Does anyone maintain a second home?

[sonnyjane]

Hi all!

My husband is in the military currently and still has several (read 10) years on his contract before he will be able to retire. We do NOT plan on staying in the city where we are currently stationed. We are, however, in agreement on where we do plan to retire and with housing prices and mortgage rates currently so low, we are entertaining the notion of buying a home now even though we won't be able to live there for a while. We have found one specifically that we have had our eye on and we are flying up to make an offer and do an inspection this weekend. We can afford to make the mortgage payments without having to rent out the home, and frankly I have known enough people who rented out their home and had horrible experiences that renting it makes me wary. That said, that is a LONG time to leave a house empty. We would go there at least twice a year to check up on things and stay for a week at a time, but what types of things do we need to do in the interim to make sure the house is secure and in good working order? Does anyone have experience with this situation or know someone that does? Would a property management company provide a service of "checking in" on the home?

Any thoughts or advice is greatly appreciated!

 

[Dee*Jay]

What a great opportunity!

Just a couple of thoughts... You say it will be many years before you're ready to occupy this residence full time. Are you prepared for all the things that will be out of date by then? Will the kitchen be the equivalent of 1960's avocado green appliances by then? You may want to update it at that time ($$$). Will the HVAC unit(s) still be efficient by then? To update: $$$.

My references to $$$ means, is this money you will have to spend in the future to update the property that would otherwise net out just by buying an up-to-date property at the time? Of course who knows, but I'm just throwing it out there.

And from a location standpoint is that area stable *enough* that the demographic and socio-economic environment will still be one you want to live in when the time comes? (Again, a crystal ball question, but one that can be considered in terms of how long the area has been "what it is.") For instance, in Chicago, I have enough faith in the Gold Coast as an established neighborhood that will endure to believe it will still be a place I would want to live many years in the future. I can't say that about other areas because of their transitional nature or because they are still being established.

Yes, you should be able to hire a property management company that will check on the property periodically.

ETA: After being a real estate agent since 2004 I do understand what you're staying about renters. BUT, whatever damage a renter could do to a property would likely more than offset by the rent you would get (assuming you don't get the crazy one-off situation that is bad from day 1.) Let's say you rent it for $500/month or $1000/month (I have no idea what a realistic number is, I'm just throwing some out there). That's $60,000 or $120,000 in 10 years. I'm guessing you could fix any wear and tear and any damage at the end of the period and be ahead on the $. There are of course tax considerations with rental property, and I am not pretending to give you tax advice, but if you think the money through long term you may indeed decide the hassle of tenants is worth it.

 

[Hera]

I don't know what area you are in, but in my area, prices are very high for housing. You can double check your housing prices by going to Zillow.com and checking out what the prices were in 2009/2010. This is a time where they found the R.E market bottomed out. I know we bought in Dec 2008 (so on the cusp of 2009) and our house is now valued at 100k more than we paid.

 

[sonnyjane]

That is all very good advice. Thank you for your input!

We are confident that the area has "staying-power". We lived there five years ago before being transferred to this location. DH's military pension will ensure that we don't HAVE to work if for some reason we have a hard time finding jobs, and this community has been ranked as a top retirement destination for many years.

I don't know what technologies will be available in 10 years but for now the home is quite modern (far more than our current home which was built in the 70's lol!).

You have a great point about the renters and the money we would make vs. the money we might lose in damages. I do have a bit of time to consider it because we are using a "second home" loan as opposed to an investment loan because we didn't have 20% down. As an agent, do you happen to know what that means exactly? We were told that it means we can't rent unless we change the loan over once we have 20% equity. That will be about 2 years from now so I guess we have time to mull over the renting issue.

 

[Dee*Jay]

Sonny, unfortunately I can't give you advice on the loan aspect because that will vary by lender, and the typical conventions also vary by geography. If you were in Chicago I would be of more help; very sorry.

