2nd home versus money in the bank

[OldShooter]

I meant as far as the hassle factor....do you disagree on that point...

There are different hassles. Kitchens without even basic things like salt and pepper, inadequate cooking utensils, bedding and sheets marginal or lacking, no or poor stereo system, inside and outside steps hard to navigate. Location and upkeep not as nice as the pictures and advertising promised. Having to immediately go to grocery stor or roll the dice on selecting a restaurant instead of getting some wine from the rack and relaxing from the drive. We've done it at many, many AirBnBs US and international but it is not our favorite way to live.

I don't have to buy a second house to know it's not a simple as renting..

True also of your first house. Do you rent that?

Owning our second home is adequately simple for us and, with the appreciation we've seen I'm pretty sure that owning it will end up being cash flow positive if we ever sell. Around $16K/year appreciation so far/25 years, property taxes around $3K/year, maybe $100K in improvements, $30K in maintenance like a new roof, paint, etc. I'm never going to go back and work all the numbers out, but overall it has absolutely been a lot cheaper than renting ever would have been.

@pb4 says it well.

 

[ivinsfan]

Oldshooter we're talking about second homes here. You do you and I'll do me. Just reading this thread tells us there is no correct answer for everyone

 

[OldShooter]

Oldshooter we're talking about second homes here. You do you and I'll do me. Just reading this thread tells us there is no correct answer for everyone

Sorry to annoy. I was just answering your questions. Yes, everyone's tradeoffs are different.

 

[brett]

It is such a personal decision.

Just be aware that one difference between the choices is that investments can be sold off quickly, in whole or in parts. Real estate is sold whole. How quickly depends on the market and the price. It appreciates as one unit of investment or depreciates as one unit of investment.

We considered buying a winter home in Costa Rica or in Mexico. Never did... but still may in Mexico at some point. Until then we rent. We enjoy travel to different locations.

 

[skyking1]

Right now our second home is an RV. It serves many needs for us. I also see the end of those traveling days too.
It checks off all those boxes oldshooter brought up. Pantry stocked, clean sheets, our own bed, comfortable furniture.
What we have not done is traveled a significant distance to a place we really liked enough to have a second home at. That is where the break-even point would be. Where driving to it is no longer practical, so the RV is a non-starter there.

 

[OldShooter]

... Just be aware that one difference between the choices is that investments can be sold off quickly, in whole or in parts. Real estate is sold whole. How quickly depends on the market and the price. It appreciates as one unit of investment or depreciates as one unit of investment. ...

Also true of cars and primary homes, which is why most of us don't consider any of these to be investments.

Edit: Income real estate is one of many types of investments that do not satisfy your criteria of being able to sell quickly and in parts. Private equity, restricted stock, many hedge funds, art and collector items, etc., same story.

 

[meleana]

I live full time in a community with a lot of second homeowners in a vacation area. So I have just one home to take care of.

 

[folivier]

We've had 2nd homes in the past, mostly within a couple hours of our main home. After retiring we fulltimed in a motorhome which gave us a great overview of areas we liked Then did monthly rentals for a couple years. Then back to a motorhome. Now we're buying a 2nd home in the mountains and selling the motorhome. For me mostly to enjoy the great climate. In our main home the summers are miserably hot and humid and I spend all my time inside. Here in the mountains I'm rarely inside during the day. So the health benefits are greater. We did consider the costs and the cabin should equal what the motorhome costs us in a year.
And I agree with OldShooter above, we always carried our knives, pillows, etc. to make the rental more comfortable. Some of the places we rented were great others not so much. Pictures don't always reflect the true condition.

 

[GreenEggs]

Second homes don't have to be fancy or expensive. Getting away from the stresses of the city to a small simple place in the woods or along the shore can be all that you need to unwind. Less to keep up and less to pay for, yet enough to enjoy. There's a lot to miss about a simpler lifestyle and simpler times, and that could be something your second home offers.

Just pointing out an option in response to the financial naysayers.

 

[Scusan]

Lots of interesting ground covered here, one thing I might add to consider if I were searching for a second home..

Look at your neighborhood and consider how the character of it may change if several of the other homes became shorter term rentals (like AirBnB). I've seen this really affect the experience. Of course, some places may have rules against short term rentals, and others are far enough apart so there won't be as much effect.

 

[OldShooter]

Lots of interesting ground covered here, one thing I might add to consider if I were searching for a second home..

Look at your neighborhood and consider how the character of it may change if several of the other homes became shorter term rentals (like AirBnB). I've seen this really affect the experience. Of course, some places may have rules against short term rentals, and others are far enough apart so there won't be as much effect.

