Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-04-2015, 12:12 AM   #21
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,743
I vote rent and travel as you can do both vs owning.

We have an ancestral cottage, and I've seen a lot of others with them over the years. Its a lovely dream when written in a book, but reality is families have changed, many will move and not use it much so forget about children using it a lot.

They are more expensive than you think, and nothing kills the joy of a vacation than to go there to mow, trim, repair, fix, deal with local contractors who want to overcharge since who you gonna call instead?, local gov't folks who resent the rich folks who think they are better than a local....

If you buy, you will find you are trapped, unable to afford that trip to Europe/Hawaii/etc...
__________________

__________________
Sunset is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-04-2015, 05:05 AM   #22
Moderator
Ronstar's Avatar
 
Join Date: Aug 2007
Location: A little ways southwest of Chicago
Posts: 9,356
Quote:
Originally Posted by NW-Bound View Post
One should add the opportunity cost of the purchase in addition to the upkeep. And if you buy 10 years ago, most RE markets trail the stock market in that time frame. In my case, I lost money as the market here is very soft for 2nd homes. When I bought it, the market was so hot there were very few homes in the market in that area. Now, there's plenty.

No, the 2nd home should not be looked at as an investment, or one would be sorely disappointed.
Yes one should add the opportunity cost if one is weighing the options from a financial aspect.
__________________

__________________
Ronstar is offline   Reply With Quote
Old 08-04-2015, 06:19 AM   #23
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 355
we have a small cabin on the lake about 30 minutes from home. We have spent the month of June and July here so far and it is the best "vacation' I have ever had. Even though places here rent for $1500+/week, from a purely financial standpoint we are probably spending more. From a life enjoyment perspective it has been fantastic. Easy for walking the dog along the lake. Riding the bike, going for a swim, napping in the hammock, tubing with the kids all right outside the door. This is my first year of retirement and this "stay-cation" has been my best vacation of my life.

We are incredibly fortunate that it wasn't an either camp or vacations decision. If it were I would probably vote travel but if you can swing it, a family vacation home that you will use and love A LOT is fantastic.
__________________
jabbahop is online now   Reply With Quote
Old 08-04-2015, 08:03 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,435
When I was RV'ing in Nova Scotia, in the small town of Pictou, I talked with a man who owned a 5th wheel that was permanently camped at that RV park, which was on the shore of a bay. This retiree volunteered that he was a local, in fact lived only 5 minutes away in town. He called the 5th wheel his summer cottage, and had been spending his summers here, rather than in town. When the campground closes down in mid October due to frost, he goes back to his apartment.

This arrangement of having a permanently placed RV as a summer place is quite common in some parts of the US and Canada. The owners are called "seasonals". And not all RVs are occupied the entire summer. Many are owned by residents of nearby towns who just want a weekend place. Some RV parks do not seem to have much to offer, other than being in a rustic setting, with a pond or a stream in the property surrounded by corn fields.

It seems like people have an innate desire for a change from their daily living surrounding. That can be satisfied by traveling, or by having a 2nd place. Or some just want to get out of the house and go hang out in town.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 08-04-2015, 08:13 AM   #25
Recycles dryer sheets
 
Join Date: Oct 2009
Posts: 421
We also had a nice 2nd home on 180 acres with 10 acre lake on a river. We used it quite a bit on weekends when the 2 boys were younger. However when they started high school sports we drifted away from it. Eventually sold it (for a very nice profit). This summer we are in our 2nd month of renting cabins in Colorado. Really dislike being in Louisiana in the hot humid summers. We've thought about buying a cabin in the Colorado mountains but the boys would only get to come out 1-2 weeks a year with work and other obligations. We still plan to rent during the summers but may buy a fishing camp on a lake within an hour or so from our home next year. I'm hoping they would use it on weekends if it's so close. And I'd enjoy it during the milder weather. But we still plan to travel.
__________________
folivier is offline   Reply With Quote
Old 08-04-2015, 10:00 AM   #26
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Florence, AL/Helen, GA
Posts: 2,093
I've been going to Lake Tahoe the last 25 years skiing, and am very familiar with the area. You appear to be doing all right in your retirement, but owning a retirement home would be difficult unless you can pay cash for it.

