buying a vacation property? gut tells me no

[twobone]

I was showing my wife our retirement savings last night. I've got a current plan to retire in 10 years.

 

Her comments is that we should take some money out of the market to buy a ski condo and enjoy it and also rent it out. Later sell it for profit if we need the money for retirement.

 

My gut tells me that no matter how you slice it, this is a bad idea. I don't like the risk of 2nd property prices even in this healthy canadian housing market. Also I think it will cost more to carry than simply renting whenever we want to go up north.

 

Lastly, I don't want to risk my early retirement plans.

 

The other side of the argument is the lifestyle benefits while the kids are young.

 

Am I just a cheap bastard???

[Kitcat]

"Carrying costs" can be huge: principal, interest, property taxes, property insurance, liability ins, contents ins, condo fees, appliances that break down, etc.

 

Then there is the hassle factor-one more thing to worry about, tenants that trash the place, rental agents who screw things up.

 

And that is where you have to go for vacations from now on.

 

OTOH-if it makes your wife happy: priceless.

[MightyMike]

I agree with Kitcat.

[twobone]

thanks guys

 

My wife (who is wonderful and cuts me tons of slack) gets caught up in the allure of owning a place and the idea of going up weekends to collingwood (closest ski place and where she grew up).

 

I may just have to build a logic based argument that says:

 

-Figure out how often you would want to go up.....figure out what that would cost to rent.

-Then show how much money we would be saving as well as the opportunity cost of leaving that money in savings as oppossed to investing in an asset that assumably has a lower rate of return.

 

She will still pull out the "you only live once card", but perhaps the rent idea will show she can still enjoy the lifestyle but at a lower cost.

 

Lastly....flowers helps

[Boxologist]

My father had 2nd place he was co-owner of for almost 20 years. It was rented for parts of the seasons as a vacation. it was never able to hold its own head above water unless they committed not to go there on their own vacation and keep it rented as much as possible.

 

To be economically viable, it wouldn't really have been 'his'.

[Ruadhd2]

Pros:

1. You have a nice place to go to.

2. You can make rental income.

3. If you are ski addict and a beach addict and don't need the rental income and can afford it and can still afford to travel other place, buy 3 or 4 places

Cons:

1. You can go many other places over your life time and enjoy variation of scenery and experiences for much less money.

2. Whatever you buy today that seems like a steal could be much less to buy tomorrow.

3. If you are not a handyman and don't have the time and don't know one or don't want to pay for one or pay a management company you could be under water in more ways than one during a month when it isn't rented.

4. Lots of other people think its a bad idea, especially in places like Florida where you can steal a condo, but you have:

5. condo fees that keep increasing (that's why timeshares are risky too)

6. Out of control condo associations.

7. Condos that go un-cared for due to dysfunctional condo associations.

8. Places that look cheap until you look at the annual property taxes (in the case of Florida)

9. Places that look cheap until you realize the cost of flood and hurricane insurance (in the case of Florida)

10. Places that become an albatross and you can't sell them when you need to.

11. Your needs change for health reasons and you can't get rid of the place.

12. Drains your attention worrying about it and ruminating about furnishing it or its safety. Just one more thing with tons of little things to worry about (like a boat or Lotus 7 variant)

[powderbrake]

Retirement is wonderful!

 

Don't "risk your early retirement plans".

 

Take the wife & kids skiing at a rental occasionally, while sticking to your present plans of money management and investment risks.

[BusaNostra]

As I get older, I'm hating the cold. Everytime I see September, I start counting days to see spring. Yep, New England is cold. I had enough sometimes.

 

Buying a 2nd home is not a bad idea if you have money to spend. It all boils down to: can I afford it?

 

I calculated my financial status (investment-savings-checking-stock-pension-social security),

I made a decision to buy a 2nd home (vacation house) near Key largo. The house was a foreclosure, originally cost over $400, which I got 1/2 the price. Has waterfront, a few minutes to Key Largo & Islamorada, 35 min to south beach and 5 minutes to Miami Speedway (awesome)!!!!

 

So, everyone has plan....

My plan is to leave this property to my children when the time comes.

Sell the house in New England, spend to grand children's education.

I don't need anything except my 7.

 

One advice....foreclosure is an azz job, i will never do it again. I survived but beat up.

Edited January 7, 2011 by BusaNostra

[Ruadhd2]

Obviously, additional properties are an individual decision and depend upon one's resources. While I pooh-poohed the idea in an earlier post, I actually have a small second home in the woods which was paid for without a mortgage and very affordable. Luckily it is very well built and is on such a simple plan with strong, reliable appliances that it only needs monitoring once a month or so. Still, you can get calls like I did from a friend who was checking on it to inform me that a pipe was leaking water into the basement! We don't rent the place out, which is a plus. I am sure there are many other forum members with multiple residences. It certainly is the dream of many. So, it is very much an individual decision, but one that should not be gotten into blindly.

[TLRracer]

Hey TwoBone is Gord Canning still the owner of Blue Mountain up in Collingwood? I used to ride all of those roads up around McKellar and Parry Sound but never made it up Georgian Bay way. I envy you your summer trips up that way:)

[LongTimeLurker]

The sell at a profit part is what concerns me. Properties, expecially condo's are no longer "guaranteed" to increase in value. Lots of people bought in 2007 or so with this dream of easy money. Rent when needed so you can move about and have a change of scenery.

[gjslutz]

As a friends girlfriend once said at an aviation dinner:

 

If you can fly it, float it or **** it, rent it!

 

We had a second home for years that we didn't rent out. I used it a few weeks a year. As it was in FL. I paid for every thing, lawn care, taxes, utilities, and when I was there everyone else had a vacation while I was the maintenance man. That was on a new house

 

It cost me even more when I sold it on a down market, about 20 years ago.

 

We also had a few single family homes that had people managing for us. On half of them we did ok, the other half we lost money on. Any problems we handled by contractors, and the agency likely had 200 other rentals, so we were small fish to them. Owning a rental that you are too far away to manage didn't work for us.

 

Now when we go for a week or a few months, we rent a house. When we walk out the door, I'm done paying. The cost is about 90% less per year. We rent one as good as we had. I use VRBO & Cragslist as well as other sites that rent. We have only had one bad experience with them over the years.