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I'm considering a small cottage 90 minutes from my primary residence. My wife and I adore it. It would be a stretch to afford it but I think we can do it. We are torn if we should pass or just go for it. We own our primary home with no mortgage. We would probably need to take a smaller $100k mortgage for the cottage. We could be there 3 weekends a month for the forseeable future. We are in our early 50s and could see this as becoming our full-time place in 10-15 years. We could feasibly AirBnB it as well when we aren't there. Help? Any advice from others who've done this already? Thank you! Peace and blessings to all
I'm considering a small cottage 90 minutes from my primary residence.
Any advice from others who've done this already?
If the location & amenities there suit and you'll REALLY go there and stay regularly...
then it's a head and shoulders better choice than buying an RV to go there dragging a kitchen and bathroom with you.
As to the financing required...
Total Price ÷10 years ÷ # of nights per year you'll be there (no air bnb)
Does that all come out to something under $30/night?
If the location & amenities there suit and you'll REALLY go there and stay regularly...
then it's a head and shoulders better choice than buying an RV to go there dragging a kitchen and bathroom with you.
As to the financing required...
Total Price ÷10 years ÷ # of nights per year you'll be there (no air bnb)
Does that all come out to something under $30/night?
Hello and thanks for your insight. No it would come out to be $100 a night. I see your point in the forumla.
I'm guessing it's not worth it? Thanks!
As someone who has owned at least 3 "vacation homes", I can tell you that the previous figures above don't come close to telling the whole story.
One major thing they left out is the resale value of the house at the end of your ownership period. On all 3 of the vacation homes I've owned, the profit I made on the sale of the homes after owning them for several years more than paid for my expenses (utilities, taxes, insurance, maintenance, and loss of income from the capital invested).
So, in my 3 vacation homes which I owned, I actually got to use them for free, and even MADE money on the deal. That's kind of like being paid to take a vacation. I like that!
Another thing to consider is that even if it turns out to cost you some money even after you sell the property later, that cost may have been far less than you would have spent if you had done a similar activity but rented instead of buying your own place.
At the end of 10 years of renting, you'll just have a big stack of cancelled checks showing where you gave your money to someone else with nothing to show for it except maybe a good time. At the end of 10 years of ownership, there's a good chance that you'll get a final check (from selling the place) that will reimburse you every penny that you spent over the 10 years plus a little extra just for good measure. As I said, I like it when I'm being paid to have a good time.
BTW, I never rented out ANY of the 3 places to anyone for a single day. If I wasn't in it, it was not being used by anyone.
As someone who has owned at least 3 "vacation homes", I can tell you that the previous figures above don't come close to telling the whole story.
One major thing they left out is the resale value of the house at the end of your ownership period. On all 3 of the vacation homes I've owned, the profit I made on the sale of the homes after owning them for several years more than paid for my expenses (utilities, taxes, insurance, maintenance, and loss of income from the capital invested).
So, in my 3 vacation homes which I owned, I actually got to use them for free, and even MADE money on the deal. That's kind of like being paid to take a vacation. I like that!
Another thing to consider is that even if it turns out to cost you some money even after you sell the property later, that cost may have been far less than you would have spent if you had done a similar activity but rented instead of buying your own place.
At the end of 10 years of renting, you'll just have a big stack of cancelled checks showing where you gave your money to someone else with nothing to show for it except maybe a good time. At the end of 10 years of ownership, there's a good chance that you'll get a final check (from selling the place) that will reimburse you every penny that you spent over the 10 years plus a little extra just for good measure. As I said, I like it when I'm being paid to have a good time.
BTW, I never rented out ANY of the 3 places to anyone for a single day. If I wasn't in it, it was not being used by anyone.
That's very good information. In your experience, how hard is it to find a vacation home that would rise in value over time? Does it take a lot of effort, or is it pretty normal and easy for folks to find / buy a vacation home that will rise in value and make ownership financially sensible?
That's very good information. In your experience, how hard is it to find a vacation home that would rise in value over time? Does it take a lot of effort, or is it pretty normal and easy for folks to find / buy a vacation home that will rise in value and make ownership financially sensible?
I didn't find it to be difficult at all. Just do some homework. What is the history of the area? What is the recent trend in prices and desirability? What does it look like might happen to the area in the next 3-5 years or longer?
No one has a crystal ball, but just apply some logic and analysis the same way you would if buying a house to live in full time. Actually, it may be even easier to analyze than if you're buying a house for full time living since you won't be hampered by proximity to work concerns or concerns about where your kids may go to school. In other words, it's all dollars and cents analysis and little to no emotional involvement.
Speaking as someone who actually owns a vacation cabin, do not underestimate the amount of your time which will be sucked up by chores and maintenance. That includes everything from mowing the lawn to repainting the place to dealing with plumbing emergencies. You'll actually get to enjoy half of your time there if you're lucky. Will you drive over there if a neighbor calls and says your back door is ajar or the smoke alarm is going off while you're at work? Hire a repair guy over the phone? Absentee ownership involves a lot more than budgetary considerations.
Speaking as someone who actually owns a vacation cabin, do not underestimate the amount of your time which will be sucked up by chores and maintenance. That includes everything from mowing the lawn to repainting the place to dealing with plumbing emergencies. You'll actually get to enjoy half of your time there if you're lucky. Will you drive over there if a neighbor calls and says your back door is ajar or the smoke alarm is going off while you're at work? Hire a repair guy over the phone? Absentee ownership involves a lot more than budgetary considerations.
I typically hire someone to do the mundane stuff like grass cutting, shrub trimming, painting, and that sort of stuff. As for unexpected things, it is very helpful to make friends with a neighbor who is willing to check on the place from time to time and call you if a problem arises.
Keep a good roof on the place, keep the furnace and AC in good shape, and turn the water off when you're away and likely you'll be fine. In some areas, security cameras might be a good idea, but I've never had any need for them. I believe that 90% of the problems that typically occur with a vacation place or a second home are due to the owner not following good preventative maintenance measures. Maybe I've just been lucky, but I've never had broken windows, doors left open, or plumbing problems when I'm gone.
That said, I have done my share of things like staining the deck, minor plumbing jobs, and minor repair jobs around the house, but that's usually because I just felt that doing it myself was easier and quicker than calling someone to do it.
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Thanks!
