Renting or buying? What is best for a second home.

[Frugalityisthenewblack]

I think the best chance to have a successful retirement is to plan ahead. I have a year off to try our the retiree lifestyle (a sabbatical) and in six years I will be in a position to leave work permanently. I want to spend the winter months in a warm climate.
Originally I thought I would buy a second home and take advantage of the cheaper market in Florida, but now I have changed my mind.
It's a woman's right to change her mind---(sometimes I abuse the privledge).
Sometimes it is cold in Florida---maybe I will visit Ecuador or Belize and see if they would be good places to spend the winter.
If we rented for a few months in a place close to the equator then returned to Canada and took our trailer to the US in the late winter/early spring for 6-8 weeks we would have the flexibilty to discover and travel the southern states. Part of me is worried I might get bored being in one place.
Buying or renting----who has made this decision and which did you choose?

 

[MichaelB]

I think the best chance to have a successful retirement is to plan ahead. I have a year off to try our the retiree lifestyle (a sabbatical) and in six years I will be in a position to leave work permanently. I want to spend the winter months in a warm climate.
Originally I thought I would buy a second home and take advantage of the cheaper market in Florida, but now I have changed my mind.
It's a woman's right to change her mind---(sometimes I abuse the privledge).
Sometimes it is cold in Florida---maybe I will visit Ecuador or Belize and see if they would be good places to spend the winter.
If we rented for a few months in a place close to the equator then returned to Canada and took our trailer to the US in the late winter/early spring for 6-8 weeks we would have the flexibilty to discover and travel the southern states. Part of me is worried I might get bored being in one place.
Buying or renting----who has made this decision and which did you choose?

If you get bored living in just one location, buy a second home and that way you may get bored in two locations. Or, you may not get bored - because you spend so much time and energy tying to keep in good repair the home away from home that is not used 1/2 of the year. Owning a second home is beyond expensive and can break a retirement plan. Speaking from experience here. To me RV'ing sounds like a better option for the nomad - or just rent a place for month or two, a different location each time.

 

[Onward]

I made the decision and it's definitely renting, for many, many reasons.

Other people choose buying. The right choice depends on your personality and specific situation.

I think you'll find this is a fairly controversial topic on this board, right up there with should you pay off your mortgage.

 

[HFWR]

I'm unlikely to ever buy a second home. For that matter, I won't own the one I'm in for another 25 years...

Renting gives you more flexibility, imho. Get bored? Move!

 

[Brat]

We owned a 2nd (vacation) home and although that experience turned out well I don't recommend it. There are some who are content to limit their activities to two locations but not us. We didn't use it as much as we anticipated.

 

[Major Tom]

I've owned and I've rented. Currently I'm renting. I may consider owning again if it looks like it might be a good short-medium term investment. Otherwise I'll continue renting with a view to full-time RV-ing at some point so I can move around.

Does owning an RV count as buying?

Ooops - just realized the OP was talking about a second home. My apologies, I was talking about my first (and only) home.

 

[ziggy29]

You'd have to use it an awful LOT -- and commit to vacationing in the same location -- to justify buying it unless it's something you can easily rent out AND use a local management company and still have it cash flow positively. That's a high hurdle to meet.

The problem with "wintering in Florida" is that you would be occupying the property at the same time it's the most marketable as a rental. I don't know how much luck you'd have renting out a Florida residence in the summertime.

 

[Frugalityisthenewblack]

A beachfront condo in Ecuador for 60,000$ ?? maybe I will buy afterall!

Why Ecuador is a great place to retire - moneyville.ca Blogs

 

[Milton]

Canadians will find that owning in Florida (or elsewhere in the US) significantly complicates their tax situations. It would be prudent to seek advice from an accountant who has experience advising people in that situation.

The right choice depends on your personality and specific situation. I think you'll find this is a fairly controversial topic on this board, right up there with should you pay off your mortgage.

While I don't like to make categorical statements, I will go out on a limb and say that regardless of one's personality and specific situation, from a strictly financial point of view owning a second property is almost never a good idea.

Of course, there is more to life than money. If you can afford it and believe it would give you pleasure, then there is certainly nothing wrong with choosing owning over renting. Good luck with your decision.

 

[rescueme]

I bought my DW. I rented my GF .

Come on folks, just a little humor to this thread.

BTW, we would never buy a second home. DW/me have no desire to go to the same place over and over when we have our free time.

That's why we're off to Hawaii in April, DW/son to Canada in June, and DW/me back to Scotland in September.

There's too much in the world to see. Why would you ever tie yourself down (other than a primary residence)?

Just my simple POV, based upon our lifestyle...

 

[W2R]

You'd have to use it an awful LOT -- and commit to vacationing in the same location -- to justify buying it unless it's something you can easily rent out AND use a local management company and still have it cash flow positively. That's a high hurdle to meet.

+1 Personally I do not want a second home, for these reasons and because I would have twice the responsibility and hassle. Renting sounds like so much more fun and seems more carefree, to me.

