Owning two houses in retirement

[Cap_Scarlet]

Does anyone have experience of owning two houses in retirement?

Why would we do that you might ask...

Well, we live in Europe and firstly we have always dreamed about living in the mountains and having permanent access to skiing in the winter and biking and hiking in the summer. We've now achieved that and it is pretty much everything we wanted ...except for one thing.

Our children live in another country.

We can visit of course without problem but we definitely do not see them as much as we would like (every trip has to be organized, there's no just popping in for the weekend). So, as we think about retiring we are contemplating buying another home with the idea that we would flip back and forth (a month here, a month there etc.)

We could manage it within our retirement pot (would consume about 15% of our stash) but we would always be leaving one house empty and inevitably incurring more costs. We could possibly rent out one of the houses when we are not there which offset part of the cost.

Anyone in a similar position? Do you regret the decision?

 

[pb4uski]

Actually, the reason that I retired is because we got down from two homes (our main home and a lakefront home that we used during the summers less than an hour away) to one (we sold the main home and made the lakefront home our main home). With the resulting addition of the sale proceeds to the nestegg and the reduction in expenses I felt comfortable retiring.

Fast forward 5 years and we were no longer spending winters at our main home and renting in Florida for the winter months and had done so for two years. We got tired of the constant uneasiness of not having a place lined up, having to haul our stuff to and fro, etc. so we ended up buying a 1,444 sf condo in Florida as a winter get-a-way.

Luckily, in the interim Mr. Market has been generous so we have been able to buy the winter condo free and clear and still have 10% more in the nestegg than we did when we retired 5 years ago and the annual costs of keeping the condo will be less than what we paid in rent so all is good. No regrets, but this season will be our first in the Florida condo so time will tell.

In the case you describe I guess that the difference between renting vs owning might rest on how long your children would be there, how frequently you would visit and for how long, etc. Perhaps an in-between might be to simply lease a flat near to them rather than buy... similar convenience but less commitment.

 

[CaliKid]

My parents got a second home, near us, so they could see the kids more often. It was not economical but we all loved them being able to visit for extended periods of time but without them in our guest room and without them at a hotel. A hotel would have been cheaper but not nearly as nice overall. I would make the second home very close as it's nice to go out to dinner, have the kids stop by when you are back at your other home, etc.... Make it easy for everybody.

 

[Ronstar]

We own a house in Illinois and condo in Arizona. Bought the condo in 2002 for a winter getaway while I was still working. I escaped to Arizona monthly about 9 times a year for several years. Now retired, we spend about 4 months a year there.

Being a condo, our Az place is easy to lock and leave. Maintenance is handled by the HOA. And we have a service check the place out once a month. I've never regretted buying the condo.

I recommend researching an area and house/condo thoroughly before buying. Renting first before buying often makes sense. And check to make sure that the children are staying put for a while. It wouldn't make sense to buy near them if they have any plans to move.

 

[Sunset]

What will you do when the children move for a job, or to a better home/neighborhood/city ?

Perhaps compare the cost of renting vs owning.

 

[Teacher Terry]

I would not want to have 2 homes. Too big a hassle. I would just rent something for the time I wanted to be by the kids if it were me.

 

[foxfirev5]

DW and I have a lakehouse located 17 miles from our primary residence in town. Since I retired only five months ago we're just discovering what we want to do. Prior to retirement it looked like we would continue the heavy travel I experienced during my working years. However, frequent short duration trips to the lake this summer basically satisfied our need to get away. A few other trips to visit the kids and vacation for a couple weeks are planned for the winter.
The one thing I've learned is that once you're retired and can do what ever you want, your plans may change. In our case less travel is our current comfort zone. While not cheap, the close getaway with a boat 25 feet from the back door is about as good as it gets.
We'll see how it goes. At least it's all been paid off for years.

 

[fh2000]

We have an apartment back in our home country in Asia. We use it for about a month each year for the past 3-4 years. Once we retire, we will use it more. We basically use it as a base to visit relatives and travel to other countries in that region. It is in a secured high rise building so we can safely lock the door and leave it empty.

It is paid for, and maintenance cost is manageable. The main issue is of course the distance. Long flight and jet lag required to visit there.

 

[Bamaman]

I understand your concerns about owning two homes that I assume are both in Europe. Throughout the years, Europe was essentially a rental market where even well to do people didn't own their own homes. Since I began my European travel in 1970, I've seen home ownership skyrocket. But so have home prices in all the major cities--where they're priced out of sight.