I have a lake house 30 minutes from home and it's paid for. You would not believe the utilities, maintenance, property taxes and upkeep that second homes take. If I wasn't a handyman type, it would be unaffordable.

We live in the southeast, and many of our friends have condos on the Gulf Coast. Many rent out their properties most of the Summer, but they still go in the hole. And in recent years, their condos have not been great investments--with hurricanes and condo assessments.

I would tell you to go ahead and become like me--a perpetual traveler. And just rent a place in Tahoe anytime you need to go to the mountains.
__________________
Bamaman is offline   Reply With Quote
Old 08-04-2015, 10:07 AM   #27
Full time employment: Posting here.
hesperus's Avatar
 
Join Date: Aug 2013
Location: colorado
Posts: 525
Yes, a nice problem to have but I agree with article that just being able to afford it is not enough to pull the trigger on an additional home. We already have a second place nearby (nice cabin in the san juan mtns of colorado) but we have discovered over the last year or two that as we travel we keep finding places that we love! I don't see this diminishing for at least a few more years, so we decided to rent nice homes where we go, and not have to lament being tied down to a particular place quite yet. Down the road, probably, as we age and narrow down where we would want to be and want to have that familiarity, but for now we will continue to travel and rent. Next up is austria this winter where I will fulfill my longtime dream to ski the alps.
__________________
hesperus is offline   Reply With Quote
Old 08-04-2015, 10:23 AM   #28
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
When you're retired your primary home is now your vacation home - you're not working any more .

Traveling after retirement or owning a second home is not a financial decision, it is a lifestyle choice. A second home is a big commitment in time and money and a very specific and limiting type of travel - back and forth between two places. IMHO it is easy to make the case for a second home when the need really exists, but most folks don't need one and it's not a good option compared with normal travel.
__________________
MichaelB is offline   Reply With Quote
Old 08-04-2015, 11:07 AM   #29
Full time employment: Posting here.
 
Join Date: Jan 2005
Location: northern Michigan
Posts: 732
Quote:
Originally Posted by Another Reader View Post

In your shoes, I would rent when the mood suited me in Tahoe and travel with the remaining money.
I agree. Although you enjoy Lake Tahoe now, do you really want to spend all your leisure/travel time there (for the next xx years?)? Renting there anytime you want to and saving some other $$ for travel would retain the flexibility you want, while not really giving up anything.
__________________
RAE is offline   Reply With Quote
Old 08-05-2015, 12:04 AM   #30
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,743
Quote:
Originally Posted by Bamaman View Post
I've been going to Lake Tahoe the last 25 years skiing, and am very familiar with the area. You appear to be doing all right in your retirement, but owning a retirement home would be difficult unless you can pay cash for it.

I have a lake house 30 minutes from home and it's paid for. You would not believe the utilities, maintenance, property taxes and upkeep that second homes take. If I wasn't a handyman type, it would be unaffordable. ......
This is what I have found, either spend a lot of money each year (averaged over the years) or spend a lot of time "working" on fixing this & that because you have to (its not a hobby).
__________________
Sunset is online now   Reply With Quote
Old 08-05-2015, 12:26 AM   #31
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
I'll add my vote for travel - not owning a vacation spot. You can always change your mind later if you keep your powder dry. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 08-05-2015, 05:56 AM   #32
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 57
Try making a list of your top 5 values and filtering your choice through those values. Here's mine:

Family (immediate. wife and daughter. I'm here to serve them as purpose #1)
Freedom (Financial, but also ability to say "FI" let's spend a month in Papua New Guinea. Or maybe pursue my dream of playing acoustic guitar at Captain Tony's in KW)
Health - None of the values below are possible or enjoyable without this
Happiness -
Wealth

And so, given that money is not unlimited, I would choose renting vs buying (travling vs vacation home). This is in line with my value of "freedom" and doesn't bump up against any of the others (assuming my wife's primary purpose in life isn't waterskiiing on Tahoe!)