And I hope you didn't take my post as negative -- in rereading it I could see it may come off that way. My apologies if it did, I was just trying to throw out some practical points in the same way I would to my own clients who were in your situation. I try to be the "voice of reason" when someone is very enthusiastic about a property because I want to make sure they think through as much as possible before it's too late. My motto is to try to have people be surprised In A GOOD Way!

 

[pregcurious]

We chose to rent our 2nd home based on the cost of upkeep (mortgage, taxes, home insurance, maintenance), versus selling (market is not very good) versus rent. We found that rent in our area is higher than the cost of upkeep. Our neighborhood is also up for a large update/development that should increase the selling price.

 

[diamondseeker2006]

You will also pay a significant insurance premium for an unoccupied home. Also, you'd have to have a cleaning service go in from time to time to keep the interior from deteriorating. You'd also have to hire a lawn service to keep the yard up the entire time. I think if you really want to do it, you should rent it out during that time and then just save some of the rent to redo the interior once you are ready to move there.

 

[sonnyjane]

Sonny, unfortunately I can't give you advice on the loan aspect because that will vary by lender, and the typical conventions also vary by geography. If you were in Chicago I would be of more help; very sorry.

And I hope you didn't take my post as negative -- in rereading it I could see it may come off that way. My apologies if it did, I was just trying to throw out some practical points in the same way I would to my own clients who were in your situation. I try to be the "voice of reason" when someone is very enthusiastic about a property because I want to make sure they think through as much as possible before it's too late. My motto is to try to have people be surprised In A GOOD Way!

Gosh no, I don't take it as negative in all. A bit of background - I have been VERY vocal in the past with both my friends and family about the perils of buying real estate, even as a primary residence. My husband, however, presented me with his "dream house", he did all the homework, printed me out the expenses vs. income and I quite frankly couldn't pick it apart at all. I let him know all about the costs to maintain a home each year (they recommend 1%-2% per year) as well as the costs of insurance and utilities and he still has enough to cover it down so despite the obvious "craziness" of buying a house now that we won't be able to occupy for almost a decade, I don't have any other reasons to say no lol!

I think reading these replies are making me lean toward renting it out once we can modify the loan as opposed to maintaining it as a vacation home for just two weeks a year. Again, that will be about two years from now so I'll still need the advice as far as how to maintain the home for these two years, but it's a great start, thank you!

 

[pinkjewel]

We have a second home which we do not rent out. The difference is we do get there at least once a month and sometimes twice a month. I don't know where the location is that you are looking at, but if it is in a hurricane or flood area- make sure you can get wind and hail insurance and can afford the premiums. Some of the premiums are outrageous, and some insurance companies are not writing premiums at all. Have a good burglar alarm system installed- one which will send an alarm for fire also. Even if you don't have much in there to steal, there are lots of vandals just itching to get into an unoccupied home. Sign an exterminator contract. The last thing you need is some "critters" invading your house. Of course, the obvious ones of lawn maintenance,cleaning service, and property management company- make sure you really check their references!!!!!! I've heard of some very bad experiences with some of the companies.

The main thing I'll add is to try to meet some neighbors that have a visual of the house. Ones that you think you can trust- and give them a key and all your contact numbers. Our neighbors across the street from us have been invaluable!!! There have been so many times that something has come up and their being there and having a key has meant we haven't needed to make an unexpected and sometimes impossible trip. I'm sure I'll think of more things,too.

