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Should Grandpa Moneybags Buy A Beach House?

The following is the seventh story in the Grandpa Moneybags series. The Hurlow Wealth Management Group created the Grandpa Moneybags series to introduce financial concepts, including buying and selling real estate. Like most financial planning topics, real estate purchases come with risk and rewards and here we see our favorite Grandpa weighing the option with the next generation of wealth holders.

Should Grandpa Moneybags Buy A Beach House?

Every summer for the past five years, Charlie (A.K.A. Grandpa Moneybags) booked a two-week vacation at a house in St. Augustine, Florida, for his family. His three daughters, Jessica, Katie, and Abby, their significant others, and his grandsons, would all get together for this special time. 

This February, he called to make their regular reservation for July. He left a message but was surprised when he got that call back the next day. "Hello, this is Tim Smith. You called and left a message about renting my parent's house in Florida?"

"Yes," Charlie replied curiously.

"Well, my father passed away in December, and my mother is ill. So, I'm sorry to say, but this will be the last season we will rent the place. We're going to put it on the market at the end of August. So, if you're interested in buying it, let me know."

Charlie was taken aback by the unexpected offer. The thought of owning a vacation home had crossed Charlie's mind, but he had concerns. On the one hand, they loved vacationing together in one place, but on the other hand, he worried that the girls might grow tired of visiting the same destination every year. He also wasn't sure he wanted the hassle of owning a home so far away. However, he knew how much the house meant to his family, and he considered the possibilities. He called his financial planner, who walked him through various scenarios about financing the property or paying cash and the potential revenue stream the home would generate. 

Finally, he called his oldest daughter, Katie, and asked her to set up a Zoom call on Sunday with his other two daughters to discuss summer vacation. He wanted to tell the girls about the offer at the same time. 

After exchanging greetings on the call, Charlie began, "Since your mom died five years ago, I've been so grateful and happy to spend a week or two with the three of you and your families at the beach in Florida. Before I make any plans this year, I want to check in and see how you feel about going back there again." 

Katie responded first, "Mark and I actually blocked those first two weeks in July to go to the beach house, and we're planning summer camps around it. I loved watching Bobby and Keith learn to surf these past few years. It's been a fantastic way to unplug and see all of you. So, we're in!" 

Jessica and Abby added similar sentiments before Charlie explained the offer. "This summer will likely be our last vacation at that house unless I buy the place. The owners want to sell it, so I thought about buying it. Can we talk through the pros and cons?" 

Abby didn't hesitate, "First, you would own an awesome beach house!" 

"Yes, that's a pro. It is a beautiful place." Jessica chimed in. "But I suppose you want to hear some cons as well. Let's see, the risk of hurricane or flood damage, and who will keep up the place when you're not there? Will you rent it out? Or were you thinking of moving there full-time?"

"I'm not ready to leave Indiana. It's still a drive up to Chicago to see the grandkids, but I want to be close enough so I can go for a weekend to see Keith's baseball game or Bobby's concerts. Also, I promised to take them downtown to that Nike store to get new 'kicks,' is that the right word? Keith corrected me when I said 'shoes,' so I have to be sure I'm saying it right." Charlie chuckled before continuing. "Besides, I have a life in Bloomington. A lot is going on at the University. I go to games and shows and see my Rotary friends every week. So I'm thinking about renting the house when we're not there."

"Well, rental income is a pro. So far, we have two pros and one con," said Jessica reading off the tally. "I guess along with the risk of hurricanes comes the cost of insurance and overall expenses to maintain the place. Also, the renters could be real jerks and destroy the house or steal stuff." 

"Why are you such a bummer?" Abby retorted. "Think about all the memories we already have and those to come. I read a study that showed people are happier when they spend time outdoors near water—also, family bonding. That's three more pros right there!" 

"The kids will be excited to know that we get to go to the beach every year to our family house. But I wonder about the cost; we have yet to really talk about money. Bobby and Keith tease you by calling you Grandpa Moneybags, but can you really afford to buy a beach house?" Katie expressed her concern. 

Charlie smiled and said, "You met my financial advisor, John Hurlow, last year. Well, he and his team ran some numbers, and it turns out I can."  

"Well, I say you go for it!" Abby said enthusiastically. 

"Four votes from Chicago. Mark and the boys will be so happy." 

Everyone looked at the youngest, Jessica, and waited for her to respond. "I guess there are more pros than cons, Dad, so I'm in too,"  

"Let me sleep on it before I make my final decision, but thank you for talking this through with me. I love you all. Goodnight." Charlie signed off and shut his laptop. He then stood up, went over to the fireplace mantel, picked up his wedding photo, and whispered to his late wife, "I wish you were here to make this decision with me. I miss you." He kissed the picture and returned it to its place.

The next day, Charlie made the call to Tim Smith. He decided to take a leap of faith and buy the house as an investment in memories, a place to come together and create lasting memories for many years to come. 

Now, every summer, the family returns to their beloved Florida home. They smile and take in the beauty of the place— a reminder of the love, laughter, and connection that binds them together.

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