 

[beowulf]

We are renting for the Winter in the Phoenix area for 4 months. We did this two years ago in a completely different part of the area and are trying a new place. Is it expensive? Yes, but a lot cheaper than buying and all the hassles that accompany home ownership. And forget about renting out a vacation home in the South West between May and October - far too many homes available for the number of people who want short term furnished rentals. Our 4 month stay is costing significantly less than the comparable mortage payment for 12 months for a similar home (3K sq ft, pool, spa). That's even with the extremely distressed prices here - assuming we bought at the low point, which has not happened yet.

And in May, we go back to our own home and have no worries about what we left behind in Phoenix. OTOH, if you have lots of money that you want to donate to the banks, it might be a good idea . And, if we ever decide we want to move here full time, we will sell our home and then, maybe, buy. Or just rent year round - the prices are about 50% less for an unfurnished house for a full year rental.

 

[kat]

I own a second home, but it's for reasons that work well for me. I like to be able to get away impulsively when I want to. That is harder to arrange if I am renting. And I have two dogs that I want to take with me. I still also go on vacation to other places as much as I used to before. My second home did not take the place of faraway vacations.

 

[MichaelB]

We own a second home. There are legitimate reasons, it doesn't really tie us down or prevent us from seeing the world any more than one home would, and it is definitely more than twice the responsibility (and expense).

 

[RetireBy90]

so Kat and MichaelB - wonder if you ended up with a condo or traditional home? I would think that a condo would bypass some of the maint issues but then you would have to pay every month for someone else to bother with them.

We have considered a 2nd home in a warmer area. We often head south when we can when it is colder in far north of Virginia :-} I would think that there are other ways to spend $$ or invest if you want to look at it as an investment. But, it would be nice to have a place little bigger than a hotel room or even a extended stay suite, and have my crap already there waiting on me.

 

[kat]

so Kat and MichaelB - wonder if you ended up with a condo or traditional home? I would think that a condo would bypass some of the maint issues but then you would have to pay every month for someone else to bother with them.
.

I have a century old house in a city where I do some semi-retired part time work, self-employed. I also have a roughly 30 year old 650 sq. foot cabin in the country on three acres, about 80 miles from my city house. I can take a business expense for using space as a home office in both places. Also, this year I expect to rent the cabin out during two or three weeks of hunting season.

 

[Walt34]

Or, you may not get bored - because you spend so much time and energy tying to keep in good repair the home away from home that is not used 1/2 of the year.

That's exactly the reason we decided not to buy a second home, having observed that those who did spent a good chunk of their vacation time maintaining the second home. That's not my idea of a vacation.

We were close to getting the first home paid off, were paying way too much in taxes, and the tax guy said the only things we could do were buy a second home, an RV, a boat with a galley and head, or start dumping money into tax-deferred accounts.

We didn't want any of the other stuff so we chose the last option.

 

[Buckeye]

I don't want to own a home in FL and I live here! The homeowners insurance situation is still a mess and I've seen the chaos and mess a hurricane (or three in one year) can cause.

 

[MichaelB]

so Kat and MichaelB - wonder if you ended up with a condo or traditional home? I would think that a condo would bypass some of the maint issues but then you would have to pay every month for someone else to bother with them.

We have considered a 2nd home in a warmer area. We often head south when we can when it is colder in far north of Virginia :-} I would think that there are other ways to spend $$ or invest if you want to look at it as an investment. But, it would be nice to have a place little bigger than a hotel room or even a extended stay suite, and have my crap already there waiting on me.

In my view a home is not an investment and a second home even less so. For someone that needs a two location lifestyle, two condos is much easier than houses.

 

[MichaelB]

That's exactly the reason we decided not to buy a second home, having observed that those who did spent a good chunk of their vacation time maintaining the second home. That's not my idea of a vacation.

We were close to getting the first home paid off, were paying way too much in taxes, and the tax guy said the only things we could do were buy a second home, an RV, a boat with a galley and head, or start dumping money into tax-deferred accounts.

We didn't want any of the other stuff so we chose the last option.

You're just trying to make me feel good, right?

 

[beowulf]

Agree with MichaelB - if you are going to own two homes, at least the one where the weather is worst should be a condo.

 

[walkinwood]

For me, taking care of one home is work enough. I'd rather rent where I want to visit than own a second home. There are many good web-sites to facilitate this.

Right now we don't own at all, but will be back to being owners by the end of the year.

 

[Walt34]

You're just trying to make me feel good, right?

Some people love doing that home maintenance stuff and admittedly I did too. But perhaps I'm getting lazy since the idea of repainting the entire house is not appealing. At one time I looked forward to it.

 

[REWahoo]

Some people love doing that home maintenance stuff and admittedly I did too. But perhaps I'm getting lazy since the idea of repainting the entire house is not appealing. At one time I looked forward to it.

I'm suffering from the same lazy streak. I'm sure it's nothing more than laziness and has nothing at all to do with advancing age...

 

[MichaelB]

Some people love doing that home maintenance stuff and admittedly I did too. But perhaps I'm getting lazy since the idea of repainting the entire house is not appealing. At one time I looked forward to it.

How much of that was looking forward to painting and how much was getting away from work (or something else)?

I'm suffering from the same lazy streak. I'm sure it's nothing more than laziness and has nothing at all to do with advancing age...

Could be common sense. I've spent my adult life about evenly split between houses and condos. There is no clear and easy choice, but I have to admit every time there is major home maintenance or expense due I recall the condo times fondly...