Is a Second Home Right for You?

It is a frequent conversation that we have with our clients regarding how and where they want to spend their retirement years. Some folks have family as their primary driver, and on occasion, taxes. More frequently, however, being based in the north, our clients are thinking about the temperature! Arizona, Florida and other destinations South can look pretty compelling.

Each of us will have our own reasons and it is important to remember that retirement is not lived on a linear basis. By this I am implying that spending will vary from year to year and most certainly from decade to decade. In other words, if you do consider a second home, do not assume you have to own it until death-do-you-part. As advocates for our clients, we stress being good stewards of financial assets; within that framework let’s make sure we plan for tomorrow while also getting today right. And if part of getting today right is a second home then let’s do a deep dive on the logistics and economics of the decision.

For many who can consider it, a second home may be an important part of getting today right. Within a second home discussion with clients, we consider scenarios where a second home is a 10, 20 or 30 year decision. The affordability question of the purchase can then be evaluated by the intended term. Clients that did not think a second home was possible saw it differently when we demonstrated that having it for 12 years and then selling it could work well within their plan.

Making the decision to purchase a second home has become a bit more complicated over the last 15 years. Options on how to own, what to own, and where to own have increased. It can be a very exciting prospect, you’re considering where you will spend a significant amount of your free time, financial resources, or perhaps where you may choose to take up your primary residence.

The intention of this article is to really look at the second home question from as many angles as possible. There is no substitute for the fact that good decision making occurs when there is a period of discernment. In other words, gather all the information that you can, check in with people that you trust, do a gut check and, if it is your way, take time for quiet contemplation and guidance.

The romantic thought of having a second home doesn’t often include conversations about the fact that you may be buying second set of plates, silverware, glasses, and sheets, and towels.

You get the picture, these can be very fun and rewarding activities as you nest in a new place. The minutia should not be something that stops the thought of a second home-nor should this be ignored. If you have children, it’s somewhat akin to the fact that you don’t have all your kids at once. It happens gradually and over time.

My wife and I have owned a home in the West, a fractional in the South, and finally a home in the South after selling the two mentioned properties. Each decision was based on where we wanted to be at that time in our lives, how often we wanted to be there, and finally what we wanted our retirement to look like. This worked for us; your decision may be similar but will absolutely be unique to your own circumstances and desires.

As a financial advisor and as a multiple home owner, it is my hope that this information has been valuable for you. I've put together some common questions and considerations around the second home decision that I have found helpful in discussions with clients, friends, and in my family.

• How much time do we have today to spend in a second location?

• Are we looking for a cabin up north or an escape down south?

• If children are involved, and time with them (or their children) is important, will this property accentuate our time together or exacerbate a separation?

• How long do we think we would own a second home?

• How do we feel about a mortgage, or do are we compelled to own it out right?

• What other costs may be involved?

• Will we want to have additional amenities such as a golf membership, access to a body of water nearby (such as a boat dock or slip, ect.)?

• Is this a property that we would want to stay in the family for multiple generations?

• Will this be our first step into a new area of the country and/or could we see ourselves buying another more substantial place down the road?

• What alternatives exist to having a second location without a full commitment to a second home?

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