 

[kgizo]

We have a second home that we don't rent out. It is a wonderful thing and I think you will enjoy when you are ready. However, I would discourage you from buying now bc low interest rates. A lot can change in 10 yrs. What if noisy or messy neighbors move in? What if zoning changes and your quiet street becomes busy? It's a risk you and DH have to determine your comfort with.
I've heard that you should budget 3% annually for home maintenance. It will be more for a second home. When you aren't there bugs move in (termites in the south), pipes burst and ruin floors, tree limbs fall and do damage, and raccoons move into the attic. I would expect the cost of maintenance, utilities, lawn care, and taxes to be more than any interest savings. Run some numbers and see if you can make it work. Sorry this comes across as discouraging, but I've seen all these things happen.
Lastly, be prepared for friends and family to ask to use it since "you're never there".
If you decide to do it, there are often retirees in the area who will charge $25-75 per visit to go to your home every week and check it out. If they have to meet a repair person it's usually $10/hr and hopefully the work is done to your standards. Your realtor should be able to give you some options.
Of course, if you are more motivated by the lot or house and nothing similar may be available in the future that is a different story.

 

[m-2-b]

We own a small farm with a rental property that is 30 minutes away from our primary residence. We rented it out to a trusted employee who manages to keep it tidy and nice. We also know the neighbors there who take care of the cows, pastures. I do think it's a matter of finding the right renters for your potential future home to make it hassle free.

 

[gemmyblond]

Hi sonnyjane -- Like you, we purchased a second home (in an area we knew pretty well) with the thought of using it somewhat and then maybe living there full-time after 10 years or so. That was 12 years ago; we still have the home, still love it and enjoy using it, and are still(!) thinking of maybe ending up there one of these days. We don't rent it out, but we did (and still do) think about doing so. For us, it's been a great decision but not without some bumps in the road. Here's some of what we've learned or what I wish I'd known before we bought:

1) It's work. Even if you manage to find reputable service providers (lawn/garden maintenance, pest exterminator, plumber, heat/air con etc), stuff still goes wrong and you'll have to both be prepared to deal with surprises from a distance as well as spend some time at the start of each visit just making sure everything's in good working order and getting minor repairs organized and done. It's just a fact of ownership, but I somewhat naively didn't figure this out for awhile and then was resentful when we'd go there and I'd have to devote significant time to house-related stuff. Now, I'm mentally prepared for it and I know to budget a certain # of hours for this stuff and then promise myself some time to just relax and enjoy things, even if there's still stuff to get sorted out (espec on the first day of a visit or if you've been gone for awhile).

2) As others have mentioned, you'll probably want to employ a 'house check' or property mgmt service of some sort. For the first couple of years, we used a local prop. mgmt company when we were gone for long periods of time; they had several programs you could sign up for where they'd do a walk-through every week or two and check various items (or you could pay them a-la-carte).
After 2 years, I knew enough folks that I found a local part-time worker who does this for others in our neighborhood, and so we hired him (much cheaper). He's reliable, honest, and is our eyes and ears when we aren't there -- and it's worked out great. But it took me time and networking to find the right person.

3) One of the biggest things I've learned is the value of building a network of neighbors or others who are in similar situations nearby and setting up an email list so people can share tips on service providers, community news, and keep an eye out. This has been invaluable but took a few years to get going. Now, we have a good list of all sorts of service people and vendors.
You can also get a head start on some of this by talking to a good, longtime local real estate agent and/or a builder or interior designer. But again -- it takes time, it's easier done face-to-face, and it doesn't happen overnight...and it's work.

4) The biggest potential problem area, imho, is water...in all its forms. No matter what climate you live in, water damage is some of the worst stuff that can happen if you're not in a house for months at a time...burst pipes, pinhole plumbing leaks, toilet/septic/drainage issues, pool/hot tub stuff, leaky roofs...it's all water-related. So we asked the guy who checks up on our house to go through a checklist of water-related issues each time to try to find water problems early on, before they spread. If you consciously think through the potential water probs and then figure out how to get comfort that things are OK when you're not there for awhile, it'll go a long way towards giving you peace of mind and minimizing damage.

Anyway, that's what I wish I'd known 12 years ago -- HTH. For us, it was the right decision even tho we still haven't moved there full-time; we've had a lot of enjoyment and good memories there and it's given us flexibility with our other place. Good luck with your decision and I hope it works out well for you!

