On SecondShelters.com: Jon Anderson’s Confessions of a Second Home Landlord
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11-bedroom $1.75 million Louis XIII chateau outside Paris, your second home?
One thing many one-home homeowners have in common is a desire to have another one. I think it’s like the “how hard could one more be” ethos of parents. I don’t have kids, but I have owned a second home for nearly 20 years and there are things to consider and stories to tell.
Picking the right property is the first stop. If you think location, location, location matters in a primary home, it goes double for a second home. Why? Because most of us will need to put that home to work generating income when we’re not enjoying its charms. A few bucks profit at sale time wouldn’t go amiss either. Because of this, finding a location that works both for your personal desires but also your financial goals of revenue generation and asset appreciation.
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Hope you can add your opinion on Condo Hotels as a second home in the next article. Are they a good idea?
Condo-Hotels are a different animal. While you purchase a condo unit, it can be put into a rental pool for a co-located hotel operation. When your unit is rented out, the hotel gives the owner a cut of the income. That cut varies greatly. I’ve often seen limits on the number of nights per year the owner can use their own unit (30-90 days is average). This would seem to be a deal-breaker for those looking for an eventual retirement home.
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While your unit may generate some cash, prospective owners would have to do the math and see how much this offsets their overall costs – mortgage, HOA fees, etc.. You’d also want some historical data from the association to judge past performance.
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There’s more math to do. In addition to researching the potential for income offset from renting, you’ll need to understand resale values. After all, you’re not really selling a home a buyer can use year round. With the limited ability to use your own home, setups like this always remind me more of a time-share than a true condo.
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A quick ca;calculation would likely reveal is to be cheaper to be a tenant in a condo-hotel than an owner. You’d likely be much better off buying a regular condo and hiring a managing agent to rent the property when you weren’t there. That way you can use it as much as you’d like and when selling, you’re selling a condo a buyer can use 365 days a year.
Thank you Jon. Appreciate it because it would be a retirement home in 4.5 years.