On the other hand, buying 2d home DOES bump up against "Freedom" -- it's a responsibility and it puts pressure on my travel choices. I'm going to feel irresponsible unless I'm spending 80% of my "away from home" time there. And of course, I can't just go online and hit the "sell" button when I change my mind.

I've had similar quandries though. We can do whatever we want as well once my daughter graduates high school and gets settled on a life direction. I get "International Living" magazine so my investor's heart says "quick! buy that oceanside 100 acres in Uruguay before it's all gone!" but I'm keeping the "freedom" value front and center to keep me on track, like a compass. We'll always own our own home here, and we also have 11 apartment buildings (48 units) so we'll always "have a place" to rest our weary bones if need be.
__________________
hotwired is offline   Reply With Quote
Old 08-05-2015, 08:02 AM   #33
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,157
We bought a vacation home in 1997 while still working. 2-2.5 hours from downtown Toronto on a nice lake. It was our weekend getaway from a very stressful job. Loved it right from the start. No effect on our travels at first. I second the idea that this was a family/friends entertaining/bonding opportunity and still is. Will never sell this place-will give to daughter and son in law who love it as well.

When we retired we bought another house in Canmore, Alberta and established our residency there. 5000 feet up the side of one of the most beautiful valleys (Bow river valley) we have ever seen. In 2012 bought a fourth house in Paradise Valley Arizona to take the edge off winter weather.

So now we have 4 places. Toronto condo is used mostly like a hotel for ourselves, friends, and family. Lake house still gets used a fair amount in summer often with family and friends. Arizona in the winter also often with family and friends.

Still travel internationally about 20-30 days per year.

I value the control that ownership bestows. I like my clothes in the closets, my cars in the garages. Like the flexibility that ownership gives, eg can go to any of our places whenever we want. Don't ever rent them, but often loan to family/ friends. Many people would view this as the opposite of freedom, we do not.

Obviously this is expensive and not everyone can swing it. Nor would many (most?) wish the responsibility, etc. of this lifestyle. I realize we are an extreme example of this approach.

Getting back to OP, a second home can widen your opportunities for interaction with family/friends as well as opening opportunities for new friends. This has certainly been our experience. Travel can eventually get tiring but multiple homes take a lot of time and money to maintain. Certainly a second home need not totally preclude travel. Really a very personal thing with a large component of financial constraint added in. I would never use debt to buy a second home unless I was still working. Our personal use real estate represents about 20% of our net worth and maybe 20-25% of total after tax expenses. What would it be for you?
__________________
Danmar is offline   Reply With Quote
Old 08-05-2015, 10:54 AM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,735
Send a message via Skype™ to kcowan
My Dad had a vacation property and we loved spending the summers there. We developed a whole new set of friends. It was 90 minutes from home. After 15 years, all the families we knew started to move on. It was fun to meet their kids but we never made the solid social contacts that we desired. (Even though some of them lived in the same city as we did.)

So we bought a timeshare (fixed unit, fixed time) and developed the same kind of social relationships there (same time next year), but after 15 years, many of them are now moving on.

We travel twice a year, one local and the other to Europe, usually 6 weeks in total.

Five years ago, we bought a snowbird property, and we really enjoy it. There is upkeep for sure, taking either time or money or both. But I expect that we will love it for at least another 10-15 years.