 

[perry]

I have actively considered having a 2nd home (and perhaps a 3rd one too) when my finances allow. After much study of the situation - and considering the upkeep needed; I came to the conclusion that this is one area where a Condo makes sense. You still need to have someone check inside every week or so - but all other upkeep is taken care of.

I know that is not nearly the same as having an independent house on a lot (or in the country). But, it sure saves on the upkeep time and costs.

Of course, I may have a small cottage in the woods - which will likely be fairly primitive and not have many of the same concerns.

Have a great day,

Perry

 

[sonnyjane]

Gemmyblond, thank you! That's really good stuff. About how much time would you say you do spend there?

Can I ask... for everyone saying that they had issues with pipes bursting... was your water shut off in the home? Everything I've read says to make sure that the water valve is closed and that the sinks and toilets are drained. Did you still have problems with pipes even after taking that step?

We had a pipe break here in our condo once while I was at work. It happened on the top floor and for several hours water just gushed throughout the house, cascading through all three floors. It cost almost $50,000 to fix everything (walls, floors, ceilings). Luckily we are renting here so my landlord's insurance took care of everything, and we ended up getting nice new flooring lol! But I can't imagine that happening if we weren't around for several MONTHS!

 

[TooPatient]

My grandparents live mostly in one home but have a couple of small places several hours away (by car) that they go to as sort of vacation homes. They love having the place to go but have run into challenges.

Burglary was a problem only once in 20 years, but they have neighbors around to keep an eye on stuff. My grandfather drives over to take care of the landscaping. Fruit disappears from their yard. He had to fence the houses/yards entirely to discourage fruit theft and also home break ins.

Pipes -- they shut the water off when they aren't there in the colder months. He also had to make sure any exposed pipes were well insulated. They leave the faucets slightly on after shutting the water off so that any trapped water has room to expand or escape without damage.

They have problems with ants, spiders, and other bugs.


They still love the little houses and are happy to have them.

 

[gemmyblond]

Gemmyblond, thank you! That's really good stuff. About how much time would you say you do spend there?

Hi sonnyjane -- The answer is: as much time as we can! Seriously. It varies from year to year (and season to season - the climate there is different). We try to go 6-8 times a year for varying amounts of time depending on work schedules etc. Sometimes, I stay for a few extra days before or after DH, just to have some solo time if I can swing it. It's been pretty consistent from year to year (except when illness etc intrudes), and we've actually spent more time there as the years have gone by.

I will add that (speaking just for myself), it was a bit harder than anticipated making friends when one isn't there a lot or consistently. People are generally friendly but unless you have a built-in peer group of some sort (shared hobby, church, sports etc) it can be somewhat of a challenge if you come in and out only a few times a year...it just takes longer.

Good luck and keep us posted! Hope it all works out well for you.

 

[missy]

Hi Sonnyjane, it can be a challenge at times but depending on your lifestyle and your personality it can be 100% worth it. Our second home is only about an hour to an hour and a half away from our first home so it is much more manageable than those who have second homes much further away. If there is a problem we can hop in the car and go there.

We also have a good relationship with our neighbors who do not hesitate to call us if there is a problem or help us out if they can. During the last 2 hurricanes the neighbors all worked together to protect and then recover from the damage and never underestimate the importance of good neighbors.

An alarm system is must. It can tell you much more than if someone is breaking in. It can tell you if a pipe has burst (flood sensor), fire, and you can also keep an eye on the property remotely. Which we do. We have cameras in the front and back and can check on things that way anytime.
It is also very important to have a relationship with a trusted plumber, electrician, etc so when something goes wrong you have go to people you can call.


If you do not plan on being there much of the year you need to hire a managing company/maintenance company to take care of all those things that need to be taken care of and watched over. It is more complicated when you are far away but it is doable. Personally I know too many nightmare stories about renting your home out but it depends on your state and how friendly they are to landlords. Not something I would ever care to do but might be something you want to consider depending on your situation.

