Buy a vacation home or just travel? A nice problem.

[pb4uski]

We bought a lakefront home in 2005 that was 30 minutes from our then main home. A first it was an idyllic getaway.... no tv, no internet, no phone.... just a radio and the lake. After a year or so we were enjoying it so much we decided to live there the summer so we added tv, phone and internet. We kept moving in earlier each year and moving back home later. In 2010 we demolished and rebuilt and moved in in 2011 and sold our main home later that year. While I love where we live and the lifestyle, there are days that I miss that old "camp" with no tv, no phone, no internet and only a radio.

We are now retired and in the same predicament as the OP. We rented a condo last winter in Florida and actually looked at a lot of condos. Owning makes sense if we were in Florida 4-6 months a year, but it seems that renting makes more sense for 2-3 months whcih is where we are at right now.

The thing I can tell you if you ever own two homes... if you are working on something and need a tool... it will inevitably be at the other home.

[Elbata]

I live in So Cal and had a cabin in Big Bear. Even though it was paid off, I just didn't like the dealing with constant problems.

Since selling, I can still use the cabin for free anytime I want, and haven't used it once. Kind of like my membership at a local country club. Once I sold my membership, I realized I liked visiting and playing other golf courses.

[EastWest Gal]

Use your extra cash for travel. With that kind of money you could seriously see the world...from the Amazon to Antarctica, from Europe to India. It's enough work to keep up one home without the burden of keeping up two.


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[kcowan]

Quote:

Originally Posted by pb4uski The thing I can tell you if you ever own two homes... if you are working on something and need a tool... it will inevitably be at the other home.

Or worse, you spend 10 minutes looking for it until you realize it.

[NW-Bound]

Don't worry. After a while, you will build up two sets of tools. At least the ones that do not cost too much money.

[Brat]

We had a place at Sunriver, OR when the kids were little. We used it several weeks a year and rented it when we couldn't be there. Once the kids were older we used it less and less. Sold it when the kids were in high school... it really helped with college tuition.

Tahoe is a great place and frankly I don't think property values will go down. That said it would be smarter IMHO to buy a small vacation house in a nearby community if you buy anything.

I agree with others who recommend traveling while you both can do that. Rent a couple weeks each year at Tahoe to scratch that itch.

[brett]

This has been our dilemma for three years. Actually double because we sold our home, travelled, came back and have since lived in a rented condo though we may purchase at some point.

We wanted something warm for 4 months in the winter. The closest we have come so far has been either Thailand or Costa Rica. But once we ran the numbers it no longer made sense. And even if they did, we are not certain that we want to be tied down. We like the flexibility of going where we want. So this is what we are doing. Last winter it was three months in Thailand/Malaysia/Austalia/NZ.

We have a Jan. wedding in Cancun and we may zip over to Puerto Vallarta and rent something for a month or do two separate one month rentals in different parts of that area. It is an easy plane trip for us-direct.

At some point, IF the numbers are reasonable, and we find a spot that we can enjoyably spend 5 months, then we may bite. Otherwise it will be rentals. Lots of interesting places to visit.

[Danmar]

Quote:

Originally Posted by brett This has been our dilemma for three years. Actually double because we sold our home, travelled, came back and have since lived in a rented condo though we may purchase at some point. We wanted something warm for 4 months in the winter. The closest we have come so far has been either Thailand or Costa Rica. But once we ran the numbers it no longer made sense. And even if they did, we are not certain that we want to be tied down. We like the flexibility of going where we want. So this is what we are doing. Last winter it was three months in Thailand/Malaysia/Austalia/NZ. We have a Jan. wedding in Cancun and we may zip over to Puerto Vallarta and rent something for a month or do two separate one month rentals in different parts of that area. It is an easy plane trip for us-direct. At some point, IF the numbers are reasonable, and we find a spot that we can enjoyably spend 5 months, then we may bite. Otherwise it will be rentals. Lots of interesting places to visit.

Owning second (or more) personal use homes seldom makes sense financially. It is the other intangible aspects that drives people to do this. Like people often say, "a lifestyle choice, not an investment"

[Midpack]

I would rather have the flexibility to vacation in many locations, so I'd travel instead of buying a vacation home anywhere. We're all about holding fixed expenses down too, a vacation/second home locks in a lot of costs whereas travel costs can vary as needed, more in good years and less in lean years or when other unexpected expenses crop up. In the OP's case the only way we'd buy at Tahoe would be if it became our primary/only residence - and then travel from there. Win-win? YMMv

[Sojourner]

Quote:

Originally Posted by Midpack I would rather have the flexibility to vacation in many locations, so I'd travel instead of buying a vacation home anywhere. We're all about holding fixed expenses down too, a vacation/second home locks in a lot of costs whereas travel costs can vary as needed

+1

Exactly my outlook. Whenever I start to think about buying a place somewhere (usually because I really like the area or would love the convenience of an "always ready, all mine" vacation home), this is what holds me back.

[Danmar]

Quote:

Originally Posted by Midpack I would rather have the flexibility to vacation in many locations, so I'd travel instead of buying a vacation home anywhere. We're all about holding fixed expenses down too, a vacation/second home locks in a lot of costs whereas travel costs can vary as needed, more in good years and less in lean years or when other unexpected expenses crop up.

