As noted in a recent post, Should I Invest in a Second Home?, a second home can take many...
Should I Invest in a Second Home?
Second Home: Why?
As noted above, you might establish a second home for multiple reasons.
- A retreat from your main home and location
- An eventual home in retirement
- A way to be closer to family
- An investment or income property
- Joining a new community
Let's cover each of these alternatives in detail.
A second home can serve as a place for shorter periods like vacations or weekends. It can also be a place you live for months at a time.
You may intend the second home entirely for leisure, as a location for remote work, or a combination of both. No matter what the amount of time and ways you spend your time, there can be any number of benefits to the second home location:
- Preferable weather
- Lifestyle differences. For example, country living versus city hustle-bustle
- Geography features like coasts, mountains, forests, or wide-open spaces
- Cultural attractions like museums, performing arts, learning institutions, or sports
One of the downsides of a second home getaway is it often generates reluctance to take vacations in other locations. You may not feel you can afford to vacation elsewhere while paying a mortgage payment or rent on the second home.
A Home for Retirement
Those contemplating their post-career future may establish a second home as an eventual retirement location. This could work as a multi-purpose strategy. When first purchased, the property can serve as a vacation getaway. However, in the long term, the property could become one's primary home (or only home) in retirement. This strategy allows the buyer to confirm that it's a place they'd like to live full-time. Also, once they retire, they can already be plugged into the local community, thereby easing the transition into retirement.
Being Closer to Family
As parents become empty nesters, adult children and their families may reside in different locations. A second home in that location can maximize time with family, especially grandchildren.
An Investment/Income Opportunity
Purchasing a second home means you are acquiring an asset that could fluctuate up or down in value. Usually, this pertains to a real estate asset. Except for the 2008 crash, real estate value appreciation has been the norm in most markets over the past few decades. Therefore, most second-home buyers could be reasonably confident of future profit.
A further economic advantage of a second home would be as a rental. Many families who might not otherwise be able to afford a second home set up their property for rental income to offset the costs they would not otherwise be able to cover.
A New Community
When considering a second home, don’t underestimate the social factor. Suppose you have found the perfect winter retreat. Yet, once the novelty of the new place begins to recede, it's not uncommon to feel a little lost. A big reason for this could be that you’re separated from your normal social connections. Even if your second home is in close proximity to family, forging new social connections outside the family circle is important.
You may move into a community that has built-in social events and activities. This makes the effort to make new friends a lot easier. Otherwise, you’ll need to take steps to make new connections. Suggestions for doing this are:
- Introduce yourself to the neighbors
- Throw a housewarming party
- Join local civic, sports, volunteer, or religious groups
- Have a yard sale
- Take on a part-time job
Putting down roots in a new location takes time, but when you make new connections, your second home will start to truly feel like a home.
This high-level review of the what and the why of a second home only starts the conversation. Subscribe to our blog so you don't miss upcoming posts covering topics such as:
- Buying versus renting
- Ownership: Full or Partial?
- How do Timeshares and Fractional Ownership differ?
- What is the investment/income potential for a second home?
- What are all the costs of a second home?
- What Are the Different Types of Second Homes?
- Second Homes: Buy or Rent?
- Second Homes: Full vs. Partial Ownership
- Second Homes: What Is Fractional Ownership?
- Is a Second Home a Good Investment or Income Opportunity?
- What Does a Second Home Really Cost?
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