We take most of our vacations there (2 weeks in June, 1 week in July, 1 week in August and 2 weeks in October) and we go most weekends of the late spring, summer and early autumn and scattered weekends throughout the rest of the year so for us it is worth it. It depends on so many factors that there is no one right answer fits all in the case of a second (or more) home. We also plan on retiring there and selling our NY home so again it works into our future plans.

All in all it has worked for us (maintaining 2 homes since 1999) but it can be a challenge at times especially with our 4 cats (they hate hate hate traveling) who we cart back and forth with us. Twice the bills, twice the stress but also twice the fun of having homes we love in 2 places we love living. But when we are older I don't think we can keep up the energy not to mention expense it takes in maintaining both homes. Good luck with your decision.

 

[Smith1942]

Bit late to the table, but here goes: We have a home in South Beach, Miami. In typical grumpy British fashion, I hate it. I hate the sun, I hate the heat, and I hate dividing time between homes when I am also constantly pulled back to the UK for family issues too. When you have a second home, during the time you are there, you lose touch with your real life. You lose touch with your friends, acquaintances, clients (if you are self-employed) and trying to live two separate lives in two different places is just impossible. We're renting it out now and you need a good agent and some good insurance. Also helps if you have a good friend in the area to keep an eye on the place and an ear to the ground, like we do. This is how we found out that our current tenant wanted to renew the lease, but he wanted to cut our agent out of it, so denying her the commission. Dodgy. The agent's done a lot for us and we have an ongoing relationship. We would never screw her like that. I think this tenant has been OK, but the property market seems to be full of people trying to get away with sharp practices. That is not my way.

My husband listened to a friend raving about his second property so thought this sounded wonderful and bought one too. But that friend is in his mid-sixties, retired, has a family who also enjoy the property, and he doesn't have to worry about working on his career or demands on his time helping faraway ailing parents.

I think there are better, more hassle-free ways to invest money, and then use that money and the growth from the 10-year investments to buy a home when you want to live in it. Property means mortgage interest, insurance, fees or maintenance, taxes - it's not a cheap investment.

Tenants are also a worry. They have a lot of power; they can do a midnight flit. Our current tenant owes $113.00 for an electricity bill, and totally ignored me when I emailed him asking for the money. He paid his six months' rent upfront and it's "only" $113.00 so I left it. But really, the reason I left it - I would never normally let someone get away with that - the real reason, if I'm honest, is that if I hassle him for it, he could do something to our place right before he leaves.

The only upside is that when my husband goes there and I can't face the disruption (because I've so often just returned from the UK or have UK houseguests soon coming) I do get some cherished time alone in our small city-centre flat. That's about the only upside! If anything happened to my husband, or if he ran off to the circus, I'd sell it in a heartbeat.

Hope this has given you another perspective!

ETA: I guess it depends on the area, too. South Beach is full of young people and there are a LOT of drugs around. I am middle-aged, do not have a magazine body, and love nothing more than a bath, a book, and a cup of tea. Or hot milk. I might have a shot of rum in my hot chocolate if I'm feeling wild. Once, I spent four weeks in South beach and no one smiled at me for the entire month. Boston is much friendlier - people are always striking up conversations with me and I've made loads of friends in my local bar. None in SB though.

 

[sonnyjane]

Oh Smith! Thanks for replying.

First of all, I lived in Miami for several years (went to University of Miami) and there is no WAY I would choose that as a destination to retire/live so I can understand your statements about South Beach entirely.

We are not approaching this as an investment at all. It would 100% be because we plan to live in that specific house when we move back to the area. The area (San Juan Islands) is actually already a retirement neighborhood. There is a military base not too far away and we would ideally love to get renters in the military because we know they are guaranteed an income and they also can be penalized by their superiors if they fail to pay rent or bills. That way we have stronger recourse should anything happen.

