Owning a second home abroad (without being rich :)

[Biketokyo]

As my one remaining parent is getting older I’ve thought more about some of the pros and cons of getting a home in the US in the future. I don’t have siblings and the family home (or funds from sale of it) will go to me. We would either simply invest all of that, or use some of it to purchase a smaller home in the same region of the US. Hopefully this is years off in the future, better to think about something like this earlier rather than at the last minute.

My main reasons for considering this are to maintain a physical connection to our part of the US (including friends and relatives in the area), to have a home there to spend part of the year after we retire, and as a hedge against climate change for our son (I’m from the Great Lakes area in the US, one of the better places to be in terms of temperature, water resources, etc.). A smaller benefit is that having a US address makes investing easier since I can continue to use the US broker I’ve been with for 30 years.

Financially, I’m concerned that this is really just another expense that isn’t worth it. We’re financially stable and are on track to have a very comfortable middle income lifestyle in retirement (we both like our careers and want to work full time until 60ish) but not pay-for-upkeep-of-multiple-homes wealthy.

I’ve seen the posts and videos here about investment properties in the US (from Daniel maybe?) but am curious as to what other possibilities there are for mitigating the expense of having a second house abroad. It’s not something hat we are looking at as an income source as it is more of an emotional and lifestyle decision provided we can afford to keep and maintain a home in the US.

I would love to hear from anyone who has considered doing something similar or who has any actual experience of owning property abroad.

Thanks!

[captainspoke]

I know that in northern Mich and Wisc there are some summer homes that are closed and left for big parts of the year, but have you considered the security aspect? In some areas, you cannot leave such a property unattended--your appliances would disappear, maybe even the plumbing, and other such things.

[Deep Blue]

It is more the work and stress aspect of it than the financial aspects, which can be quite minimal. If you have someone who you can leave keys with (family, friends, neighbours?) it does help a lot. When we purchased our house in Tokyo (and were living outside of Japan) my in laws used to come over every few weeks, do some weeding, open the the windows, run the water etc to check everything was ok.

But this aside, there is a tonne of paperwork - utilities, insurance , taxes as well as all the regular repairs and maintenance etc.

We rent out some houses in the UK and having an agent deal with all this stuff is helpful but even so it’s a non-trivial amount of work.

[goodandbadjapan]

I have a property in the UK. I bought it outright and my parents live in it. I don't charge them any rent but it really doesn't cost me anything apart from insurance. Of course it could be a good income stream but I don't need it as an income source, and it is appreciating in value. As Deep Blue said, if you have someone that can keep an eye on the property it will help a lot. And if you don't have people living there you need to handle standing charges or whatever for utilities, but that can likely be done by setting up a few direct debits. In my case it is no hassle at all, but appreciate it would be a lot harder if it wasn't basically being looked after by family.

[Wales4rugbyWC23]

I think if you are looking to go back to live there for part of the year, then I think you are looking at short term rentals, maybe an Airbnb, which could bring in a bit more income, but it is a lot more hands on than long term rentals. Even if you have got agents there, it would really be best to be in the country that is from family experience. From my own experience long term rentals are very easily doable from living in Japan with good agents, and good tenants....

[Biketokyo]

Thank you everyone for your input. It was helpful to hear about your experiences. Air B&B seems like more trouble than it’s worth unless we got a property in a hot tourist area (then it would be a lot of work still but potentially a decent return—still not something I really want to do). If we were to get a place in the next 5 years or so it might make sense to do it as a long term rental until I’m closer to retirement. Finding a place in the same neighborhood as a close friend who could check in on it could be a possibility though as Captainspoke brought up, security could be an issue.

Goodandbadjapan, it sounds like you have things set up well (and good on you for getting your parents a house-well , it’s your house, but still…). If it’s not too personal a question, what do you plan to do in the future if your parents are unable to stay in it and take care of it?

Hopefully this is still quite a ways off but it’s good to hear people’s experiences and ideas. Thank you!