A Home Abroad You Use Half the Year
At the kitchen table one evening, Hubert said, "We use it half the year and it costs us all twelve."
Picture a couple named Estelle and Hubert, 64 and 67. A year ago they bought a one-bedroom apartment abroad for US$150,000, and they live in it for six months at a time. This price is an illustration.
At the kitchen table one evening, Hubert said, "We use it half the year and it costs us all twelve."
Estelle took out a pencil. "Then let us see what twelve months costs."
| A year of owning (illustration) | US$ per year |
|---|---|
| Closing costs, 5% to 12% of the price (7,500 to 18,000), spread over 10 years | 750 to 1,800 |
| Property tax, 0.5% of the price | 750 |
| Building fees, US$100 a month | 1,200 |
| Upkeep, 1% of the price | 1,500 |
| Insurance on the apartment (an assumption) | 450 |
| Electricity, internet and water kept on in the six empty months (an assumption) | 600 |
| Money tied up in the apartment, at an assumed 4% | 6,000 |
| Total | 11,250 to 12,300 |
For comparison, six months of renting the same apartment at the six-month price is 6 x US$1,170 = US$7,020. Utilities for the six months they are there are the same either way, so they are left out of both sides.
In this illustration, owning costs about US$4,200 to US$5,300 more a year than renting for the six months they are there. The closing costs depend on the country, so a local lawyer could give the real range. The 4% is an assumption, not a promise. The table also holds prices flat, so a price that rises would lower the cost of owning and a price that falls would raise it.
Estelle noticed what the comparison leaves out. The other six months. The apartment sits empty while the rented one does not exist. If the apartment could be rented for those six months to someone else, the rent would cut the owning cost. She wrote that as a question for a local agent. She put no number in the table, since the rent, the agent's fee and the extra wear all depend on the town.
Two weeks later, back in Arizona, Estelle's phone showed a message from a friend in the building. It came with a photo of a wet ceiling. A pipe in the unit above theirs had leaked, and their own apartment had been empty for two months.
The building's caretaker shut off the water that afternoon. The damage was small. Hubert called the caretaker the next day and said, "Somebody could look in when we are gone."
He asked what a monthly visit would cost. The caretaker did not have a number yet. They decided to keep the apartment and ask two neighbors for prices.
You could…
- Add the costs of the empty months to your own table, including a person who checks the place.
- Look up last year's property tax and building fees, and write them down.
- Ask a local agent what the place would rent for in the months you are away, and what the agent's fee would be.
- Compare the yearly total with renting the same months before you decide.
Who looks in on your place when you are away? Tell us who it is, below. A reader searching for that person could learn where to look.
Figures are estimates for planning, based on public data.
Tell us in the comments