“ Making memories in a second home with your friends and family is priceless ,” he says .
Other Considerations
Legacy is hard to predict , though , as other advisors point out . Keeping a second home in the family “ can be a challenge ,” says Don Grant at Sabre Wealth in Wichita , Kan . “ The house on the lake that was once a one-family home is now being used by several kids with several grandkids .”
The home can become a “ point of contention ,” he says . Some heirs might not want to maintain the property or can ’ t .
Also , if the second home is left unoccupied , squatters might move in . “ Every state has different laws regarding squatters , [ but ] it ’ s possible that the landowner could lose ownership ,” he says . He recommends installing security cameras and staying cognizant of local laws .
Hurricanes and other disasters have pushed homeowner insurance premiums to rise faster than inflation ... a policy renewal can jump 20 % or more . In some places , it ’ s impossible to buy a policy at all .
Location Location can also make a huge difference , advisors say . In many areas , hurricanes , wildfires and other disasters have pushed homeowner insurance premiums to rise faster than inflation . The bill for a policy renewal can jump 20 % or more . In some places , it ’ s impossible to buy a policy at all . State Farm and Allstate Corp . stopped issuing new policies in California several years ago . Farmers Insurance Group ceased offering new home coverage in Florida and canceled many renewals . American International Group ( AIG ) has limited its coverage in certain ZIP Codes .
“ Double-digit increases in insurance premiums have become a significant pain point for all households , regardless of their net worth ,” says Barse .
Another reason there ’ s possibly less interest in owning multiple homes “ is that fewer people are working fully remotely these days ,” says Salvatore Capizzi at Dunham & Associates Investment Counsel in San Diego . “ It was one thing when you could work from your dream vacation home all week long . But the thrill of the second home getaway does not seem to sparkle quite as brightly when you have to battle traffic and return to the office routinely . The dream may have started feeling more like an expensive headache .”
Steve Parrish , professor of practice and scholar in residence at the American College of Financial Services , agrees that many clients don ’ t think about “ the hassle aspect ,” as he puts it . “ They find that shuttling back and forth is bothersome [ and ] takes them away from friends . Sometimes the new place just doesn ’ t feel like home . … Need to see your dentist ? Oops — wrong location . Looking for that favorite book to reread ? It ’ s stored in the other place .”
Steven Podnos at Wealth Care in Cocoa Beach , Fla ., is all too familiar with that feeling . He and his family own two homes — one on the beach and another on a river , he says . They are 20 minutes apart , a proximity he recommends . “ You ’ re much more likely to use it [ if it ’ s not too far away ],” he says . “ We use both of our homes every week . When we owned a vacation home in the past [ that was ] three hours away , we used it rarely .”
Sound Strategy Still , despite the hassles and expenses , some advisors contend that buying a second home can be not just pleasant but part of a sound strategy . The location could ultimately become the client ’ s primary residence , says Daniel Forbes at Forbes Financial Planning in East Greenwich , R . I . “ You ’ re simply buying your retirement home early , and you get to enjoy it while you ’ re working and still have a steady income ,” he explains .
“ Owning a second home can be a good idea for those who are financially independent and want to diversify outside of traditional investments like bonds and stocks ,” says Jaime Eckels at Plante Moran Financial Advisors in Auburn Hills , Mich .
But always be sure to exercise caution before taking the plunge . “ Rent before you buy ,” suggests F . Michael Zovistoski at UHY Advisors NY in Albany , N . Y . “ Check out the neighborhood , climate , amenities and other items that you would not otherwise find out from a realtor or the local chamber of commerce .”
Such preparation will take time , he acknowledges , but it ’ s prudent . “ Understand the good , the bad and the ugly by talking to people in the community you are considering joining ,” he says . “ Don ’ t rush into a decision you will regret .”
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