Thinking of buying a vacation house? Here’s a list of everything you need to have in mind when buying a second home in Florida!
Written by Betty White of Moving Offices San Diego
Buying a second home in Florida is a big step not many people get to make. It’s a great way to earn extra income or have a vacation spot guaranteed every year. However, it’s important to think it through and consider all possible variables before making this financial commitment. That’s why, in this article, we compiled a list of all the things you should have in mind when buying a
second home in Florida.
The Downsides To Florida Weather
Although Florida is well-known for year-round sunshine and beautiful weather, that also comes with a few downsides. For starters, although the weather in Florida is mostly perfect year-round, it’s also very vulnerable to hurricanes and tropical storms. This means you may need to purchase
flood insurance in addition to standard homes insurance.
Furthermore, if you want to spend the winters in Florida, there’s a lower likelihood that it’ll be extremely hot, but it can still get pretty warm. This means you may have to switch on an air conditioner at some point during the winter, which can add extra costs. A great way to regulate temperature and save money year-round is to install a smart thermostat.
The Full Financial Impact Of Owning A Second Home
It’s not enough to just be in a good financial state and have enough disposable income to afford a bigger house. When buying a second home in Florida, you need to take into consideration all possible expenses.
When you own two homes, all financial obligations fall on your shoulders twice. If you have a problem in both your primary residence and second house, you’ll be hit with two massive bills in a short period of time. You’ll also have double the bills for home insurance, taxes, and other expenses such as energy bills, lawn maintenance, etc.
Renting Out Your Second Home
A significant upside to buying a second home in Florida is that you can rent it out for extra profit whenever you’re not in it. Florida is a popular tourist spot, and Airbnbs are becoming a much more popular option among traveling millennials than hotel stays. There are, however, laws that you should be aware of before renting out your home. Keep in mind that laws differ by city, and even neighborhood, so what’s legal in one area may not be in another.
Furthermore, cleaning services, insurance, and general upkeep should all be factored into your budget as a landlord. Because rental income cannot be guaranteed, you’ll have to make sure you can cover these expenses along with a monthly mortgage payment on your own.
How Will Buying A Second Home In Florida Affect Your Retirement
You don’t want to borrow from your retirement plans to pay for a second property even though it can be a good investment. Investing in property always comes with certain risks. Even if that second home seems like a solid investment, the costs may require you to work more to pay for the second home leaving you with no time to actually vacation there.
On the other hand, if you can afford the second home without taking money out of your retirement plan, it can be a great way to test out the waters and try a soft retirement. If you’re considering retiring in Florida but haven’t made up your mind yet, buying a second home there can help you make up your mind. Spending time in your second home will allow you to acquire a sense of the weather, the local region, and your neighbors. Use vacations and getaways to
evaluate if the area is somewhere you might imagine yourself settling down permanently.
What It Means To Have A Go-To Vacation Home
Buying a second home in Florida allows you to travel there whenever you feel like it. Whenever you need a vacation or a family retreat, you don’t have to worry about looking for accommodation. That means you alleviate the stress that comes with planning the trip while achieving all the benefits of taking the trip.
On the other hand, owning a vacation house also limits your options when it comes to vacation destinations. If you own a second house in Florida, it’s only financially sound if you spend most of your holidays there instead of traveling the world.
Another thing you need to consider before finally deciding to buy a house is the current market conditions. Do your research and find out if house prices are rising or falling. This can give you an insight into future market trends as well. If you’re buying a second house in Florida for the sole purpose of renting it, rising prices could be a good sign. It could mean that the area is on the
rise and very attractive for potential tenants.
Remodeling Your Second Home
If you’re buying a second house, you can decide between buying a move-in-ready home or a fixer-upper. While the first option means you can start moving in or renting it as soon as possible, the second option also has its advantages. For example, a fixer-upper affords you the ability to remodel the house based on your personal preferences and needs. Moreover, you can ensure everything in the house is new and made from quality materials, saving you time and money on repairs.
However, if you are far away and have to do it remotely, remodeling can be a lot more challenging. You’ll have to hire contractors you can trust. Make sure you also check in with them often to keep track of their progress.
A vacation home is either a personal dwelling or a rental property according to the IRS. If you only rent it out for 14 days or less each year, it’s regarded as a personal residence. However, if you rent it out for more than 14 days per year, it’s deemed rental property. Regardless of the classification, you’ll have to disclose rental revenue in most circumstances.
This is crucial to have in mind when buying a second home in Florida. This is because you won’t be able to claim the mortgage interest tax deduction if your vacation home is classified as a rental property. You can, however, claim losses on your rental if the amount you spend exceeds the amount you earn.
Regarding the pluses and minuses of owning a second home, the lifestyle you want and how you financially pay for it will be unique to every individual and family.