Wintering 101: Your Guide to Seasonal Living
Every year, millions of retirees flock to warmer climates as they seek balmy weather and seasonal entertainment in the winter and cooler climates as they seek to escape pressing heat and humidity in the summer. Regions like the coast or sunbelt welcome well over 50 million visitors between January and March, who are just the tip of the iceberg when it comes to seasonal travel.
There's even a colorful name for these intrepid travelers: snowbirds. Depending on where you live, you may have heard this term before. However, over the years, the definition of a snowbird has changed. In the past, this term was applied to those who traveled south in the winter to escape the cold. Now, it applies to anyone, although usually retirees, who travel seasonally to spend time outdoors and enjoy their favorite activities.
What is a "Snowbird?"
Snowbirds are typically retired—or are close to retirement—and have made the decision to spend the winter in a state other than where they normally live.
There are a few different ways you can stretch your fledgling snowbird wings. Some choose to purchase a second home, while others look for a rental property they can return to annually. Others still opt for a winter on the road by purchasing an RV.
Getting Started
Set a goal
Like most things in life, it's helpful to set a goal before you begin. Start with the basics, such as deciding on where you want to go, how long you would like to stay, and, of course, your ideal budget. Some important budgeting concerns to keep in mind may be the following:
- Travel Expenses—Basically, how will you get to your destination? If you're flying, have you secured transportation once you have arrived? If you're driving, have you evaluated the cost of fuel, wear and tear, or any potential parking fees?
- Activities—Once you've arrived, it can be helpful to have a general idea of what sort of activities you may enjoy. This doesn't need to be a hard itinerary so much as a way to holistically evaluate your daily costs. Will the activities be free or incur costs?
Choose Your Location
Because you'll be spending a fair amount of the year at your chosen destination, it's important that you identify what matters most to you at this step.
For example, does a 55+ community sound like something you'd enjoy? Age-restricted communities can be found in every state and are often full of activities, fun, and potential new friends. If you enjoy the sun, sand, and refreshing ocean waters, you may want to consider what it would be like living in a beach community. Often, travelers learn there's a large difference between living near the ocean and vacationing near one.
No matter what you choose, this is the point in the process where you should spend as much time as it takes to feel confident in your destination.
Renting vs. Buying
Depending on where you decide to travel, renting on a seasonal basis can cost thousands over the length of your stay. However, the funds you spend on renting could also pay for a year of expenses while you enjoy your new, second home. Sure, buying a home is a significant investment, but it may also open up rental opportunities and give you the freedom to visit your second home whenever you please. But if your goal is to stay in a different city or state each winter, renting would be the way to go. You also would not have to worry about upkeep of a house hundreds of miles away. To help you make the best choice and learn your options, your financial professional may have resources that you can access as you consider your decision.
Pros & Cons
Sounds great, right? However, before you begin searching for your perfect winter home, there are a few items to consider. After all, wintering in more temperate locations can often mean more than enjoying the sunshine on your back and warm sand beneath your feet. Is your dream to return to the same place each year, thus establishing a friend group in that area? Or would you rather explore a new place for a few months each year? Or maybe you want to travel on the open road to explore all the United States has to offer. These are some questions to think about.
Owning a Recreational Vehicle (RV)
The allure of the open road and nearly limitless freedom can appeal to many retirees looking to spend their winters elsewhere. However, sometimes, the reality of RV life can differ from one's perceptions. The following are some items to keep in mind before starting your journey:
- Comfort Behind the Wheel—Depending on the size of your vehicle, you may need a commercial driver's license (CDL), even if your RV is a non-commercial vehicle (which most are). For recreational vehicles with a Gross Vehicle Weight Rating (GCWR) over 26,000 pounds, including a towed unit with a GVWR over 10,000 pounds, a CDL is required in the United States, per federal and state law.
- Try before you buy—If you aren't sure which direction to go with the size and type of RV, rent a unit similar to what you are considering. You'll soon know if life on the road is for you.
- Ask a (Financial) Pro—A candid conversation with your HCM Advisor may be a smart move before making any permanent decisions. Your RV will most likely depreciate in value over time, and the guidance of a pro can help avoid financial issues that may arise down the road.
Owning a Second Home
If you prefer something more permanent, a second home may be right for you. A second home can allow for longer trips and more entertainment and socialization opportunities; in addition, it may retain—or even gain—value over time. Be sure to discuss how each house will be kept up while you are living in the other. Just like any major real estate purchase, there are some considerations to keep in mind:
- Location, Location, Location (and Price)—The ultimate price for your new home will depend heavily on the location you choose. Even if you have experience in the real estate market, it can be helpful to enlist the aid of a real estate agent in your search. Having an inside source who lives in the area where you wish to purchase your home can make a huge difference.
- Televised Inspiration—If you've ever watched a real estate show on any given number of networks, you've already started your search. These shows, although entertaining, can be invaluable as learning tools. Pay attention to the triumphs and mistakes these shows often highlight so that you can hit the ground running.
- Enlist a Friend—Anyone who has shopped for a home knows how difficult it can be to remain objective. Sometimes, we see a home and love it so much, its shortcomings can fall by the wayside. Instead, try asking an impartial friend to weigh in on your top choices. It may be a little painful, but what they notice can save you from headaches in the future.
Owning a Rental Property
Many of the same considerations of second ownership apply here as well. The major differences arise when you decide to rent your property while you're not using it. After you've purchased your property, the following are some potential ideas to help make your rental property a success:
- Management—A reputable property management company can be one of the largest boons for private rental property owners. For a fee, these companies will maintain the property, handle tenant issues, and make sure your investment is well tended. When you start the search, try asking your real estate agent for a recommendation to get the ball rolling.
- Fractional Ownership—Purchasing a rental property can sometimes feel like a large investment. If you're not quite ready to take the plunge, consider fractional ownership. By splitting the investment among multiple owners, you may be able to defray the cost and potential risk of your rental property.
- Research Is a Must—For this, the internet is your best friend. Spend some time reading through message boards and posts from other rental prfoperty owners. Oftentimes, you can find helpful, actionable tips or ways to avoid mistakes that others have made during their search.