Perhaps your kids have grown and are out of the house now? Or you made a good living and have a good retirement savings fund built up? Are your mortgage paid off and your credit impeccable? Sounds like you are ready to start your second life with a second home and an investment property or vacation home can be excellent ways to do just that. Not only will you get a change of pace and scenery, but you will be expanding your assets with an investment too.

Just because you like the idea, don’t be too quick on the draw to whip out your checkbook and sign a real estate agent to find your second home.  There are considerations to before taking the leap into additional home ownership.

Real estate professionals know that just the right questions to ask like do you have enough cash in that retirement fund to pay for the down payment and closing costs too? Will this decision wipe out your savings or will you have cash left over to live truly retired? Have you considered HOA fees, taxes, utilities and insurance? Even though you may believe you are financially prepared, retirement is no time to make a hasty decision.  Heaven forbid you should have to get a job during your golden years of relaxation!

You will definitely want to contact your accountant or tax professional.  Second homes and vacation homes come with a variety of rules depending on where you live, how much time you spend in the second home and whether you rent it out to other people.  You will want to investigate these rules so the IRS isn’t knocking on the door of your vacation home looking for more money than you have left in that nest egg.

Money is not the only consideration in making this purchase. Consider your age too.  For obvious reasons, a 30 year fixed rate mortgage may not be an ideal option for retirees.  You will also want to consider your physical health for your age.  Second homes require maintenance and upkeep, unless of course that is included in your association fees.  A second property is going to require a commitment of time and money, make sure you have both available and want to make that commitment.

One last consideration and that is, are you sure you know what you want to do with your retirement years? Will you get bored loafing around the condo in Florida and miss the mountains of Montana? Or vice-versa? If you have any doubts, rent a home in the area you are considering spending your retirement before you make a big purchase.  You just might be surprised that what you thought you were looking for doesn’t quite scratch your retirement itch. 

The overall rule of thumb here is to consider this purchase from every angle. Don’t make a purchase that is going to wipe out your hard earned savings or that will take up all your free time. These golden years are the years you’ve look forward to enjoying after all!