Many people consider buying a winter home in Florida to escape the cold winters further north. This is especially true for those who have retired or no longer have children in school. However, buying a winter home in Florida is not the right answer for everyone. To determine if buying a second home makes economic sense, ask yourself these five questions.
You pay for an empty house a majority of the year when you’re only living in that home for one season. An effective way to offset some of your mortgage costs when buying a winter home might be to rent it out. This doesn’t have to be difficult.
There may even be a system set up by your homeowner’s association to handle the landlord’s duties if your home is in a gated community. You will, of course, be paying more for a home that’s in a residential community. You might be able to ask for a higher price, however, if your homeowner’s association is taking care of the maintenance and landlord duties.
Just be sure that you will be able to rent out your home. First, some communities do not allow owners to rent out their property. So, be sure you will be able to do so before buying. Second, it is harder to rent homes that are not in tourist areas during the summer months.
Keep mind that while renting out may make a lot of financial sense, being a part-time landlord might not be for you.
You already pay property taxes on your first home. Are you sure you want to pay more taxes when buying a winter home in Florida?
Plus, you need to remember that taxes get more complicated with a second home. It’s easy to over- or under-pay your taxes if you make improvements to your winter home or rent it out. That is why it is important for you to keep good records.
The biggest mistake people can make after buying a winter home is losing track of the cost of the improvements. Remember, when working with the IRS, documentation is always necessary. It would be a good idea to consider hiring a tax preparer.
You might be able to afford two mortgage payments, but you will also have two:
There could also be other expenses that you didn’t have with your first home. Most condo fees tend to be higher than people expect. You might also need to buy flood insurance.
Do you know this area you’re moving to well? Keep in mind that living somewhere is very different from vacationing there.
Are you’re considering buying a winter home in a community with other retired people? Then you should look at homes during peak “snowbird” season, which is December through January. That should give you a good idea of what things are like during the busy season.
Have you thought about travel costs? They could be higher than you think, especially if you will be heading North for Thanksgiving and the holidays. The cost of traveling between two homes can be bigger than you think, even if you are financially well off.
These questions are not to stop you from buying a winter home in Florida, but it is a good idea to think about all the costs before you make a commitment. If you have questions about buying a winter home in Florida, give us a call. We would be happy to introduce you to the many different communities that cater to those escaping the winter climate.