Think it Through: Advice on Buying the Perfect Florida Vacation Home
For retirees with a few dollars in the bank and fond memories of beach getaways, buying a Florida vacation home and escaping the long, frigid winters at your northern home can be an exciting prospect. Unfortunately, many jump in too quickly without considering the financial ramifications of such a big investment.
It’s easy to focus on all the fun you and your family will have while overlooking the many associated costs, taxes, insurance, and maintenance. If you have a large family, there’s living space to consider and whether you’ll allow loved ones to borrow it from time to time. But, with careful planning and an honest, objective assessment of your finances, a Florida vacation home can be a major source of enjoyment. If money’s no object, you can concentrate on location and lots of memorable experiences. But for most retirees, there are lots of details to think through before purchasing the right vacation home.
Is it affordable?
Some people make the mistake of looking at the sale price alone. But many of the same factors you’d consider when buying a house back home are relevant when investing in a vacation property. Determining whether you can afford it means considering things like condo or homeowner association fees, property taxes, utilities, physical upkeep, furnishings and decor (this is important if you plan to rent it out). Also, bear in mind that you may not be able to sell it for a profit down the road (remember that real estate isn’t a liquid investment). Then there’s the money you’ll pay for hurricane insurance, which is an expensive proposition, especially if your vacation home is in a flood zone. If you own or plan to purchase a boat, that means a completely different set of costs. Your best bet is to brainstorm every cost you can think of, assess the total cost and make your decision based on how much wiggle room you’ll have.
Once you buy your Florida vacation home, how much time will you really spend there? If you live in New Hampshire or northern Minnesota, the travel costs alone may limit the number of times you can realistically get to Florida. This can be an issue if you don’t plan to rent out your vacation home. It may not be a great investment if you can’t expect to spend enough time there to make it a worthwhile purchase. Too many people jump headlong into buying a vacation home, only to end up with a vacation property that sits empty most of the year.
Making it pay
Retirees and small-scale investors often use a vacation property to generate revenue. Renting can help make your investment profitable and give family and friends a place for fun and sun (not to mention an occasional trip to Disney World). There are many options available, from renting through a management company to posting your home on Airbnb. Then there are logistical details to arrange, things like providing keys, having your place cleaned on a regular basis, and processing rental payments. You’ll also need to make sure you’re properly insured (a landlord policy will cover major risks, like fire and theft).
Don’t forget that you’ll need to safeguard your second residence while you’re off body surfing and eating fresh shrimp with every meal. If you have a pool, you’ll want to make sure it’s securely covered and protected with a security fence of some kind. You might also consider having an alarm system installed to guard against break-ins. Using a security system, even one you install yourself, can be a great way to maintain peace of mind when you can’t be there.
If you’re going to rent out your home, it’s also a good idea to protect yourself from potential litigation by operating your rental business as a limited liability company. Registering as an LLC is an easy and inexpensive task when you go through an online service. Another option is to hire an attorney, or you can wade through the legalese yourself. Regardless of how you do it, with the right groundwork, you’ll be ready to earn passive income while protecting your assets.
Profitable and enjoyable
A Florida vacation home is a reward for many retirees who work for years taking care of their family and saving what money they can. Take full advantage of the opportunity by accurately assessing your financial situation and purchasing a property that’s within your means. Handled correctly, your vacation home can be a profitable and enjoyable destination for you and your loved ones.
And one day you may decide to retire to it full time and leave behind the cold of the North. When that happens, then….
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