But given the choice of 2nd home or travel, travel would win for us. We also do not rent out our second home owing to tax implications. We do let friends use it.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 08-05-2015, 11:12 AM   #35
Recycles dryer sheets
 
Join Date: Feb 2015
Posts: 95
I own a vacation home that generates significant income via short term vacation rentals (VRBO). Minimal headaches, great return on initial investment and we love it there so we use it often. I like travelling but hate hotels and resorts. Would always prefer to rent a house and just got back from renting a private island on a lake for a week which was great fun and enjoyed by my family. Also planning to take the family to Hawaii in the next year and again will rent a nice home rather than a hotel.
__________________
Sittinginthesun is offline   Reply With Quote
Old 08-05-2015, 11:23 AM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,435
Quote:
Originally Posted by Danmar View Post
... Our personal use real estate represents about 20% of our net worth and maybe 20-25% of total after tax expenses. What would it be for you?
My two homes are 25% of my net worth. Over the last 5 years, when I started to track expenses, the home expenses are 28% of total after-tax expenses. It is indeed the largest category on my Quicken screen.

I expect the expenses to be lower for the next 5 years (knock on wood), as we just had several expensive home improvement and repair projects on both.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 08-05-2015, 11:58 AM   #37
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 685
In my opinion, it depends on a lot of information that the OP has not really given. A big factor is how often you stay at a second home. For us, we could not rent for as much as we use it. Our break-even point is at 16 days annual use.

Appreciation $7,200
Principal $5,300
Value of Use $15,400 (154 days at $100 per Day)

TOTAL VALUE $27,900

Cost of Owning $7,500
Cost of Capital $6,600

TOTAL COST $14,100

NET VALUE $13,800 (138 days equivalent)

__________________
48Fire is online now   Reply With Quote
Old 08-05-2015, 02:45 PM   #38
Recycles dryer sheets
 
Join Date: Apr 2015
Posts: 82
Thanks for all the suggestions and idea's, I was afraid it would be like 50/50! Most of the pro and con reasons I've thought about and they all certainly make sense.

I hear a lot about people not using the second home enough to justify it, in my case my wife still works from home and could simply take her computer to the second house and work from there as long as we had internet.

What kills me is watching all these House Hunter/Beach House TV shows on HTV. Everywhere else in the country people are buying these beautiful vacation homes for $200,000. or $300,000. and that same amount of money in Tahoe buys an old starter home or small condo. If I'm going to buy something I'd rather have something nice and of course that brings the price way up.

Wish me luck!
__________________
Drake3287 is offline   Reply With Quote
Old 08-05-2015, 03:22 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,435
OK. Good luck!

You made me look on Zillow out of curiosity. There are a heck of a lot of listings in Incline Village, but boy, they are pricey! A cursory look all around the lake shore shows the same thing. So many with 7 figures. Below $500K, you can only get a 1000 sq.ft. condo.

How do so many people have this kind of money? Or perhaps they don't, hence the numerous listings?

Quote:
Originally Posted by Drake3287 View Post
What kills me is watching all these House Hunter/Beach House TV shows on HTV. Everywhere else in the country people are buying these beautiful vacation homes for $200,000. or $300,000. and that same amount of money in Tahoe buys an old starter home or small condo...
Well, you can always leave California and join them, where there's not as much money chasing after the homes. But if you have your heart set on Lake Tahoe, well, there may not be a comparable location.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 08-05-2015, 05:02 PM   #40
Recycles dryer sheets
 
Join Date: Apr 2015
Posts: 82
The Bay Area is to full of wealthy people! Tahoe is where every goes unfortunately. Although I'd love a place next to the lake, even Truckee which is a few miles away is still expensive.

Like everyone else I should have bought during the low point in the market a few years ago.
__________________

__________________
Drake3287 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hi I'm an Acupuncturist (53 yo) Should i buy a rental vacation home? daibai Hi, I am... 10 07-10-2011 11:52 AM
Just picked up a nice 110k home for 28k! thefed FIRE and Money 63 06-12-2009 11:03 AM
Recession over? Buy, buy, buy? NW-Bound FIRE and Money 42 05-27-2009 05:53 PM
vacation home 2nd home? mathjak107 FIRE and Money 2 01-27-2008 05:05 PM
FI/RE a nice problem to have but still a problem Grizz Hi, I am... 27 06-29-2007 02:29 AM

 

 
All times are GMT -6. The time now is 06:59 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.