Can We Afford a $1.5MM Second Home?
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Anonymous
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Ok, SO and I have discussed someday buying an ocean-front condo in Naples Florida as a part time winter residence. Eventually, we think, we'd spend winters there entirely.
We just returned from a vacation there and found a condo that fits all of our criteria. Ocean-front, 2 bdrm, 2 bath unit in the building we want. The asking price is $1.5MM. We've done the comps for that area as well as that building and the price is fair. I have never spent that much money, not even close to that much, in my life. I work, SO is retired and we are both 59. Our net worth is about $12MM, with most of it coming from SO. With me working, at least for now, we could mortgage 1/2 of the amount needed, if we wanted to preserve our savings. My question: Are we crazy to spend that much money on a second home based on our resources or should we "go for it" and use money we've worked hard for? Btw, as a note, we have no debt at all. We do plan on meeting with our accountant and financial advisor before making a decision, but I'd like to hear from you folks as well. |
Anonymous
| Go for it. Don't look back! |
Anonymous
| Do it! Remember your taxes will be really high though since you aren't residents. |
Anonymous
Really? Why? We have a friend in that building, also a non-resident, and his property taxes are very reasonable. We are NY State residents, so we know all about high taxes. Florida is refreshing in contrast to NYS. |
Anonymous
| Florida? With that kind of money, I'd aim for something more exciting. But that's just me. |
Anonymous
| You could retire there eventually. Sounds wonderful. Congrats, OP! |
Anonymous
| Hardly seems crazy with that net worth. |
Anonymous
| exactly what you want for 10% of your net worth? Do it!! Congrats! |
Anonymous
| Probably fine, but how old are you and what is the breakdown of your net worth? Out of $12M if you need to borrow half, a lot of your assets are tied up. That may be fine, but let's see the breakdown. |
Anonymous
| Your net worth is not nearly as important as how much liquidity and income you have. |
Anonymous
| Ever been through a hurricane ? Priced wind and flood insurance ? |
Anonymous
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My net worth is about 1/2 yours and we bought a $1.2M second house. We have a mortgage on it but are paying it off to coincide with retirement.
My only concern with Naples is the fluctuation of value. It's better than other parts of FL, but you do need to be prepared to lose some of the value. If it's a long term home you don't really need to worry about that though. |
Anonymous
| I can't think of a less exciting way to use $1,5M than Naples, FL, but if it makes you happy, do it x |
Anonymous
+1 just wait til you get your quotes on flood insurance. lol. |
Anonymous
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You're 59 OP - you want to drop $750,000 on the place (not counting insurance and monthly mortgage). How often are you planning on going? How much would a similar place be to rent? Will you be happy just going to that one place?
Even if a week at a really nice place was $10k (with airfare and what not) you could go 75,000 times... IMO it's not worth it, not when it's an area prone to hurricaines and what not. |