VOL. 129 | NO. 129 | Thursday, July 3, 2014
Rays of Wisdom
Dana and Ray Brandon
Vacation Home – Is It Time to Buy?
By Ray and Dana Brandon
Ray’s take: It’s summertime and the vacation season is upon us. Sometimes, it sounds wonderful to own a beach or mountain getaway. Many Americans share that same dream – a “summer place” to enjoy and perhaps pass down through the generations.
Depending on your circumstances and your financial plan for the future, this might be a good time to consider buying. Mortgage rates are still pretty low and prices in many areas remain well below peak levels. According to the National Association of Realtors, vacation home sales jumped nearly 30 percent last year. Nonetheless, they were still about two thirds of the peak in 2006.
So is a vacation home in the cards for you this year? Before you make a long-term commitment to a vacation home, look at the reality and not just the dream.
You should take off the rose-colored glasses prior to making a decision regarding purchasing a second home for vacation purposes. Think about year-round things like the costs of maintaining. You may have to pay pros to do things you do for yourself on your primary residence, like mowing the lawn and minor repairs. Then there’s insurance and taxes. If you decide you no longer want the home or get into financial straits, selling can be difficult since a vacation home is not a necessity potentially causing demand to drop suddenly when the economy is in trouble.
Additionally, you should be careful about over-weighting real estate in your portfolio and being “locked in” to a vacation destination. It’s difficult to predict where you’re going to want to vacation 10 years from now!
A vacation home can be a wonderful thing as long as you have considered all of the ramifications ahead of time.
Dana’s take: My first summer read is “Under Magnolia,” Frances Mayes’ memoir of her Georgia childhood. In it, she tells of her family’s Sea Island beach cottage. Reading it made me contemplate owning a beach cottage.
I imagined all the good times of multiple generations of family gathered and little ones exploring the seashore with buckets and shovels. I don’t imagine mildew, hurricanes, rental hassles, partying neighbors or the new condo development blocking my view.
The joys of a vacation home can be enjoyed with a rental if you book a generous block of time. Let the owners take the location and weather risks so you can enjoy a no-worries vacation. And look at the bright side; when you rent, you are less likely to field requests from acquaintances to “visit.”
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at firstname.lastname@example.org.