When do you buy your vacation/retirement home?

[Reggie]

We've been tossing around the idea of going ahead with the purchase, but I'm having a hard time pulling the trigger. We know we want a retirement home in Florida and we know the area where we want it. The market is still recovering so its still a decent time to buy. My hesitation is that we will not use it that often and we need to pay a company to keep it up while we are home. This would be used as vacation for close family and friends and then eventually our winter home once we retire. I'm 40 and my husband is 45.

Would you buy now and rent it out and loan it to friends and family?

[disneysteve]

At what age do you plan to retire? You are 40 and 45. If you are retiring very early, like 50ish, I might consider it. If you plan to work til "normal" retirement age of 62 or so, I wouldn't even think about it.

One thing to consider, in Florida especially, is that 55+ communities are really the way to go these days. I know many people who have retired to them and absolutely love them. Of course, you are both too young to do that at this point and most of them have rules against subletting/short term rentals.

[Reggie]

55+communities are something I hadnt thought about, very good point. My husband plans to retire closer to 60, I plan to retire around 50 or so depending on if I have grandchildren.

Does anyone own out of state rentals?

[disneysteve]

So your husband will work another 15 years. That means any house you buy today will be 15 years older by the time you actually move in. At that point, you'll need to be replacing worn out appliances, carpet, fixtures, roof, HVAC, etc. It's likely not worth the carrying costs for the next 15 years. Better to buy a newer place when you are actually ready to retire.

Also, so much can happen in life in that much time. What if one of you gets sick (or worse)? How will that alter your retirement plans? You mentioned having grandkids. Where do the kids live? Will you still want to move to Florida if the grandkids are 1,000 miles away?

My family vacations every year in Florida - in a rented vacation property. We've thought many times about buying our own and renting it out when we weren't using it but the costs and hassle factor have always convinced us not to.

Now if you reach a time when you are being snowbirds - spending weeks or months at a time in Florida and the rest of the year where you are now, that may be the time to seriously consider buying.

[autoxer]

I would try not to confuse vacation home with retirement home with rental property. Lay out the plan more clearly and then it'll be easier to decide if it's a good move.

If you buy a vacation home and you don't rent it out, it will be a huge unnecessary drag on your finances. Do this for yourself, not to be able to loan it to friends or family.

If it's your retirement home, you don't need to buy it this early. You have this fear that prices will go up too much before you actually retire, so you think you are saving money by buying it now, but are you really accounting for how much it will cost to carry for 15 years.

If your goal is to be a landlord, then go be a landlord and use that to help build wealth.

[disneysteve]

I would try not to confuse vacation home with retirement home with rental property.

If your goal is to be a landlord, then go be a landlord and use that to help build wealth.

Good point. If you want a rental property in Florida, you can buy that now, rent it out, even stay in it yourself from time to time (just pay attention to the laws that govern personal use). Then when you are ready to retire, you can sell that house and use the money to buy your retirement home.

[Reggie]

I really like the idea of using it as a vacation home and renting it out occasionally and then selling at retirement. Some of the properties I've been researching are inexpensive as far as taxes and insurance so the cost to keep is relatively low. We would use it 6-7 times a year and my older daughters may use it another 2-3 times. That may not be enough to deal with the hassle but its such a good investment right now. I could always sell in a few years.

[disneysteve]

I really like the idea of using it as a vacation home and renting it out occasionally and then selling at retirement. Some of the properties I've been researching are inexpensive as far as taxes and insurance so the cost to keep is relatively low. We would use it 6-7 times a year and my older daughters may use it another 2-3 times. That may not be enough to deal with the hassle but its such a good investment right now. I could always sell in a few years.

I think that's a much better plan than buying your retirement home 15 years in advance.

If you plan to just share the house with family, that's great. If you actually want to rent it professionally, study up on the tax laws. I believe you can only use the house for personal use a certain number of days per year if you still want to be able to claim expenses on your taxes as a business rental.

One thing that always stopped us from doing this was that we would only use it ourselves once or twice a year so it just wasn't worth it, but if you realistically seeing you and your family using it 8-10 times per year, that might make it worthwhile, especially if there are others that you will allow to use it as well.