Yes. We are probably all guilty of visualizing radically different "2nd Home" environments. Growing up, our family place was on a long strip between two lakes, about 800' frontage on the main lake. When we bailed out as the place got too much family competing for time, our "new" place was in an area of 200' lakefront lots, so neighbors no bother but a nearby road had some traffic. Now our planned BTD place will be about 6 acres near the family compound with 250' on the main lake, about 500' frontage to the side on a shallow and marshy lake, and about an eighth mile blocked by trees and hills to the nearby road. That is certainly a much different visualization than ocean beachfront condos and apartments.

 

[street]

Second homes don't have to be fancy or expensive. Getting away from the stresses of the city to a small simple place in the woods or along the shore can be all that you need to unwind. Less to keep up and less to pay for, yet enough to enjoy. There's a lot to miss about a simpler lifestyle and simpler times, and that could be something your second home offers.

Just pointing out an option in response to the financial naysayers.

This is true. In fact my cabin at the ranch is really maintence free. I don't have running water and is only a 3 season home. I enjoy the simple pioneer life style for the days I spend there. I really don't want a 2 home that is worth 500K and would feel I need to be there more because of the value and upkeeping needed to be done. Mine I can walk away not have to worry about a yard etc..

 

[GreenEggs]

This is true. In fact my cabin at the ranch is really maintence free. I don't have running water and is only a 3 season home. I enjoy the simple pioneer life style for the days I spend there. I really don't want a 2 home that is worth 500K and would feel I need to be there more because of the value and upkeeping needed to be done. Mine I can walk away not have to worry about a yard etc..

"We don't have to live this way. We like to live this way."

Nobody would believe it if it was your primary.

 

[USGrant1962]

Lots of interesting ground covered here, one thing I might add to consider if I were searching for a second home..

Look at your neighborhood and consider how the character of it may change if several of the other homes became shorter term rentals (like AirBnB). I've seen this really affect the experience. Of course, some places may have rules against short term rentals, and others are far enough apart so there won't be as much effect.

Or your vacation home community may change if the homes become permanent residences. Our vacation home, built by FIL in a remote part of PA in a mountain/lake community in the late 1960s, is getting infested by permanent residences who a)bulldoze the trees on undeveloped lots to build McMansions, 2) bulldoze 2- 3-bedroom cottages to build McMansions, 3) want to jack up the dues for amenities regardless of the finances of long-time, middle income residents and very long time retirees.

I think the point is that vacation areas can change even faster than normal residential areas, so keep that in mind.

Having said that, we have a second home that was in the family and we love it. But it is less than 4% of our NW so the financial concerns expressed by many here are not an issue.

But, our place is less than a three hour drive from our primary residence so we go for 3-4 day weekends all spring, summer, and fall. A cross country vacation home is a whole nother kettle of fish. I know a number of people that do that (VA-ID, CO-CA, MD-NM, SC-WA) but they are all relatively wealthy and can easily pay for the flights back and forth.

 

[RobbieB]

A lot of the stuff that favors owning a second home dissipates on a long term rental. Say a season, 3-4 months.

A week should be enough to get the place stocked with goodies, pots and pans, stuff like that. Nah you're not gonna replace the furniture, so make sure it works. A mattress pad would be cheap and easy, sleep is important.

And if the first season didn't work, you get to try another place next year.

 

[JP.mpls]

I agree with all of the arguments against owning a second home.
It truly is not a financially viable move, and renting makes way more sense.

That being said, I'm thrilled about my new winter place in Florida.

The evenings are starting to cool way down here in MN. My partner and I are looking at each other, and acknowledging that it is almost time to head south.

Take care, JP

Note: Robbie didn't say this, so I will. Blow that dough.

 

[brett]

Our decision not to buy a vacation home was not really down to financial.

We prefer to travel to different areas, different countries rather than snowbird in one location for several months. We have rented a condo for a month mid trip but usually it is a week to 10 days in each place and multiple places in each county.

Since retiring ten years ago we have spent our winters travelling to, and spending time to warmer winter places on our respective bucket lists. Asia, Australia, South America, Central America. We still have a few winter places on our list to try if this covid business ever comes to a conclusion.

We have done a cursory look at the numbers should we decide to buy. Clearly it comes down to what your personal preferences are and what your budget is.

 

[OldShooter]

... We prefer to travel to different areas, different countries rather than snowbird in one location for several months. ...

