Considerations for Purchasing a Second Home

Confluence Financial Partners — Considerations for Purchasing a Second Home | Season 2, Episode 4

Greg 00:04

Hello and welcome to the Imagine that podcast. I’m your host, Greg Weimer, founder, partner and wealth manager at Confluence Financial Partners. Each month, we’ll explore new ways to help you maximize your life and your legacy and meet some extraordinary people along the way. So if you’re looking to get more out of your life today and legacy tomorrow, let’s get started.

Katie
00:25
Hi, everyone. This is Katie Montagazzi, director of marketing here at Confluence. I’m sitting here with Greg. We were just talking about some topics that come up in conversation with clients and their families. And as of late, a lot of people are talking about buying a second home. And that sounds exciting, and it is. But as Greg’s going to share, there are a lot of pros, cons, things to think about, and we’re going to talk about that today.

Greg
00:51
Yeah, big decision. But I would just say what if. Fun decision, like enjoy the process. We’d be happy to help you facilitate that conversation with your family about a second home. We went through that two and a half years ago, so a lot of stuff to think about, though. I would really encourage you. I’ll just give some random thoughts, go to different places to make sure you really know where you want to be.

Greg
01:20
How often do you want to go there? We needed to be within 2025 minutes of an airport because we go in and out a lot, so that’s real important. Should you rent? Should you own some of these prices? I don’t know. Do you look at them?

Katie
01:36
Florida. That’s about it. But yeah, I look at crazy.

Greg
01:39
I look@realtor.com. Every morning to just check the prices. They’re really getting out to be outrageous. How about after you purchase the home, if you’re purchasing costs associated with the house, it is the most underestimated number of all the numbers, the carrying costs of homes. It’s just a lot. You usually have an hoa. You have to take care of it.

Greg
02:02
When you’re not there, things break. By the way, I don’t mind that we knew that going in, but I would argue for most people, the carrying costs are extraordinarily high. But I’ll be balanced on this. The carrying costs are extraordinarily high, but the moment you create with your family and the legacy you create. Spending time with your family. I’m just thinking of so many people that have done it, and I think they would almost all agree they are also very high. So you may look at it as a carrying cost, you may look at it as a price, but you also could look at it as an investment in your legacy.

Katie
02:44
Yeah, I was going to say, our mission is maximize lives and legacies. And a lot of times that means for people doing things now while you’re living with your family, to create the legacy once you’re gone. So I know for you and your family, that’s been the case for your second home.

Greg
02:56
Yeah. If you buy a stock, you get a dividend every quarter, and those dividends are awesome. And when you die, your family gets a stock. And by the way, we love portfolios. So we’re not saying put all your money in second homes. Let’s be really measured on this. But if you own a home or just a second place to go, or you go on vacations, whatever your thing is, you don’t get a dividend.

Greg
03:21
But you do get incredible experiences. And then your children get a home that they can sell in 20, 30, 40 years. So it’s not like you’re spending giving the money away. You’re still going to get it back. But there are opportunities. I would say, though, it’s not any fun if you’re stretching, for most people, it’s better to rent, because if you’re just going to go January, February, March, we don’t go that long. We have a couple of weeks at a time.

Greg
03:46
If going to go January, February, March, and you’re just going to go down three a lot of times. Renting, even for a month or two. Renting is by far financially, from a financial standpoint, a better decision. And both of them provide the incredible experiences. But you’re right, the carrying costs. Really high.

Katie
04:06
Yeah. And I’ve seen clients financial plans where we can put into the plan. We think it’s going to cost x amount of dollars per year on top of buying the house. And we can help you figure out the math of that, too. So it’s not just the logistics, but the math 100%.

Greg
04:21
Like, if you’re going to buy a second home, the most valuable reassuring thing to have is to make sure you have the certainty that that second home is not going to put you in a financial pinch, period. Absolutely. So we will model out the additional cost. We will model out how much it’s going to cost you to buy. We’ll model out all that and we’ll literally show you, can you comfortably buy it? Or maybe we would recommend renting or maybe wait a couple of years. But absolutely we can help you with the certainty of that decision.

Greg
05:01
I guess that’s the point. It is a big decision. There’s a lot to think about. But I hear a lot of people talking about second homes. Shoot, you go down to parts of Florida now it feels more like Pittsburgh. There’s so many people that travel back and forth. So it’s a wonderful opportunity to have that.

Greg
05:17
We love talking to family because at the end of the day and. Your portfolio is awesome, but your portfolio is awesome because it supports your life and your legacy. So if a second home is the right thing for you, we can help you come to that conclusion.

Katie
05:37
Thank you, Greg. That was an interesting conversation. And like we said in the beginning of the podcast, purchasing a second home has really become a hot topic for a lot of our clients. So if you want to start or continue the conversation, we’d be happy to do that with you. Thanks.