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

[Danmar]

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]

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]

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]

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]

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.

Sent from my Nexus 7 using Early Retirement Forum mobile app

 

[fishnfool]

House swapping might be another option to buying a second home but it's not for everyone.

 

[pb4uski]

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

Oh... I thought that was a given.

 

[pb4uski]

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. ....

That is part of our reasoning as well. The reality is that we don't totally know where we want to settle for winters and renting gives us flexibility to try something different. I'll concede though that seasonal rentals in highly desirable areas that are nice in the winter are sometimes difficult to get.

 

[48Fire]

That is part of our reasoning as well. The reality is that we don't totally know where we want to settle for winters and renting gives us flexibility to try something different. I'll concede though that seasonal rentals in highly desirable areas that are nice in the winter are sometimes difficult to get.

And we have a 70 pound dog, which makes if even harder. Hate to admit that the dog influenced our purchase, but it's true. Finding a private, fenced, courtyard access also limited our market.

 

[bclover]

Rent.

+1

Op, I'm in the same situation. I plan on retiring next year at 55. I've always loved the shore and dreamed of owning a place at the beach. In fact next week I'm traveling to Charleston SC to check out SC beaches (have family in the area).

I've decided to rent for the first couple of years to see if this is truly what I want. I figure vacationing somewhere is totally different than actually owning a place.

I'll travel a bit also.

 

[Danmar]

That is part of our reasoning as well. The reality is that we don't totally know where we want to settle for winters and renting gives us flexibility to try something different. I'll concede though that seasonal rentals in highly desirable areas that are nice in the winter are sometimes difficult to get.

We started out this way in Arizona. But the market was just so low we eventually couldn't resist buying a place. Helped that the CDN $ was at a premium as well. You should always rent for 6-12 months before buying anyway.

I am sitting on my deck at our Ontario lake house as I write this. We have owned this place for 18 years and have substantially improved it over this period. Just love it here although it is certainly expensive to maintain. Renting would not have been a viable option. Also, it would not have afforded the great satisfaction I get when I think we will pass on this paradise to my daughter. Different strokes for different folks.

 

[GSMAN]

I have mixed feelings about owning a second home. I bought a nice piece of property a few years ago with a running creek through it with some excellent fishing in the spring near by. About 2 years ago I built a 750 square foot cabin with all the amenities of home. The cabin/property is 140 miles from my home base so its around a 3 hour drive. I probably go up there 10 times a year. Two or three of those trips are for fishing the rest are for maintenance and cutting the grass. I basically go up there and work most of the time. Something always needs tending. When we pull into the property and unlock the gate, I silently pray every time no one has broken into my cabin and made a mess! There is that aspect of owning a second home. The initial cost was a little under 100k so it wasn't that much of an investment but the ongoing maintenance obviously continues. Now having said all that, I love going up there in the fall/spring shooting guns, cooking outside with my buds, fishing and having a great time. I have thought about buying a bigger place but then it will probably be more work. My wife retired last week so maybe we will be able to spend more time up there and get more things done with not such a time constraint. So my vote is to not own a vacation home but rent. I reserve the right to change my mind.