Conversation Starter – Should you rent or own?

This is the most important question to answer. If it’s the former, then owning makes sense. If the latter, renting is obviously best.

How much time will you stay: The whole winter, or just a few weeks?

The longer you stay, the more attractive owning becomes. In higher-priced snowbird destinations (beach communities in Florida, for example), winter rents may be so high that after only a few weeks, the cost of renting outstrips the price of owning.

Do you fly south every year, or is it a once-every-few-years kind of thing?

The more you visit the same destination, the more attractive ownership becomes. If you’re only occasional snowbirds — perhaps you tough it out back home every other winter, so you can take a trip to Europe in the summer — you’re probably better off renting. On the other hand, if you’re established snowbirds who return to the same area around the same time every year, you might want to start shopping for a place of your own.

How much can you realistically rent your vacation home for?

Let’s say you decide to buy. How much could you realistically rent the place for — based on what other people are renting their places for? The key word is realistically. You’ll be renting it out during the off-season, when a lot of people don’t want to be there. Account for that in your projections.

How stable is your financial situation?

The one thing renting gives you that ownership can’t is flexibility. If your retirement portfolio doesn’t perform as expected, if you have a medical emergency, or if you’d like to fund a grandchild’s education, you’re not tied down to a mortgage and property taxes. Before buying, ask yourself seriously: what if worse comes to worst, can you afford to tie up your cash in a vacation property?

How do you feel about dealing with foreign taxes?

Owning property in a foreign jurisdiction forces you to deal with cross-border taxation and estate issues. That’s particularly the case if you plan to rent your home in the off-season. Some people don’t see this as a big deal — they’re former business professionals, accountants, or they’re just good with figures. Others would rather have a root canal than file a tax return.

Do you envision family members visiting you? Do you have friends who would take advantage of a vacation property when you’re not there?

If yes, that could swing the equation toward ownership — your property becomes a source of family memories, not just a place with four walls and a roof and good weather. In addition, having other people visit when you’re not there will ensure there’s someone to safeguard the place, handle routine maintenance issues, and so on. That can dramatically reduce the need for a costly property management service. But, if it’s only you, then ask yourself whether ownership is really worth it for a place you’re at only a few months a year.

How do you plan to maintain the property? Who will do it while you’re not there?

Are you the type who enjoys puttering around the house, cutting the grass, cleaning out the eaves, or painting the fence? Or is that exactly the kind of thing you’re looking to get away from in your time down south? What about when you’re not there? Is there a management company you can hire to look after things? This is less of an issue if you’re looking to own a condo or trailer — part of your monthly fees will pay for such maintenance. But for those looking for a detached home, this is a serious part of the consideration.