We’re moving into vacation time when many of us start slowing down and enjoying the summer months. Couple that with people exploring options that allow them to work from anywhere and that means people might be considering purchasing a vacation home.
My parents were in the same boat 30 years ago as they looked for ways escape winters in Chicago. Eventually, after visiting different areas, they decided that St. Thomas was the right fit for them. They loved to swim and snorkel, and the weather and water is always warm enough to do so. It is also a United States territory which makes traveling and living there easy.
While my parents knew they wanted to be regular “snowbirders” in St. Thomas, they also hesitated to purchase a second home. Once they retired and were able to spend multiple weeks at a time at the beach, they opted to rent a condo.
Even though they have spent decades going to the same place, they were never interested in buying a vacation home in St. Thomas. The annual hurricane insurance alone is about what they spent renting. Beyond that, they have no worries about finding renters when they were not using it, dealing with the repairs, and many other headaches that come with owning property.
Less important, but part of the equation for my parents at least: the family from whom they have been renting for the last 20 years have not raised the rental rates; my parents were guaranteed income for them, and they treated the home like their own.
For example, one time the refrigerator broke during their stay, and they called the owners in New York. The owners asked if my parents could go buy a new one and they would pay them back. My parents said “Sure!” and took care of it. Having that relationship is a win for everyone.
How we want to spend our leisure time becomes more and more important as we age and start thinking about retirement.
When we work on a financial plan, many of my clients have purchasing a vacation home on their “wishes” portion and that’s great! For some people it’s a good fit. But I always like to make sure my clients know their options. I want their retirement to be as “headache-free” as possible – so that might mean considering renting rather than purchasing a second home.
One of the perks of my mom spending every January thru March in St. Thomas is joining her there! Family and friends visit when they can and I’m no different. This March I was able to work from her condo for 10 days and sneak in time to snorkel each day.
The best part? I was there at the end of my mom’s trip and when we left, all we needed to do was pack. We didn’t need to clean out the fridge, change the sheets, or anything.
We just packed our bags and headed home.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.