Thinking Of Getting A Summer Home In Retirement? Here Are Some Things You Need To Know

What are your retirement goals? Picking up a new hobby? Spending time with grandchildren? Taking the globe by storm and going on extended vacations you never had time for before? Summering in Maine and wintering in Florida?

However you plan to reshape your life once you retire, if you plan on jumping back into the housing market for any reason, there are a few things you should consider before putting the For Sale sign in the lawn.

The Popularity Of Multiple Properties

According to the National Association of Realtors®, the sales numbers for vacation properties absolutely exploded in 2014, exceeding the previous peak from 2006. These properties "catapulted to an estimated 1.13 million last year," the press release explained, "the highest amount since NAR began the survey in 2003." Accounting for 21 percent of all real estate transactions in 2014, vacation-home sales are a red-hot investment.

Source: NAR®

However, investment-home sales dropped over 7 percent in 2014. NAR chief economist, Lawrence Yun, commented, "Despite strong rental demand in many markets, investment property sales have declined four consecutive years to their lowest share since 2010."

Juxtapose the 6 percent of households claiming multiple properties with the NAR information, and it becomes clear why there now exists a "second-home phenomenon."

Source: NAR®, 2015 Investment and Vacation Home Buyers Survey

Who Is The Multiple-Property Owner?

Whether the situation is intended to be temporary (think purchasing a downsize property, but not selling right away) or more long-lived, holding the title to more than one home can be both overwhelming and invigorating, particularly depending on your stage of life.

Lankarge/Nahorney addressed the "second-home phenomenon," by saying that, "According to the most recent census estimates, nearly 6 percent of American households own a second home, typically within 150 miles of their main residence."

"Most of these second-home buyers are folks in their prime wage earning years who are looking for an escape from their work week realities or an investment – or both. Many of these second homes are located near recreation areas, bodies of water, or mountains. While most second-home buyers purchase a seasonal home for the pure enjoyment of it, the red-hot real estate market of the past few years has generated home appreciation in these areas between 59 percent (Cape Cod) and 67 percent (Cap Mary)," Lankarge/Nahorney continued.

That being said, retirees are a significant portion of the housing market, forecast to be the third largest in 2016 and cited as harbingers of the second-home phenomenon as "the new retirement focus."

Questions To Ask Yourself Before Jumping Into The Second-Home Market

There are many benefits of second-home ownership, but the venture is not a good fit for everyone. Jessi Sgarlata, lead agent with The Southbound Group, shared, "Second-home buying makes sense […] It's a two-fold investment. One, you're diversifying your portfolio by investing in a city that has proven its growth and sustainability over the years, and two, while you're building equity you are also saving on hotels if you're traveling." However, if you are not looking at purchasing in a sustainable area, or your finances are not in shape, taking out a mortgage in retirement could be detrimental.

Below are just a few questions to get you thinking about your motivations and the practicality of a new home.

• 1. Does It Make Sense Financially?
• What does your financial situation look like? How much of a financial burden would taking out a mortgage place upon your shoulders? How much debt would you be taking on?
• 2. Why Do You Want It? What are the reasons you are considering a second home? Is it to gain income through renting the property out? Is it for a vacation home or seasonal property?
• 3. What Will Happen When You Aren't There?
If you aren't planning on commuting between properties regularly, what will happen to the empty house? Will someone come and check on it? Will you hire cleaners to maintain the property?
• 4. Is It Worth The Insurance Costs?
• How much more will it cost to insure the property? How much will that add to your monthly expenses? Will there be additional insurance coverage you need to take out based on the area?
• 5. What Are The Tax Implications? What are the property taxes? What other taxes will be incurred? How will these affect your budget?

If you are considering a second home once you retire, start thinking and planning now. Talk to your financial advisor about the options you have for investing in additional property and the implications of taking on late-in-life debt. By starting to plan now, you can ensure a picture-perfect retirement for your future.