Retired at 52 with a paid-of lake house – should we buy a second home or just rent?

Just because you’re retired doesn’t mean the wealth creation journey ends. Indeed, many younger retirees who have well more than they need to sustain them for life may have the opportunity to keep having their money work for them.

Whether they seek growth in stocks, passive income from other assets, or appreciation in real estate, the road to a more sizeable nest egg (and perhaps the ability to spend just interest without touching one’s invested principal), it’s vital to allow your nest egg to keep working for you, especially as inflation looks to take more purchasing power out of savers’ hands.

Buy that second home? Or rent (for now)?

In this piece, we’ll look at the case of a Reddit user who’s 52, happily retired — a “chubby FIRE” kind of retirement — with a lake house, but is wondering if it’s a good move to buy a second home in Malaysia or “just rent.” They cited that “life is short” as one of the reasons why going for a second home (their first one is in California) would make sense. And while the individual certainly has the means to finance another hefty purchase, I’d advise against going for significant big-ticket purchases with a “you only live once” (or anything like it) kind of mindset. 

Indeed, many abysmal investment decisions have been made with YOLO at the top of mind. While that doesn’t mean forgoing the home, provided the investment provides a good return on investment or drastically enhances one’s retirement lifestyle, I do think that more questions need to be asked (whether it be to a financial advisor who’s a fiduciary or one’s significant other) before signing any dotted line.

At the end of the day, managing two homes that are on other sides of the planet is no easy feat. Arguably, it can be stressful for a newly-retired person. Either way, the distance may be no issue for the Reddit user, given their wife, 55, is from Malaysia, and they seem to spend a great deal of time there. While it’s not an easy choice, I do think the added complexities of buying property abroad must also be considered. Indeed, a financial advisor and realtor who knows the Malaysian market is a must to make a more informed decision. 

Even if one’s set on buying, renting can make sense to start.

Personally, I think renting can also be a good idea before considering settling down with a home. Even if owning a second home is the goal, renting and giving oneself a chance to explore neighborhoods is a wise way to know, with certainty, where one should set roots. As such, I think there’s no need to rush, especially since the retiree has a great deal of passive income coming in from their investments.

If one finds the perfect home in the ideal neighborhood, a legal and tax pro could come in handy to take care of matters that come with being a foreign property owner. Undoubtedly, things could get rather complex, and such factors shouldn’t be discounted before making the big move.

The bottom line

For this Reddit user, it’s not a matter of affordability but rather of whether it’s a good move. Given their family connections in Malaysia, I think buying a home is ultimately the right move in the long haul. However, renting in the interim could make a lot of sense as the retiree takes his time to find the perfect place while demystifying the complexities involved with buying real estate in Malaysia as a U.S. citizen.

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