In many places in the U.S., home ownership is fairly priced. I happen to live in an extremely low priced housing market where my main home is large. I also inherited a lake home 18 miles away that's been in our family since 1945. And I bought my daughter and 2 grandchildren a big house for a little price--and have refurbished it.

With no debts, I have the financial resources to maintain these houses. But if I lived in Munich, Paris or London, I would have had to pay 7 times what I did.

My problem is maintaining the real estate--almost a full time job. We have to stay close by and cannot go away for any appreciable time right now.

 

[Cap_Scarlet]

I understand your concerns about owning two homes that I assume are both in Europe. Throughout the years, Europe was essentially a rental market where even well to do people didn't own their own homes. Since I began my European travel in 1970, I've seen home ownership skyrocket. But so have home prices in all the major cities--where they're priced out of sight.

In many places in the U.S., home ownership is fairly priced. I happen to live in an extremely low priced housing market where my main home is large. I also inherited a lake home 18 miles away that's been in our family since 1945. And I bought my daughter and 2 grandchildren a big house for a little price--and have refurbished it.

With no debts, I have the financial resources to maintain these houses. But if I lived in Munich, Paris or London, I would have had to pay 7 times what I did.

My problem is maintaining the real estate--almost a full time job. We have to stay close by and cannot go away for any appreciable time right now.

Yes - cost is a concern - although as we are away from the major cities it is more moderate (although I would guess still high by US standards). Our main home is worth about $600,000 (for 3,000 sqft) and we would look to buy a second for around $400,000.

 

[brucethebroker]

We live in Midwest (low cost of housing), where we enjoy living about 8 months of the year. We also have a winter home in FL. Since the FL condo is maintained by the HOA, it is an easy place to come and go (as another post mentioned).

As far as cost, we downsized when we semi-retired. The combined costs of our smaller home up north and condo are only a few hundred dollars more per month than we previously paid for the larger home.

 

[48Fire]

We bought our second home 4 1/2 years ago, and no regrets. And one of the primary reasons we have two homes is that one is near our daughter and son-in-law.

The second home hassles can be minimized if you downsize and have a minimalist view of maintenance, furniture, clothes, kitchen supplies, etc. We love the flexibility of going either direction at a moment's notice, either because we feel like it or we need to.

 

[donheff]

We went into ER with two houses - our primary home in DC and a riverfront weekend house. We had run the numbers and felt fine supporting both but over the years were not using the weekend house as much as we expected. We simultaneously arrived at the decision that it made sense to sell it and we did. The mortgage was paid off so the influx of cash and reduction of expenses just adds an additional margin if the market goes way south.

 

[Danmar]

Very personal views on this. Check previous threads. We started retirement with two homes then bought two more. Canadian Rockies (skiing and biking), Arizona, Lake house in Ontario (quiet, lake sports, entertaining friends and family), Toronto condo (exciting, urban, often loan out). Obviously expensive and time consuming, but so far we love it. First question is affordability, then whether it's practical. Only you can decide.

One thing to consider is whether your investment in personal use real estate is reasonable in relation to your total net worth. Seems that the norm on this site is around 10-25%. See a previous poll on this topic.

 

[kcowan]

We started with one house. Then decided on a second when relatives needing us died.

Have handled the 3rd location (near kids) with home swaps and rentals. A complicating factor is that we enabled the kids to own cottages and then they bought them in differing areas. So the choice of near their homes or their cottages make a permanent 3rd location difficult.

 

[Sunset]

Yes - cost is a concern - although as we are away from the major cities it is more moderate (although I would guess still high by US standards). Our main home is worth about $600,000 (for 3,000 sqft) and we would look to buy a second for around $400,000.

So financially speaking you could compare the cost of a $400K home

taxes,maintenance,insurance,security monitoring,utilities, etc = $10K /yr
the missed income on the investment at 5% = $20K/yr

So the total cost is easily $30K/yr. to own a second home.

I wonder what a rental costs per month and per year ?

 

[pb4uski]

+1 I wonder if the OP may be better off to just rent a flat near their children rather than buy... I guess that it depends on what rents are in the area.

You could reduce the $30k by a modest amount for appreciation of the second home if appropriate.

 

[check6]

We have two homes 1200 miles apart. We have no children and do it for the weather. You end up with two of everything although somehow we ended up with four cars, two at each local. Both properties are lock and leave with zero monthly maintenance. We would love to have one home but cannot find the perfect place weather wise. If I could live my life over the second home would be Wengen, Switzerland.

 

[Sunset]

We have two homes 1200 miles apart. ..... You end up with two of everything although somehow we ended up with four cars, two at each local. Both properties are lock and leave with zero monthly maintenance. ......

