Learning Center Article

Article: Buying a Vacation & Retirement Home

Buying a vacation home that doubles as a future retirement home requires forethought and thorough investigation. Conventional wisdom tells us to first settle on a desired location and then look for the least expensive house in the best possible neighborhood. This is of course true, but buying a future retirement property demands additional consideration. Without a doubt, the purchase of a dual purposed home can be one of the most important and financially rewarding decisions a pre-retirement couple undertakes. Quite simply, the ultimate home buying decision comes down to establishing relatively conservative financial boundaries, drawing up a wish list and employing a real estate broker to find a home that will serve your needs now and in years to come.

Even prior to the financial planning phase, a vacation and future retirement home buyer should take a step back and make certain that there is 100% commitment. Ask yourself a few simple questions. First, is it possible that your financial position could materially change for the better or worse in the upcoming years? Have you decided on a location that requires a dramatic environmental change? What about relatives, does it matter that their next trip may require a flight instead of a drive? If you've answered 'yes' to any of these, our advice is to find a long-term rental in the area and give it a test drive. If, on the other hand, there are no doubts, it is time to set your financial parameters.

Once the decision is made to move forward, you need to figure out how much of a home you want and what type of home you can afford. The latter is a bit easier to quantify as most financial institutions prefer mortgage payments that are less than 29% of gross monthly income. However, if you have a good financial track record, banks will afford you some latitude. Obviously, lending rates are a crucial factor in this equation, especially if you go the adjustable rate route. A word of caution: be careful of Adjustable Rate Mortgages that look particularly attractive in today's low interest rate environment as an uptick in rates could lead to a potentially unpleasant financial situation. Remember that buying now for a future retirement is a long term proposition and your new investment should appreciate with no financial carrying cost surprises.

An additional factor to consider is whether your prospective vacation property can provide rental income before it becomes your full-time retirement home. If so, you would be able to deduct a portion of your mortgage interest payments, taxes and property amortization against the rental income. In other words, it is a great way to build equity and create additional cash flows. It should come as no surprise that an increasing number of people have taken advantage of this strategy.

After defining your financial boundaries, it's time now to come up with your wish list. What do you want in a home? How many bedrooms and baths? Do you want to live in a private gated community or out in the country? Does it have potential as a rental property? In addition, off-site criterion should be established to ensure that all aspects of your vacation home experience are amenable to your current and future retirement lifestyle. For example, are there property management services and what about local conveniences such as transportation and healthcare facilities?

Now that you are armed with your financial parameters and wish list it's time to find a local broker and see what's available. Almost 70% of home buyers leverage the internet to research properties so if you haven't already, it's time to start surfing the web. Simultaneously, you should be refining your financing plan by contacting a number of financial institutions and mortgage broker aggregators. Don't be bashful, comparative shop with at least two or three companies to ensure that you understand the various financing options and are being offered the best deal.

As we all know, the relationship with a broker is extremely important. A broker must truly understand your financial parameters, desired home criterion and lifestyle objectives. Brokers are normally paid for by the seller. Therefore, it's your job to establish the broker and buyer relationship that best works for you, not the seller. Remember, this is your vacation and future retirement home.

With a bit of good luck, buying a vacation and retirement home can yield some interesting financial benefits including long term capital appreciation and additional cash flows. Thorough planning can help mitigate future uncertainties and make the home buying process into a truly rewarding experience.

About the Author: Robert Flournoy is a staff writer for Golf Home Connect. For additional information on golf course community real estate visit Golf Course Communities

Your Home Buying, Selling, and Real Estate Resource

Home Buying Intelligence Magazine provides comprehensive real estate articles, mortgage guides, and real estate quizzes, for everything about home buying and selling. Our core goal is to provide factual information that will help our buyers and agents gain knowledge and make intelligent real estate investment decisions. We cover a very broad range of real estate, mortgage, equity loan, and insurance topics and provide varying subject depths for the home buying novice to seasoned agent.

Real Estate Quiz Zone

We have a Real Estate Quiz Zone to test your knowledge! Home buying and selling is a big deal financially, how well do you really understand it? Take a quiz and see how many questions you can answer correctly! To complete the quiz, click on the radio button of your choice for each of the questions. When you are finished, hit the "Check Answers" button at the bottom of each test page. Our quizzes cover everything about real estate: home appraisal, estates, property laws, mortgages, financing, agents, brokers, and more!

Real Estate Learning Center

Does the world of real estate terms, contracts, and mortgages seem like a big puzzle to you? It really can be quite intimidating. See our Real Estate Learning Center, where we provide comprehensive learning guides for everything about home buying and selling! From real estate investment, appraisal, insurance, and selecting the right real estate agent and listing broker. Make intelligent decisions on residential home mortgage, refinance, equity loan, home improvement, and house selling.

Our Service

This Service is designed to provide a community based forum for the open and free flowing exchange of home buying and real estate agent comments, opinions, experiences, and information. Although Home Buying Intelligence Magazine attempts to provide accurate information, it assumes no responsibility for any errors, inaccuracies, omissions, delays or other defects in any of the information provided as detailed in the Site Policy. All information and resources contained in the Service are fully protected by applicable copyright and trademark laws.

Home | Learning Center | Quiz Zone | Glossary | Contact Us | Site Map | Site Policy | Find an Agent | Link Exchange | Link Partners | Resources | Learning Center Map | Quiz Zone Map

© Copyright 2005, eCohesion LLC (727.502.0420). All Rights Reserved | Privacy Policy | By using this site, you agree to our Terms of Service.
    email: support-team   phone: 727.502.0420

January Issue


»Home Buyer's Corner
»Seller's Know How
»Learning Center
»Quiz Zone


Selling Your Home?
Let REALTORS® Compete For Your Business!

Search MLS Listings
Homes101™ has a real estate agent waiting to help you find a home right now!

Find a Contractor
America's Premier Contractor Referral Service.

For Sale By Owner
Buy and Sell Real Estate Without Paying a Broker!


Free Estimates
Free Estimates from Qualified and Pre-screen Contractors.

Find a Painting Contractor
Professional Painters Referrals are Always Free. home improvement projects easier

Refinance your Home
Refinance your home to consolidate debt regardless of credit history.

Order Boxes Online
Next Day Delivery for Most of the USA.

Try a Pop Quiz
Home Buying Core Knowledge
Property & Ownership
Know Your Condos
Selling and Listing
Contracts, Terms and Condtions
Leasing & Rentals 101
Estates & Property Laws
Real Estate Valuation
Real Estate Terminology
All About Financing