This is a reasonable plan and would appeal to most people, I think. As I said, not often easily done from a financial perspective. But the fact that many people do buy second homes and we must assume enjoy them, it can still apparently be a rational choice.

[brett]

I think that we have pretty much arrived at the conclusion that for us, at the moment, a vacation home does not make sense.

But that is only the half of it. After owning our own homes for 35 years, we downsized to a container and travelled.

We have been renting for 2 plus years. Home ownership looks different to us now that we are empty nesters and retired. In fact, the investment equation for home ownership vs rent has not made financial sense to me. We are still renting...and may continue to do so. Our equity has performed much better in the market over these three years than it would have had we kept the home. Not to mention the on going cost of a home (oportunity cost, upkeep, taxes, etc) that was significantly larger than we needed/want. DW is not quite on side with this...nesting issue I think.

[48Fire]

Quote:

Originally Posted by Midpack I would rather have the flexibility to vacation in many locations, so I'd travel instead of buying a vacation home anywhere. We're all about holding fixed expenses down too, a vacation/second home locks in a lot of costs whereas travel costs can vary as needed, more in good years and less in lean years or when other unexpected expenses crop up. In the OP's case the only way we'd buy at Tahoe would be if it became our primary/only residence - and then travel from there. Win-win? YMMv

That's a good point on the fixed expenses. To mitigate that somewhat, we bought our second home about 1 year prior to ER. Part of the rationale was to firm up the non-recurring expenses as well as nailing down the variable costs. I thought that if I was not happy with these, I could unload it, or work a little longer.

As it turned out, having the second home the first winter sealed the deal from a OMY perspective. A couple calls to the office during 70 degree days, when it was snowing like crazy at our old place made it easier to pull the plug and ER.

[papadad111]

Quote:

Originally Posted by FUEGO The mortgage is just the start of vacation home expenses. An extra set of utilities, furniture, maintenance, etc. To be partially offset by renting it out but still a hassle. Vacationing is easy. I vote spend the cash on nice rentals wherever you want to visit somewhere. Maintain flexibility.

I totally agree with Fuego.

The budget side of owning a second home are not trivial. With today's sharing economy and air BnB and similar options (well beyond staying in simple hotels) the entire idea of luxury travel-living is at a new level of fun and convenience. DW and I are on board with the rent vs buy for vacations approach. I've done the ROI numerous times and renting comes out way cheaper for what we need and where we like to travel.

We did consider a second home/condo in a resort area but that was strictly for investment purposes. We decided to pass as cap rates were not at a sufficient hurdle rate for us.

Also, Having travelled and lived all over the world, the one thing I have learned is that there is no perfect place and having flexible options especially for us ( relatively younger retirees) is fantastic.

[Pbkmaine]

I did not like having a second house. For me, it was twice as much to worry about.

[kcowan]

Quote:

Originally Posted by brett At some point, IF the numbers are reasonable, and we find a spot that we can enjoyably spend 5 months, then we may bite. Otherwise it will be rentals. Lots of interesting places to visit.

One of the benefits of retirement is that you no longer have to stay in one place. Besides the job, there are kids, relatives and friends that can keep you close, not to mention health coverage.

But if those are not real constraints, then it makes no sense to restrict your life to one place. I think that is why celebrities often buy homes in multiple places. You can develop a sense of belonging in a couple of places and still travel.

Many of our snowbird friends who spend 5-6 months in PV, also spend months traveling to the cool mountain areas in the summer, enjoying the Spanish and Aztec/Mayan cultural heritage. What they save by living in Mexico enables to spend the time traveling (granted these people tend to come from coastal areas up north that are more expensive).

So there is no one-size fits all. Although inertia can be a significant force. I have a friend who retired Dec. 31/14 who is going through that process now. He has a Hunter 49 sailboat and that makes his choices more complex.

[LinCella]

I look at Trulia a lot for South Tahoe and there's a wide range of prices.

[kgtest]

Renting gives you different experiences. Personally I would rather have three different experiences than one. Imagine how many places you could rent for $400,000. Even at $2,000/mon you could rent a very NICE place @2,000/mon with no utils or maintenance costs for 16years straight.

Of course renting doesn't give you a physical asset that could appreciate. Depends on how much work you want in retirement I suppose. Convenience = $

I stayed ON THE OCEAN and ON the slopes of Mt. Haleakela in a very nice Hawaiian neighborhood for $2000/mon. This was not retirement though, I was only 32 when we did this but it was like being on a fulltime vacation with a 40hr responsibiliy 85% of the year. We did travel quite a bit while renting. Imagine that...

[Lucantes]

Quote:

Originally Posted by Midpack I would rather have the flexibility to vacation in many locations, so I'd travel instead of buying a vacation home anywhere. We're all about holding fixed expenses down too, a vacation/second home locks in a lot of costs whereas travel costs can vary as needed, more in good years and less in lean years or when other unexpected expenses crop up.

+1
this is what works for me.

[GravitySucks]

Thanks for starting this thread Drake. Every spring I think I want to buy a boat, every fall I think I want to buy a beach condo. Great reasonings to not fall prey to that want in this thread.

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