What’s the Value of Owning Two Homes? – Ep 189
August 26, 2019
The value of owning a second home can be very rewarding, fun, and tempting. You can buy it in your own city or that vacation spot you are longing for. It can also be a bad idea to purchase a new home. Today's episode talks about Tom Sightings article on Do You Really Want to Own a Second Home? and it details the pros and cons of owning a second home. It could be a great investment or it could become a drain on your retirement finances.
The Need for a Second Home?
My co-host for this episode Kathy Gottberg lives in the Palm Springs area of Southern California. It is also a dessert but not as humid as South Carolina where I live and the weather in Palm Springs is about 115 degrees. But instead of being there experiencing that heat, she stays in a mountain cabin that she and her husband rent every summer for a month. They’ve been doing it for 23 years. That is why they always get the question of why don’t you buy a second home because you go there every summer for a month? People may not realize the downside of buying a second home.
Also, coming from a real estate background, Kathy has two thoughts on that. One is people got into homes that they honestly could not afford. They were bigger, fancier, more expensive than they could afford. That was a huge portion of what happened with the housing crisis. Banks were not helpful at all; they were making money, and they gave loans to people that they should never have given them to. So, what is the value of owning another home?
Renting Can Be Another Choice
In certain cases, rather than buy a home that you can’t afford, renting is probably a better choice. But if you’re like Kathy, just like what she said in the last episode, she and her husband bought rightsize, so they bought a smaller home, free and clear, and they made it as energy efficient as possible. They don’t have HOA dues, and their utilities taxes, insurance, and everything is less than $300 a month.
The value of having a home is good security for seniors to know that they’ll have a place that they can live but the problem is that if you’re barely making it now in your home and you have a huge mortgage, that will go on for another 30 or 40 years, and you're in your advanced age. It will not be a rocket science to figure out that that will not work, that’s a recipe for disaster.
Value of Owning a Second Home
The value of having another property is that you can use the property whenever you want, which is true. It’s so tempting to think you can go over the mountains where your property is and use that property. But the downside to it is how often are you going to use that property because life gets in the way. Before you know, you got a thousand of things on the plate and you can’t get to it. Also, you’re tied to go to that one place rather than having the freedom to go to other places that you haven’t gone to.
Though there are many people who like to travel, there are also many people that are home buddies. Many people are just happy staying home. And even though if they’ll have a second home, Kathy doesn’t think they’d be excited about going to that second home because they just want to stay home. That is because they have the value of having a life, a family, and experiences right where they are. Buying a second home won’t make them happy either, and they won't have the value of it.
RVs and Boats
I have friends that travel and they literally live in an RV. But there are also people that I know that buy an RV and then it just sits in the yard and they never use it. These things are so expensive, we’re not talking about the price of a car; we’re talking about six figures for these RVs.
Kathy and her husband borrowed an RV from her parents and w...