This really is the blind men and the elephant. In our case, we visit our lake home fairly frequently for long weekends, typically drive (3 hours) on Thursday AM and back on the following Monday. The weeks around July 4 are family days where all of the nearby family cabins are occupied. During that period we might stay as long as 2 weeks. I don't think we've ever had a longer single stay. Much different usage than maybe the majority here.

We don't even consider this to be "travel." Travel is going new places, typically two or three times a year, max 3 weeks per trip. Until recently.

A local joke is DW at the grocery store remembering that we need some staple like ketchup and buying a bottle. This often leaves us with two bottles at the lake or two at home, still being out of ketchup at one of the two places.

 

[ExFlyBoy5]

A local joke is DW at the grocery store remembering that we need some staple like ketchup and buying a bottle. This often leaves us with two bottles at the lake or two at home, still being out of ketchup at one of the two places.

Ah yes...and then the obligatory cleaning of the fridge every couple years because so much of the food stuffs aren't used throughout the year.

 

[Luvtoride]

We don't even consider this to be "travel." Travel is going new places, typically two or three times a year, max 3 weeks per trip. Until recently.

Old Shooter, good description of the two (at least...maybe 3 if you add "snow bird" homes) concepts of "homes" and travel to this thread.

Our 2nd home at the Jersey shore is as you described, within easy driving distance from our main home and a place we go for long weekends or for a couple of weeks at a time. We don't view these visits the same way we do vacations (although it can feel like that being there).

We still take our vacations during the year to places like the Caribbean (twice this year) and Florida (going for our 2nd trip this year in October). We do try to avoid taking "vacations" during the prime summer season when we most use our shore home.

If having a 2nd home would preclude us (or anywhere here) from taking vacations, we would have certainly considered that trade-off before buying it but so far we have been able to maintain travel vacations and our 2nd home getaways.

 

[Music Lover]

"We don't have to live this way. We like to live this way."

Nobody would believe it if it was your primary.

A second home isn't your primary residence so it can be whatever you want. It can be smaller and only 3-season, but that's fine with most people.

It's no different than a summer convertible that gets stored every winter.

 

[RetMD21]

When it is no longer a financial consideration, I look at the upkeep decisions and added complexity of the thing.
My longer term goal is to simplify, so for me it would be a hard hill to climb on that basis.

That's my issue too. We're looking at winters in a warmer place than Michigan so it it nearly 2000 miles making popping in on the second home on a weekend for maintenance impossible as well as undesirable. We're trying rentals this year. I hadn't considered buying many weeks of time shares as RetiredHappy has done. Many tradeoffs to balance.

 

[RetiredHappy]

That's my issue too. We're looking at winters in a warmer place than Michigan so it it nearly 2000 miles making popping in on the second home on a weekend for maintenance impossible as well as undesirable. We're trying rentals this year. I hadn't considered buying many weeks of time shares as RetiredHappy has done. Many tradeoffs to balance.

If you want to learn more about timeshare, head over to tugbbs.com.

With timeshare, you can stay at where you buy, you can buy point system and book at all resorts with the same system, and last but not least you can trade out using and Exchange company to other locations not within the same system/brand.

 

[imnontrad]

I agree that a second home can be a money pit. Although you may like that place in Colorado now (and I live in CO), you may decide to spend time in other areas of Colorado or other states/countries later. Plus as you age, your housing needs for something that has no steps, etc. may change.
Plus, housing in popular vacation areas in Colorado are really expensive. if there is a downturn and people dump their second homes, the RE market in those areas will not be pleasant.

 

[WhenIsItTime]

I have a second home 25 miles from main house. Main house larger and is in town for schools, convenience to stores, activities, medical care, etc. Second is smaller, but on a great lake. Spend >90 nights a year at lake house. A couple thoughts:

1) Proximity helps. Easy to run back and forth.
2) Chores at the lake are not chores. I like being there that much.
3) Lake house was not meant to be an investment, but its value is easily up 50% in 6 years without any significant expenditures. Sure, worse than S&P 500, but not bad for our part of the country.
4) The second house feels like a home. Our beds, our furnishings, our clothes in the closet, our toys. Family and friends love to visit. We would never consider renting it strangers.
5) Fortunate to have great neighbors in both places, but spend more time with neighbors at the lake.
6) Still try to take an airplane vacation 2-3 times a year. Do prefer to rent a house for lodging.

Key for us on second home was I knew we would spend time there and I could do it without negatively affecting quality of life otherwise. I've never once had second thoughts about using that money differently.

Seems to be a pretty polarized topic based on previous posts. Just have to decide what side you are on. Like many things, its not a permanent decision.