How to Avoid Vacation Home Investment Mistakes – Orange County Register

The Johansens fell in love with Maui while renewing their marriage vows.

“What if I could live here part-time?” Juana pondered. “Raj, you and I spent a fantastic two weeks here and I could see families gathering here for vacations and big events. What do you think?”

“Why not?” her husband replied. “Our business has a lot of value, and the business broker selling it on our behalf assured us that we could easily achieve what we were looking for. Let’s look at.”

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And just like that they decided buy real estate there.

“Will this make my grandchildren happy?” Juana joked. Her husband, Raj, smiled and replied: “They’re better off. We’ve spent part of their fortune on this!”

In fact, Raj was a little nervous. Did he act prematurely? He agreed to buy the vacation property only because he knew his business would sell for a good amount. And although the broker had not yet offered a buyer, he was confident that his business would sell quickly.

Juana already envisioned celebrating the holidays at her Maui home. I think my whole family will love this place and my grandkids can learn to swim, snorkel and much more. Together they will create a wonderful experience.

“Let’s surprise the children,” Juana said to Raj. “I’m excited to show it off at Chad’s graduation ceremony next month.”

“I agree,” said Raj. “What a great idea!”

In fact, the presentation of Maui’s home at my grandson’s graduation was incredibly disappointing.

“Maui?” asked daughter Leila. “It’s very far and it’s pretty expensive to fly. What a nice idea. I don’t know if it will work out financially to get there. We’re saving for our kids’ college.” And considering their current school schedule and our work schedule, it’s difficult to take a few extra days off for travel. .”

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“What’s your address again?” His son Jim interrupted. “If it’s a property you just found on the internet as ‘for sale’, there are some issues. The place looks great but there are a lot of posts about crime in that neighborhood. did they tell you about it?

“Well, frankly, I’m thrilled,” said daughter Barb. “I don’t have a job right now. There’s nowhere else I want to look for a job other than Maui. When can I get a set of keys?”

“Wait a minute,” said Juana. “I hear that some of you are finding it difficult to attend family celebrations. I just found out that the house we purchased is in terrible condition.’ Neighborhood. i think i have to sit down. ”

At that moment, a panicked Raj got a phone call and left. When he came back his face was pale.

“I have a problem, Juana,” he said. “Apparently our finances weren’t done right and the value of the business has gone down significantly. I feel.”

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“Can I ask you a stupid question?” Johansen’s other son, Raj Jr., asked. Or are you just moving there? It’s pretty far away. ”

Poor Chad. No more of his hard-earned graduation spotlight, he hobbles out to find his friends.

We have already covered important points such as budgets, taxes, and dealing with heirs in the last three installments of Women, Money, and Thoughts. Beyond this, you’ll find that there are other important questions to ask yourself before buying a second home.

—How do you feel about this investment? Is it emotionally based, or have you thought through the rationale and expectations?

— Are you buying in a good neighborhood? how do you know?

— Do you have a plan for how to manage the property from a distance?

Your vacation destination is just as amazing as your home base. To keep your mind and spirit free and happy, think carefully and plan before you make the purchase of your second home.

As a thought partner to the CEO and his team, Patti Cotton helps manage complexity and change. Please contact her at her email: Patti @PattiCotton.com.