Some rich millennials are buying vacation homes instead of primary homes because it’s too expensive to buy in the cities where they live.
There are three main reasons why people consider buying a vacation home, according to financial expert Jean Chatzky: They frequent a certain area, they’re planning to retire, or they want rental income.
But second homes are different than primary homes and come with a lot of caveats — here’s what you should know before you buy.
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Some rich, urban-dwelling millennials are swapping out starter homes for vacation homes: They’re renting in cities and buying country houses because they can’t afford to buy in their city’s expensive real estate market, according to Farran Powell of The Street.
That’s certainly not the only reason why people are buying vacation homes, and millennials aren’t the only ones to favor them. But buying a second home isn’t a decision to be taken lightly.
“It’s important to understand that second homes are different,” Jean Chatzky, financial editor of NBC’s “Today” Show, wrote in “Women with Money,” her latest of 11 books. “And not just because you can no longer deduct mortgage interest.”
There are three reasons why one might be considering a vacation home, according to Chatzky. Here’s what you should consider before making the leap.
Read more: Millennials are making 3 key decisions that are wiping out the starter home — and it’s changing what homeownership in America looks like
1. You want your own space in a place you visit often — but how often do you really visit?
Chatzky and her husband bought a second home in Long Beach Island, New Jersey, which they use every weekend from May through early September.
But even if you’ll only use a vacation home part-time like Chatzky does, a house is still a house. Bills — including mortgage, HOA dues, utilities, cable, etc. — are still year-round responsibilities, Chatzky said. If you live far from your second home, you’ll also need to pay someone to check in on the house, she added.
Some vacation homeowners also feel guilty if they want to vacation elsewhere — it can be hard to justify paying for a trip when you already have a place to visit, Chatzky said.
She advises giving the idea …read more
Source:: Business Insider