Hi I'm an Acupuncturist (53 yo) Should i buy a rental vacation home?

[daibai]

My husband and i are currently renting and we're considering buying a beautiful vacation home....our first home! I am just beginning to earn nice $ from my profession-a career change-but feel that i will be successful. We have very little in retirement savings, about $100,000. We'd keep our apartment $1500 rent, mortgage would be about $2,000, we can afford this with about $4,000 left over for other expenses. Are we crazy to consider this?
- Good chance that we can rent the home in the summers.
- House is a good price, in an idyllic setting in new england, 4 hours from our apartment.
- Hubby has 4 day weekends and summers to work on home (tenured professor)

I am worried about the opportunity cost of the $ we'd be putting into the home. Is this a good way to prepare for retirement? We could stash away $1,500 per month or more, instead. Meeting with a financial planner next week.

 

[73ss454]

Welcome daibai!

My only suggestion is to make sure the planner is paid by the hour and not on commission. If he/she is you'll be working for the 3 of you.

Not enough info on the rest of your plan but I'd be saving and not buying but that's just me.

 

[daibai]

Thanks so much....I know that my post lacked info, didn't want to be long-winded, but you peaked my interest....how much does a financial planner earn per hour...estimate.

Best to you and thanks again.
Deborah

 

[calmloki]

Since you are an acupuncturist buying a rental home is just the right thing to do! (Where's that wry smiley....)

Actually, I'd argue against it. Buy a home to live in, or a rental to make money with. Don't buy a job to spend money on. You are looking at spending about 1/2 your income on housing payments. Cue Suzy Orman - DENIED!

We have rentals, and two homes, but didn't buy the second until we were well established and with NO thought that it was a good rental investment.

Can you flesh out your thinking? Something I'm missing?

Welcome!

 

[LOL!]

Husband is a tenured professor (I'll guess about the same age as you) and you all only have $100K in retirement funds

I recommend that you do not put any money into a vacation home at all and instead, start contributing the maximum to retirement plans. For him, it will probably be $38K per year (including employer matching) and for you assuming you are self-employed about $49K per year.

 

[73ss454]

Thanks so much....I know that my post lacked info, didn't want to be long-winded, but you peaked my interest....how much does a financial planner earn per hour...estimate.

Best to you and thanks again.
Deborah

Depending on the part of the country your are from I'd say a few hundred an hour. If you use a commission based advisor you'll be sold a bunch of things that are not in your best interest but your advisors.

The best thing to do is do some reading and not use an advisor at all.

 

[eridanus]

Why buy? For $1500, you can rent a place for a month. The rest of the year, you can save the money and buy a house in which to live.

 

[Moemg]

Welcome ! Unless you have absolutely huge pensions to rely on I would forget the vacation home and just start saving as much as I could .

 

[GregLee]

Is this a good way to prepare for retirement?

Thinking of it just as an investment, it's hard to be enthusiastic. But if it's a very nice place (it sounds great), maybe you'd like to live in it when you retire. My wife and I have retired to live in the house we bought in 1994, 16 years before we retired in 2010, and it certainly was nice to be settled and be in our retirement place already, when we retired, with mortgage long since paid off. (However, with only a 40 minute commute to work, we were able to live there the whole time, without maintaining a second home.)

 

[FreeAtLast]

At what age could you have the mortgage paid off? Can you live there full time after you retire? Do you want to live there F/T after you retire.

"beautiful vacation home" seems to ring with emotions, not usually good when making a business decisions.

 

[Lagniappe]

At $24k per year, plus maintenance (and maybe taxes and insurance) this sounds like an expensive way to get away on the weekends, and in no way sounds like a way to prepare for retirement. Are you thinking of living in it after you retire, of selling it for a profit to fund retirement, or something else? And would the down payment use up the $100k you currently have saved?

I would save the money for retirement.