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Old 11-14-2011, 12:46 AM
1,744 posts, read 2,051,205 times
Reputation: 3971


Help talk me off a cliff. I live in a cold weather climate and am thinking of taking advantage of the low interest rates and the depressed housing market to purchase a 2nd home in a warmer climate. Eventually, I would become a snowbird and live in this house part of the year. In the mean time, it will be my annual escape.

My rationale for making such a move is to pay for the house now while I have increased purchasing power so that when I retire, the house will be paid (or nearly paid) off. An additional benefit is being able to enjoy the benefits of the house now, recognizing that tomorrow isn't promised to any of us.

Here is the catch. Since I want the property to be available for my own use during the peak rental season, I would not rent it out. I would use it for approximately 4-6 weeks a year. The rest of the year, I would make it available for friends or family who might be in the area, but most of the time it would be vacant. There would probably not be a high demand for short-term rentals.

I am currently maxing our my 401K and Roth, as well as investing in non-taxable stock investments on a monthly basis. I also making extra payments on my primary mortgage. No other debts.

Would you do it? Why or why not?
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Old 11-14-2011, 01:29 AM
Location: Northern Nevada
8,545 posts, read 8,670,919 times
Reputation: 3058
Where are you thinking of buying? We are near Palm Springs..my house might be available to purchase soon, we have tons of 'snowbirds' here..

Whether it's a 'smart' move to make only you can answer..but the folks who spend the winter here LOVE it!
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Old 11-14-2011, 02:31 AM
Location: Lincoln, CA
505 posts, read 1,377,704 times
Reputation: 515
Originally Posted by dmills View Post
Help talk me off a cliff.
That alone should be enough reason for you already.

You already know deep down whether you should or should not do it, so why ask for assurance?

Any financial adviser will tell you it's a terrible idea. In a day and age where searching for private home rentals, vacation rentals and hotel booking is easy as touching your phone, why would any buy a whole house just to guarantee a hot spot for a few weeks out of the year?

I bought a home next to a lake in Texas several years back with the same idea. At first we went 2 weeks each time, maybe twice a year for the first 1-2 years. By the third and fourth year, we'd be lucky if we even thought about going at all. We ended up selling the place for a huge loss. The bottom line is why tie yourself down with another payment when you could easily book any destination for a few hundred bucks if and when you decide to go on vacation? Unless you have oodles of cash laying around and everything (including your first and second homes, cars, credit card debts) all paid off, you're just signing on for more debt.
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Old 11-14-2011, 03:23 AM
Location: Summerville, SC
3,383 posts, read 6,382,464 times
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My in laws have one, but my Mon in law is there easily 3 months a year, and other family members go often. It's a small cuap place.

Another thing to watch is taxes. Where I live now non primary homes get taxed bad, like $5k a year. I saw it while house shopping and see what the owner is paying in taxes and have a mini heart attack to realize he is renting it out.

Sent from my autocorrect butchering device.
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Old 11-14-2011, 03:28 AM
Location: Wisconsin
7,215 posts, read 6,931,882 times
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I wouldn't do it until your primary residence is paid off. But I really hate debt to begin with.
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Old 11-14-2011, 03:55 AM
54,896 posts, read 57,257,764 times
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it was the worst idea we ever had .

our issues are that since it cost us a chunk of dough we find we feel obligated to go there as much as we can and go anywhere else rarely.

once you exhaust what there is to do in the area over the first few years it becomes quite boring.

the worries when you not there when storms and power outages come is more than makes it worth owning for us.

every poweroutage or if the heat breaks down is a race against time in the winter and your not even there.

maintaince in some areas can be alot since the last thing we want to do is cut grass and yard work when we come up.

we have to be plowed every snow storm so the fuel truck can make deliveries. gutters and leaders cleaned 2x a year, preventative bug spraying every year, dealing with cutting down dead trees all the time,etc.the expenses never seem to stop.

dual sets of bills all year, cable,phone,internet,electricity etc eventually take its toll and become annoying when the novelty of the new house wears off.

the biggest negative is after you live a country life for a while ,as much as we thought we would like it we dont anymore.

needless to say we have it for sale now after owning it for 5 years.

i would not own a vacation home anywhere at this stage.

there are tax implications also if you ever want to make it your primary if your first buying a home now..

the capital gain exclusion on a vacation home if you make it your primary is pro-rated against all the years you owned as a vacation home.

if you owned it say 10 years and it was your primary the last 5 and you sold it you only get 1/2 the amount of the capital gains exclusion.

Last edited by mathjak107; 11-14-2011 at 04:35 AM..
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Old 11-14-2011, 05:04 AM
Location: Florida
15,912 posts, read 16,210,928 times
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Play the figures game.
How much would you spend per year vacationing times how many years?
How much will owning a place all that time cost?
Play safe and figure buying later may cost twice as much.
Fact is that may be the opposite or pretty even but I like the 'prepare for the worst, hope for the best' when it comes to finances.
Add in the hassles of owning vacant property long distance....remember things like no vandalism coverage.
Sounds like you intend to mortgage, so don't forget to count the interest as money lost.
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Old 11-14-2011, 05:22 AM
54,896 posts, read 57,257,764 times
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i figured out we could have stayed at the swankiest place in town everytime we have been there over the last 5 years and not even have come close to a fraction of the costs of buying..
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Old 11-14-2011, 05:41 AM
Location: Afghanistan
152 posts, read 392,813 times
Reputation: 195
We had a modest vacation home. At the end of our use I calculated that it cost us 522.00 a day for honest use, that is the cost divided by the days used for vacation (vice winterizing it and other chores). Had we not spent our money that way we would of had some wonderful vacations.
You know when you have given good advice when someone quotes your own advice back to you.

OP do not buy into the dream. Make your own dream, do not buy it (the dream).
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Old 11-14-2011, 05:48 AM
Status: "Working on a new project!!" (set 6 days ago)
Location: Home in TN:)
18,971 posts, read 23,599,628 times
Reputation: 83370
I would not buy a vacation home right now. The expenses and stress of owning a vacant home part of the time just don;t seem worth it.

1. A second homes means double the bills. The big ones are the taxes and insurance.

2. Would you be mortgaging this home? Then you have the interest to pay for 15-30 years in a still depreciating market in some areas.

3. Has the area you are looking in already hit bottom? Are there an vacant homes? What about the shadow inventory? If the area has not turned yet I would not touch it at all. You will lose.

4. If you don't know the area well or have friends there you could be very bored or hate it there.

5. If you have the plan to retire there eventually, the neighborhood that it is today could changes drastically later on, for the worse.

Be very careful at this time. I would rather rent in different places and meet new people. Learn your new area very well before buying anything. One place can also become very boring.

Good luck.
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