Buying a Home

Buying a Second Home in Retirement

Review these common questions and current trends as you consider buying a vacation home or rental property.

If you’ve recently retired or are close to wrapping up your career, you may be thinking about where and how you’d like to spend your free time. Aside from changing your primary residence to one that better fits a more relaxing way of life, you may also be considering buying a second home. After consulting professionals to develop a financial plan and arrive at a target price, all you need to do is decide how you’d like to make use of your new property and what it’ll feature.

$200,000

The average price for a second home in 2017 was $200,0001

36% of investors and 29% of vacation buyers paid cash for their property1

1 2017 NAR Investment & Vacation Home Buyer’s Survey, National Association of Realtors, 2017.

What purpose should my second property serve?

Before researching second homes, think about about your goals: Are you simply looking for a vacation home, or an opportunity to earn extra income in retirement? If you want a second home long-term, you’ll want to consider locations that would be conducive to you and your family’s lifestyles. Look into areas where you already enjoy spending time or can potentially envision settling down.

If you want your second home to be an investment, rental properties can provide a great source of income during the weeks or seasons you’re not around. They’ll also keep you busy, since you will be assuming the role of landlord and taking care of your tenants’ needs. You also can hire a property manager, though doing so will reduce returns on your investment.1

42%

42% of vacation home buyers plan to use their second home for family vacations1

37%

37% of investment property buyers plan to rent out their properties to generate income1

1 2017 NAR Investment & Vacation Home Buyer’s Survey, National Association of Realtors, 2017.

Regardless of how you plan to use your additional property, you’ll need to purchase a second home insurance policy, which could potentially be different from your existing home insurance coverage. Your second home’s location, type of property, amenities, and how consistently it’ll be occupied can all affect your premium.2 And because owning another home means taking on a new financial responsibility, it could also impact your need for life insurance. Be sure to review your coverage, perhaps aligning a term policy with the length of a new mortgage if you need to take one out.

What kind of features do I want?

If you are using your second property as a lasting vacation home, you’ll want to ensure it will grow with you over the years. Make sure to find a spot that is easy to maintain, whether it’s choosing a tidy patio in lieu of a sprawling lawn, or a house with enough flex space that can adjust to your needs throughout your life’s stages.3

When investing in properties to lease out, look to areas that will be attractive to renters, such as neighborhoods close to a college campus or those in the midst of revitalization.1

For an idea of which location may work best for you, click through these four potential settings:

Should I use my previous real estate agent?

When looking for a second home, you may want to turn to an agent you’ve used in the past to help find the new property. This is a good strategy if you’re searching for a second home close to where you live, but if you’re looking to buy in a different area, it may be wise to find a new agent who has local expertise there. They’ll know more about market prices, property histories and desirable neighborhoods, which gives them the know-how to help you find your perfect home.4

To locate a new agent, use local publications that feature properties similar to what you’re looking to buy. Look for agents associated with those properties and do some research to see how many years’ experience they have – ideally at least five – and whether or not they’re certified.5

Buying a second home is an exciting step at any time in your life, but it’s especially thrilling when you’re about to embark on your retirement years. This new property can help you create special memories with your family or provide you with a new source of income. Whatever your post-retirement dream might be, your second home can set the stage to help you achieve it..

When buying a house, you’ll need to revisit your insurance needs, including life insurance. As with the acquisition of any new asset, your financial position and that of your family may change, so it’s important to have enough life insurance in place to help financially protect them. Learn how you can help ensure your family will enjoy your new home for years to come.

1 Buying a Second Home to Rent: Dos and Don’ts, Investopedia, 2019.

2 Insuring a Vacation Home, Insurance Information Institute, 2019.

3 Housing Trends for Baby Boomers, National Association of Home Builders, 2019.

4 4 Keys to Buying a Second Home, Bankrate, 2018.

5 Guide to Buying a Second Home or Vacation Home, HGTV, 2019.
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