A vacation home can provide years of enjoyment and fond memories for multiple generations of your family. They can also create an extra layer of headaches and expenses that prove more trouble than they’re worth.
Here are 4 reasons to think twice before buying a vacation home, even if doing so won’t break the bank:
Full-time bills for part-time enjoyment.
Most workers receive around two weeks of vacation time from their employers. Self-employed “gig economy” workers or small business owners might manage to carve out a few extra days. Or, they might be so busy running their businesses that even a week of vacation time is a stretch.
Regardless, the bills associated with your second home are going to be there 52 weeks of the year: mortgage payments, electricity, basic upkeep, etc. Are you going to spend enough time at your vacation property to justify those costs?
“Landlord” is a job.
Many folks plan to offset the expense of a vacation home by renting it when they’re not using it. This can be an effective way to earn some extra money and make your mortgage payments without stressing your finances.
But when you rent out a property you own, you’re taking on a new job: landlord. That means vetting potential renters and dealing with any unruly folks who slip through your screening process. That means more wear-and-tear on the house, appliances, and furniture. That means repairs. That means complicated insurance and tax issues.
And all that means more work while you’re still working.
Maybe taking on that job appeals to you, especially if you’re retired and enjoy doing handiwork. But if you don’t want to add “landlord” to your resume, don’t use renting your vacation home to justify the purchase.
Visit more, travel less.
Buying something new is exciting, especially when it’s a big-ticket purchase like a vehicle or home. But that excitement can be surprisingly fleeting. Take your new sports car around the block a few times, and it’s suddenly just your car. Watch a few movies in your fancy home theatre, and suddenly it’s just your TV.
A vacation home could be an exception to that rule, especially if it becomes a focal point for family gatherings. In that case, what you’re really buying isn’t a home: it’s an experience of time shared with loved ones. The same holds true if your vacation home is near activities you and your spouse both enjoy, like a cluster of great golf courses or a vibrant restaurant scene.
But if your vacation home is just a nice house, that “getaway” feeling is going to become just another part of your regular routine. Vacationing will start to feel like visiting, or worse, like walking into another set of rooms in your house. When vacation time rolls around, it’s going to be hard to justify spending additional money on “bucket list” travel when you know your second house is just sitting there, racking up mortgage interest, waiting for you to replace the leaky water heater.
Retire TO, not FROM.
So: you don’t want to be a handyman, you dream of crisscrossing Europe, and vacationing for more than 10 days per year makes you antsy.
Still, there’s that voice in the back of your head saying, “We love that place. We have the money. If we don’t buy now, we never will.”
Maybe buying a second house isn’t going to improve your Return on Life right now. But retiring to your favorite vacation destination could be an invigorating change of scenery. There’s a big difference between putting off your goals until it’s too late and putting a plan in place that will let you hit that goal when the time is right.
In the meantime, keep that favorite spot in your vacation rotation. Who knows? After a few more years, the shine might wear off and you’ll start dreaming about a new retirement home.