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Retirement is a great time to relax and enjoy the luxuries of travel. However, jet setting around the country or globe can be expensive. For that reason, many seniors may consider a more permanent travel investment in the form of a vacation home. The question is, though, should you consider renting or buying? Certainly, sticking to your monthly or yearly budget is vital to a healthy financial life. This is especially true when there isn’t the same steady income stream you were afforded during your working years. If you’re looking to find a permanent vacation destination, here are some important factors for deciding when it’s best to rent or buy a second home.
What is Your Current Budget in Retirement?
Everyone’s retirement budget is different. So much depends on the savings you put in during your working years, social security income, current costs of living, and other sources of income. If you will be renting a vacation home, you’ll need to add the lease cost to your budget. This may change based on whether you’re renting every month, or simply for a few weeks out of the year. Renting does allow you more flexibility, especially if you want to go elsewhere or change things up. However, purchasing a second home allows you more security. The other side of that sword? A second mortgage and the fees that come with closing costs of a house.
What is the Housing Market in Your Vacation Destination?
Popular vacation destinations are going to run you quite a bit more. While you might love summering in a spot like Miami or Los Angeles, your money may be best used in a more modest market. For example, this resource lists cities like Kissimmee, Detroit, and Gatlinburg as being better returns for your purchase. You might consider contacting realtors in your desired area and finding out what surrounding towns offer the best bang for your buck. Regardless, deciding whether to rent or own will really come down to availability and your cash flow.
How Often Will You Be Using Your Vacation Home?
Renting versus buying a vacation home should really come down to usage. When you’re not in the area, that home may sit vacant for some time. It’s a good idea to consider not only how often you’ll be in the area, but whether your children, grandkids, or extended family will be visiting the destination. If you’re feeling as though this property may sit unused, renting may be a better option. If, rather, you’re anticipating a lot of occupancy, buying may help to mitigate issues like wear and tear or other related issues that come with owning a home.
While buying or renting a vacation home is mainly dependent on your financial standing, there are still a lot of factors that go into the process. Thinking about issues like usage and market value can help to inform your decision. A life settlement might give you more cash on hand to buy, or funds to rent and enjoy the vacation of your dreams.
Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.
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