So I'm interested in zero monthly maintenance,
Can you explain what is zero monthly maintenance ?

Do you mean you are paying someone to do the work, and repairs ? Or you just ignore it.

 

[Cap_Scarlet]

So financially speaking you could compare the cost of a $400K home

taxes,maintenance,insurance,security monitoring,utilities, etc = $10K /yr
the missed income on the investment at 5% = $20K/yr

So the total cost is easily $30K/yr. to own a second home.

I wonder what a rental costs per month and per year ?

You are right with a couple of caveats.

1. If you can tell me where I can earn 5% relatively risk free let me know ;-).
2. If only makes sense if we can rent it out part of the year (say 6 months @ 2,000 per month).
3. Capital appreciation - maybe 2-3% per annum?
4. Rent of vacation home (also c. 2000 per month)

Means the maths are less straightforward.

 

[Cap_Scarlet]

If I could live my life over the second home would be Wengen, Switzerland.

I love the alps but Switzerland is just sooooooo expensive. We are in a nice town in Austria which is not quite a nice as Switzerland but a lot lot cheaper.

 

[W2R]

We have two homes 1200 miles apart. We have no children and do it for the weather. You end up with two of everything although somehow we ended up with four cars, two at each local. Both properties are lock and leave with zero monthly maintenance. We would love to have one home but cannot find the perfect place weather wise. If I could live my life over the second home would be Wengen, Switzerland.

The perfect place weather wise is on the beach in Hawaii, for me anyway.

But really, in modern times we have air conditioning and heating in the home, in the car, at businesses, restaurants, everywhere. If the weather starts to feel sticky and uncomfortable, one can easily cool off in a climate controlled environment. Personally I just don't feel the need for perfect weather any more, especially as a driver for something as important as where I live. Now back in the 1950's, it was a different matter and weather would have been my top priority!

 

[sengsational]

Nobody got the second house to "reside" in a no income tax state?

 

[pb4uski]

You are right with a couple of caveats.

1. If you can tell me where I can earn 5% relatively risk free let me know ;-).
2. If only makes sense if we can rent it out part of the year (say 6 months @ 2,000 per month).
3. Capital appreciation - maybe 2-3% per annum?
4. Rent of vacation home (also c. 2000 per month)

Means the maths are less straightforward.

The 5% isn't risk free - it is the opportunity cost of having $400k tied up in a property rather than invested. Could be more or less depending on your AA but 5% might not be out of line... perhaps a bit high... but if your portfolio earns 7% and the property appreciates at 3% then a 4% opportunity cost might be in the ballpark. So for $400k the net opportunity cost would be $16k...add another $10k for property taxes, maintenance, electricity, etc and the cost is $26k a year.

If you can lease a flat for $2k a month then you are ahead leasing rather than buying. YMMV.

 

[RockyMtn]

I have been a multiple home owner a couple of times. First was 1992-2007 when we had a Denver house and Colorado mtn house about an hour and half away. Used it a lot. Kids grew up skiing and enjoying the cool summer months. As kids went off and we got older the skiing part was no longer necessary. Sold the house in 2007.

Four years later bought a second home in Scottsdale to use when it got cold in Denver. Having been retired a few years I found myself wanting something in a warm weather locale. For the next four years we spent six months in each location. However, we quickly tired of the going back and forth. It seemed like we had just got to one place and it was time to go back to the other. The decision to downsize to just one house came relatively easy. The next question was where?

We chose Scottsdale as we felt that there were 10 good months of weather in Scottsdale and only eight or so in Denver. (We disliked the cold the older we got). Also, the area of Denver we lived was changing rapidly and a lot of the allure to living there was gone. Neither of us had any other family living nearby at that time.

So we sold both homes and bought a new, slightly larger home in Scottsdale. Net/Net we put about $600k of home equity into our pocket and eliminated one mortgage! We eliminated probably about $30k in annual expenses plus a $5k/month mortgage. We are now mortgage free.

Rather than buy another property in the Az mountains for those hot summer months we have decided to hotel and/or rent in July and August when it gets god awful hot here. This year we spent a week on Oregon coast. A week in Sand Diego. A week in Denver and rented a condo in Park City Ut for the month of August.

We have a list of about 15 places we would like to go for a month at a time. Just the expense savings on owning multiple homes more than covers the cost of the two months away. Plus we aren't tied down to going to the same place every year.

The money is not a real issue in our situation. We could afford to have multiple homes as we did for a number of years. We just choose not to.