5 Reasons You Should Not Buy a Vacation Home When You Retire

Many aspiring retirees look forward to traveling once they clock out for the last time. And some love the idea of buying a vacation home once they retire .

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But even if you think you can afford it, does it make sense to buy a second home in retirement?

The answer is “no” more often than most retirees think. Consider the following drawbacks to owning vacation homes in retirement — even if you plan to rent them out to recoup costs.

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1. Retirement Budget Buster

Robert Persichitte, accountant and Certified Financial Planner at Delagify Financial , doesn’t mince words. “Don’t buy a vacation home in retirement because it will ruin your budgeting.

“Most people get used to living on a certain amount of money, and a vacation home usually increases those budgets drastically.”

Not only do you take on the fixed principal and interest payments for a mortgage loan, but you also take on the variable expenses that come with owning real estate.

Next: 5 Reasons Retirees Regret Selling Their Homes in Retirement

2. Unpredictable Expenses

“In retirement, you’ll already deal with changes to your budgets and lifestyle,” notes Persichitte. “You won’t want that to be more chaotic than it needs to be.”

When you buy a property, only one thing is guaranteed to stay exactly the same, year after year: your principal and interest payment. And even that only remains the same if you take out a fixed-interest mortgage.

Every other expense can and usually does rise. These expenses include property taxes, property insurance, repairs, maintenance, homeowners association or condo fees and other costs of ownership.

Repairs and maintenance can particularly throw off your budget, especially on a fixed income. Last year, it was a $4,000 furnace repair; this year, it’s a $3,000 roof repair; next year, it’ll be a $5,000 air conditioning repair — that’s the norm of home ownership, not the exception.

3. Unreliable Rental Income

Some second-home buyers justify their splurge by telling themselves, “It’s not an expense; it’s an investment! I’ll rent it out when I’m not using it, and I’ll break even on cash flow while the property appreciates!”

It’s a nice thought, but you may be deluding yourself.

First of all, remember that most vacation hotspots have a high season and an off-season. When you calculate cash flow for a vacation rental, you have to calculate it for every single month of the year to reach an annual net rental income.

Second, you’ll take on more expenses than those outlined above. You’ll need to pay a vacation property manager, and they charge a higher percentage than long-term rental managers. Many charge a minimum monthly fee, even if the property doesn’t rent for a single night.

You’ll also pay more for accounting and your tax return preparation.

The bottom line: don’t justify your vacation rental as an investment. If you want to actually invest in a vacation rental property, make it a purely financial investment, stacked up against other investments like stocks, bonds or real estate syndications. Maybe you’ll use it for a week or two each year, but that’s a bonus, not the purpose of the purchase.

4. Travel Commitment

When you buy a vacation home, you feel obligated to use it — a lot. Otherwise, you’ve just wasted hundreds of thousands of dollars.

That means that instead of visiting new places, having new experiences, and trying new foods, you return year after year to the same location.

Go see the world. Experience new countries and cultures, challenge yourself, stretch your comfort zone. Don’t lock yourself into the same travel itinerary every single year.

5. Declining Interest and Ability to Travel

It’s an uncomfortable thought but one we all need to confront. Most of us will experience declining health in retirement.

They say retirements go through three phases: go-go, slow-go, and no-go. In your 60s and much of your 70s, you might love traveling as often as you can afford it. At a certain point, retirees start to slow down, traveling less frequently and less far.

And then they stop traveling altogether.

View any prospective vacation rental purchase through that lens. How many weeks would you realistically spend at the property next year? What does that come to as a nightly rate if you include all expenses, including repairs?

How many weeks would you stay there in five years from now? Ten? Fifteen years from now?

Your usage will inevitably decline, which means the effective cost you’ll pay for each night’s stay will skyrocket.

What To Consider Instead

Sure, owning a second home sounds sexy. But for most retirees, it’s a boondoggle.

“Rather than buying now, wait a few years before committing,” recommends Persichitte. “Also, try out a test run. Consider renting for a year first.

“You might not even enjoy the vacation home, and it’s much easier to walk away from something you are renting than something you bought.”

This article originally appeared on GOBankingRates.com : 5 Reasons You Should Not Buy a Vacation Home When You Retire