Thank you again everyone for all of the advice. I really appreciate it all! I spoke with my landlord about some of her tips and regrets and think I have a good amount of information going into it. We will be inspecting the house on Saturday and I do feel confident that we've done proper research. I do like the fact that we can cover the costs without renters because it means any income is extra.

I'll keep you posted!

 

[TooPatient]

Oh Smith! Thanks for replying.

First of all, I lived in Miami for several years (went to University of Miami) and there is no WAY I would choose that as a destination to retire/live so I can understand your statements about South Beach entirely.

We are not approaching this as an investment at all. It would 100% be because we plan to live in that specific house when we move back to the area. The area (San Juan Islands) is actually already a retirement neighborhood. There is a military base not too far away and we would ideally love to get renters in the military because we know they are guaranteed an income and they also can be penalized by their superiors if they fail to pay rent or bills. That way we have stronger recourse should anything happen.

Thank you again everyone for all of the advice. I really appreciate it all! I spoke with my landlord about some of her tips and regrets and think I have a good amount of information going into it. We will be inspecting the house on Saturday and I do feel confident that we've done proper research. I do like the fact that we can cover the costs without renters because it means any income is extra.

I'll keep you posted!

Beautiful area!

I love it there! DH and I have talked about getting a house there and spending several days each week (Fri-Sun) or more there. So long weekends there and then back to Bellevue area for the work week (minus telecommute days!).
Of course this is all one of those dreams for some day in the future -- after I finish college and have a career that would allow telecommute at least a day or two a week. Also after teenage kid is done with high school.

Don't rule out renters from Microsoft or Boeing who would like to use it for long weekends or vacations! Lots of people around here telecommute a day or two each week and would be able to spend 3-4 days or more per week there.

 

[sonnyjane]

UPDATE

I just wanted to say thanks to everyone that provided advice earlier about maintaining a second home.

We visited the property a couple weeks ago and absolutely loved it. It was in really great shape, just a few minor repairs upon inspection (for example, ONE shingle, a "single shingle" hehe, is missing). My husband is enthralled with the place and I definitely see us living out our days there, so we put in an offer and ended up getting the place. We are in escrow now but will be closing two weeks from today should everything go according to plan.

At this point we are leaning toward using the home as a vacation property and not renting it out. We are open to changing that strategy should we need to financially but currently, we don't need to rent it out so are going to give it a go. Our first priority is to install a high-tech security system that allows us to control the lights from here and also that has video monitoring capabilities. I believe I mentioned earlier that this community has a lot of residents that only spend a month or so in their home, so I feel a bit better knowing that, and our HOA fees cover a security guard that will do checks occasionally on the outside.

Again, just wanted to say thanks for the advice!

 

[justginger]

Re: UPDATE

I just wanted to say thanks to everyone that provided advice earlier about maintaining a second home.

We visited the property a couple weeks ago and absolutely loved it. It was in really great shape, just a few minor repairs upon inspection (for example, ONE shingle, a "single shingle" hehe, is missing). My husband is enthralled with the place and I definitely see us living out our days there, so we put in an offer and ended up getting the place. We are in escrow now but will be closing two weeks from today should everything go according to plan.

At this point we are leaning toward using the home as a vacation property and not renting it out. We are open to changing that strategy should we need to financially but currently, we don't need to rent it out so are going to give it a go. Our first priority is to install a high-tech security system that allows us to control the lights from here and also that has video monitoring capabilities. I believe I mentioned earlier that this community has a lot of residents that only spend a month or so in their home, so I feel a bit better knowing that, and our HOA fees cover a security guard that will do checks occasionally on the outside.

Again, just wanted to say thanks for the advice!

It sounds wonderful. If it is definitely something you see yourselves in down the track, and can comfortably work into your life plan, then go for it! I think you'll be happy with your decision, it sounds like you love the place.