guest post, by Jim McKinley, offers some sound advice on what to do and think about before you sign on the dotted line. (And by the way, I’ve been told I make an excellent house guest.)

By Jim McKinley

The current housing market means that now is as good a time as ever to purchase a vacation home — preferably providing both a getaway and a good investment.

But that doesn’t mean you shouldn’t do your homework before committing to that cozy cabin in the mountains or sunny beach condo — or your dream vacation home could turn out to be more of a nightmare.

Since a second home should be somewhere you and your family can go to relax, make sure it serves that role and not one that gives you headaches.

Here are some tips on how to vet a vacation home before you sign the papers:

Rent First

Before committing to a new home, it’s a good idea to rent in the area to make sure you enjoy staying there for extended periods. Otherwise, you could sign the papers only to realize you’re bored out of your mind after a couple of weeks.

Try to visit two or three separate times during different seasons — this will give you a feel for the weather and crowd patterns.

For example, you may think the mild weather and moderate crowds during September make for the perfect vacation spot, but you may not be so welcoming to the blistering heat and the need for dinner reservations that come with summer.

Factor in All the Costs

After you’ve tried out your desired location, research the available vacation homes for sale.

Along with the price, you’ll have to factor in many other costs, such as HOA or condo fees, property taxes, insurance coverage, renovations, and so on.

Since you likely won’t be there year-round, small maintenance issues can become big ones — so it’s a good idea to set aside about 1 percent of the home’s purchase price each year for maintenance.

For instance, if you’re looking in Tucson, Arizona — where homes typically sell for $205,000 — you’ll need to plan to set aside $2,050 annually for common maintenance.

Work Out the Maintenance

One of the most important aspects of owning a vacation home is figuring out maintenance issues.

No matter what method you choose, prepare to spend some time and money.

Although they’re the most expensive, property managers are the most convenient because they can open and close the home, assemble a staff to maintain the home, and even take care of advertising, checking in guests, and handling payment if you decide to rent out your home.

Hiring a local caretaker is less costly, and may be your best option if you’re not planning to rent the home out.

If you plan to do most of the maintenance yourself, you’ll still want to compile a list of electricians, plumbers, and handymen that you can call when something comes up, as well as take precautions to create a lived-in look for when you’re away.

It’s also a good idea to ask your neighbor to keep an eye on the home from time to time.

Choose Your Insurance Wisely

Just like purchasing insurance for a primary home, you’ll want a plan in place for your vacation home for disasters like floods, fires, and earthquakes.

If you’re renting the home out, you’ll want to have a more comprehensive plan to cover rent loss in the case of catastrophe and possibly an umbrella policy for additional coverage if someone gets injured on the property.

Before you start mulling over options, however, see if your insurance policy on your primary home can cover a second home. If so, it can save you the time and hassle of getting a new policy, and you may qualify for a bundling discount.

In any case, installing a security system is one of the best things you can do to keep your premiums down since it reduces the likelihood of claims.

It’s important to do your research and analyze your options when considering buying a vacation home.

If you rent in your desired area a few times, factor in all the costs, figure out home maintenance, and pick the right insurance, you’ll be setting yourself up for a successful purchase.

Remember that your vacation home should be a retreat — not a burden.

Author bio: Jim McKinley is a retired banker who loves explaining financial issues; see his website moneywithjim.org.

Photo Credit: Clark Norton

2 Responses to Want to Buy a Vacation Home? Read This First

  • Clark, this made for good reading. I wonder what your experience is with people who buy a vacation home late in life. Besides the costs that Jim lists, I think there are all sorts of other costs (not just monetary) associated with, possibly, a new mortgage and with keeping another residence going. Have you found among your friends and readers that a vacation home leads to greater cacooning and less venturing on new discovery or adventure? That would be a cost many of us would want to avoid.

  • Excellent point, Steve. If you’re, in effect, tied down to a vacation destination by owning a home there, you’re far less likely to have the time or resources to explore the rest of the world. For instance, I love the Greek islands but would I want to limit my travel time each year to that one location? (Indeed, to just one island among the many diverse ones there?) No.

    That said, I do have close friends and relatives who love their vacation homes and want little more than their own private retreat in the mountains, at the seashore, etc.

    So in the end this may be the biggest decision of all that you have to make — do you favor returning time and again to one favorite getaway place or do you like to leave your options open for more widespread travel and exploration?

    I’d be interested to hear other readers’ thoughts on this subject.

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According to government and private surveys:

  • Leading-edge baby boomers (born between 1946 and 1955) and seniors account for four out of every five dollars spent on luxury travel today.
  • Roughly half the consumer spending money in the U.S.--more than $2 trillion--is in the hands of leading-edge baby boomers and seniors.
  • Baby boomers (born 1946-1964) travel more than any other age group.
  • When asked what they would most like to spend their money on, baby boomers answered “travel” more than any other category, including improving their health or finances.

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