One of my employees just retired, we're in NW Indiana near Chicago. His house was on the market at $140K for 2 years without a single offer despite a brand new roof and few other costly fixes. Then about a month ago someone stepped up and offered $110K, but he had to be out in 30 days. He was disappointed, but he took it, and his last day was Monday. But he took a $30K bath selling the home he lived in for over 30 years...it is a good time to buy real estate in most places, not that the buyers market won't last a while.
So true! But the reverse side of that coin is that once one buys such a home, it is nearly impossible to get rid of it. So, for example, if I bought a house in Springfield then I would be stuck with it even if my plans changed for some unexpected reason.
Decisions, decisions. Right now I am thinking of waiting at least until Frank and I both have our houses all fixed up and on the market, and we can both move up there. We could rent unless this (or another) great opportunity presents itself. I really hate the idea of owning two homes in two different states, though, and the real estate market here isn't all that great, either.
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As an expatriate, I intend to continue living in Hong Kong after I retire but spend 2-3 months a year in my old home country. I looked at buying a house v invest and renting apartments for the 2-3 months I would be back home. The numbers obviously depend on expected rates of return on the investments, cost of the property at time of purchase and a number of other variables, but even with a conservative ROI assumption of 4%, the property would have to appreciate at around 2.4 % pa to break even. If the investments did better than 4%, the ROI would need to be higher.
Add in the loss of flexibility, the time needed to sort out maintenance and the implied cost if I spend less time there in any given year and it ended up being a no-brainer to go with renting.
While I do know some people who purchased holiday homes in Thailand during the Asian crisis (significant capital appreciation and significant currency appreciation), most people I know who buy holiday homes spend a lot of time complaining about the bills.
__________________ Perhaps a man really dies when his brain stops, when his mind loses the power to take in a new idea - George Orwell
By definition, a vacation home is used only part of the time. If it's an ER home, then it's not a vacation home. All the evidence suggests that owning a second property that sits idle is a money pit. If it's rented long term, you can't go there on vacation. If it's rented short term, you need to keep investing the time to market it, in addition to the extra wear and tear.
IMHO the only cost effective way to own a vacation property is to own a fraction of it. The fraction should be no more than you expect to use yourself. Don't see it as a financial investment, just a lifestyle choice. That's what I do, and I have no money pit, but I save thousands of dollars annually on what would otherwise be expensive accommodation. I am always amused by the other fractional owners at my resort who own several fractions of several homes and are surprised that they are not making money.
I repeat, a vacation home is a lifestyle choice. Period. And that can be a very good thing!
It's wonderful taking our "home" to various places across the country.
Also, having an RV makes it easier to relocate in general as you can spend time in an area to thoroughly check it out, and have something to live in between houses.
By definition, a vacation home is used only part of the time. If it's an ER home, then it's not a vacation home. All the evidence suggests that owning a second property that sits idle is a money pit. If it's rented long term, you can't go there on vacation. If it's rented short term, you need to keep investing the time to market it, in addition to the extra wear and tear.
IMHO the only cost effective way to own a vacation property is to own a fraction of it. The fraction should be no more than you expect to use yourself. Don't see it as a financial investment, just a lifestyle choice. That's what I do, and I have no money pit, but I save thousands of dollars annually on what would otherwise be expensive accommodation. I am always amused by the other fractional owners at my resort who own several fractions of several homes and are surprised that they are not making money.
I repeat, a vacation home is a lifestyle choice. Period. And that can be a very good thing!
2nd home a Money Pit? Not everyone feels that way. Just as some people find they can't afford a time share, some people can't afford a 2nd home. For many people a vacation home or 2nd home is a life style choice that is well worth the cost.
Jim
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JimnJana
Former DINKS now DRINKERS (Dual Retirement Income No Kids Early Retirees)
2nd home a Money Pit? Not everyone feels that way. Just as some people find they can't afford a time share, some people can't afford a 2nd home. For many people a vacation home or 2nd home is a life style choice that is well worth the cost.
Jim
I didn't say that all second homes are money pits. I said that second homes that sit idle are money pits. And of course, some people are happy to own a money pit. But you can't own a money pit and be LBYM at the same time.
I didn't say that all second homes are money pits. I said that second homes that sit idle are money pits. And of course, some people are happy to own a money pit. But you can't own a money pit and be LBYM at the same time.
Well, I disagree with that as well. We made a decision not to rent seasonally rent/short term rent our 2nd home after we converted a long time rental property. We don't feel we are throwing money away by taking care of the home. We enjoy the time we spend there and it is worth it to us, it is our choice. Could we be doing something else with the money we spend on our 2nd home? Sure, but we don't want to. At least not at this point in our life.
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JimnJana
Former DINKS now DRINKERS (Dual Retirement Income No Kids Early Retirees)
We have owned a vacation home in Sunriver, OR and after that a time-share in Jackson Hole.
Owning a vacation home ties you very tight to one location, owning a time share even in a trading pool is not a money saving venture. Sunriver may be unique in that there is a very strong all season rental demand. Except when the national economy is the pits resales are strong. Frankly, if you can't pay cash for a vacation home you can't aford it.
My advise is to find a vacation house you love to rent and develop a relationship with the owner. Use it regularly. All the advantages of ownership with none of the risks.
I have friends who have gone together to buy a vacation house. My concern is how to unravel those arrangements when it is time to move on.
I like vacation homes quite a lot. But I don't own them. My siblings own them and I get to use them. I guess I developed a relationship with the owners.
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