An Asset and a Haven: Home-Buying Advice for Retirees

Purchasing a vacation home can be a profitable and enjoyable investment if you’re a retiree weighing your financial options. If you buy in a warm-weather climate, you and your spouse may choose to live there much of the year. A second home can also be a perfect gathering place for friends and family. Or you could turn it into an active asset by renting to vacationers. However you choose to use it, a vacation property gives you flexibility and an opportunity to maximize your investment by generating income in retirement. 


As with any real estate investment, you should buy in a desirable area to improve your chances of turning a profit when it’s time to sell. Buying in a popular location is also important for attracting vacation renters. You could further enhance your profits by renting out both homes, when unoccupied, so your properties are working for you year-round. As such, a second home can double your opportunity to create income.


Do you have a hard time accommodating the entire family during the holidays or for family get-togethers? Hosting all your children, their spouses and grandchildren can be a real strain on your square footage and available bed space. One of the nice things about a second home is the flexibility it provides for entertaining. You can host the entire family for vacations in a nice locale, which may not be possible with your first home. With that in mind, consider spending a little extra for a second property that’s slightly larger than your first home – it’d be nice to have extra space if you and your spouse choose to live there instead of staying home through the long winter months. 

Extra buildings

As you assess your options, bear in mind that you can always save money by purchasing a smaller property than planned and adding an outbuilding for storage, or as a garage or office (it might provide space for extra accommodations). It’s a cost-effective and convenient alternative if you’re looking to save money, because steel buildings are extremely durable, flexible, energy-efficient, and they don’t take much time to put together. 

Renting it out

If you decide to rent your second home, you’ll need to factor in fees, rising property taxes and furnishings as well as the ongoing costs of maintenance. If you live far away, you’ll probably need to hire someone to keep an eye on the place when you’re not there. Property management companies can make things a lot easier by scheduling renters, troubleshooting, and keeping the house clean between rentals. If you do hire a property manager, be sure they’re bonded and insured and have plenty of experience (ask for customer reviews and research unsolicited feedback online). 

Tax deduction

Some people choose to keep a vacation home unoccupied when not using it for personal reasons. Why? Taxes, of course. If you charge rent for occupancy for no more than two weeks per year, the interest on your mortgage and property taxes are fully deductible from your gross income … just like your first home.  

Keep insurance costs down

Insurance costs on a vacation home can easily exceed those on your first home if, for example, you buy near a lake or in the mountains. Keep insurance premiums low by buying in a less risky location, bundling your policies, and installing a centrally monitored alarm system that detects both fire and break-ins. 

A vacation home can provide retirees with long-term rental income, a special place for family to gather, and an added measure of financial security in retirement. On the downside, taking on a second mortgage can easily turn into an overwhelming financial burden if you haven’t saved and prepared adequately for it. There’s also travel time and costs as well as ongoing maintenance concerns, so be very careful about getting into something you can’t handle financially or logistically. As long as you play your cards right, you could be setting yourself up for a very comfortable retirement. 

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