Vacation homes. Dismal math & a dead horse

[childay]

Cute, but really small! What if you want to have guests?

I've been following this thread with great interest. I've been looking for a lake house 1-2 hours from my primary residence for the past 2 years. We are avid waterskiers and want a place to keep a boat and ski on the weekend and a few weeks a year. Lots of options for lakes here in Florida, but the market has been insanely hot with most homes selling within 24 hours of listing. Things are finally cooling down but nice home on good lakes with a slalom course are few and far between.

My wife is opposed. Prefers to rent. Feels the burden will fall on her to maintain. We did have a beachfront condo 10 minutes from our primary for years which we sold. She did most of the work there since I was in the prime of my practice.

Is renting a reasonable option? Do you have the boat already? 2 hours is pretty far

[StarTrekDoc]

The first house would be a my limit of driving for a 2nd house. Don't let the AirBNB/VRBO potential dictate your purchase determination as this is primarily a 2nd house than vacation rental.

IF the vacation house fits your needs; THEN calculate the rental potential and pencil out the financials to see if it makes sense to own.

[G]

I don't get looking at a second home only an hour or so away from primary home. I get the convenience (until you realize that your favorite fishing rod is at the beach but you're at your main house and tomorrow you're going fishing in the opposite direction), but is it that burdensome to just drive home at the end of the day?

It takes me 30 min to get "downtown" from my house--and I learned to drive during an hour-long commute to high school--so perhaps I'm just attenuated to driving.

[Tangler]

Is renting a reasonable option? Do you have the boat already? 2 hours is pretty far

1hour 15-20min drive, not too bad. Renting is certainly possible but not sure how much it will ultimately generate and as others have said, primarily a vacation house. Boat 🛥️ is next big purchase but not immediately.

[Tim]

The second house was also a recent sale!
Looks like a rehab/flip deal. Not familiar with Cape Cod properties or even Ma. values.
So far each one you like was purchased during the FOMO period for real estate and is now the new owners want out.
If you look at the valuation histories, you know that RE is local. A ton of Boston money seems to have migrated to desirable areas, live at the beach and dreams of working from home.
Not predicting a crash, but I sense some owners are trying to get out because the appreciation has slowed and that vacation house investment train had left the station.

[Tangler]

The second house was also a recent sale!
Looks like a rehab/flip deal. Not familiar with Cape Cod properties or even Ma. values.
So far each one you like was purchased during the FOMO period for real estate and is now the new owners want out.
If you look at the valuation histories, you know that RE is local. A ton of Boston money seems to have migrated to desirable areas, live at the beach and dreams of working from home.
Not predicting a crash, but I sense some owners are trying to get out because the appreciation has slowed and that vacation house investment train had left the station.

Yep second one was a buy and flip and the seller is the agent (agent = owner). I don’t know if I will do it but I will certainly be careful and do due diligence.
Second home is certainly a flip but it looks like they did a good job and it is a perfect location that I fish every spring, summer and fall.
Wife rolls her eyes and gets n/v when she sees price per square foot etc.
I look at it tomorrow at 14:30.
Thanks for the help. Sorry for all the posts.

[wideopenspaces]

Yep second one was a buy and flip and the seller is the agent (agent = owner). I don’t know if I will do it but I will certainly be careful and do diligence.
Second home is certainly a flip but it looks like they did a good job and it is a perfect location that I fish every spring, summer and fall.
Wife rolls her eyes and gets n/v when she sees price per square foot etc.
I look at it tomorrow at 14:30.
Thanks for the help. Sorry for all the posts.

I think it's pretty darling and the location/drive sound great. I bet you'd use it a ton. Ours is a 2 hr drive and we're there every weekend in the summer pretty much. I'm typing this from our vacation home. I don't think I'd ever get tired of being up here. Let us know how the viewing goes!

[MSooner]

Earlier this year we bought a lot to build an investment home in the Smokies in 2-3 years. We go up there 4-5 times a year and it’s 2 hours away, so we expect to use it often enough. The primary goal is definitely to make money and to give me a way to increase our net worth without taking on a full time job.

Something that has been really helpful is joining some Facebook groups for owners local to the area. I’ve learned so much—which areas have well issues, common maintenance issues I wouldn’t have expected, features I should think about including when we build, what the heck to do when a wildfire rips through the area, and so on.

I am a sucker though—I ended up taking on the HOA president duties because it’s a small neighborhood with a shared well water system and someone has to be the point of contact when something goes wrong. It’s gone down twice since I assumed the duties, including today 😬

I don’t think I’d want to deal with the hassle if there wasn’t potential for it to be positive financially.

[Mitchel674]

Is renting a reasonable option? Do you have the boat already? 2 hours is pretty far

Now you sound like my wife!

We currently rent a place often on a great lake with two slalom courses about 2 hours from my primary home. The owner even rents me his ski boat. Cozy at only 1000sqft and one bathroom but a nice setup. Sadly, it's not always available like my own lake house would be.

We don't have a ski boat yet, but that will come this year. The ski boat market has been even crazier than the lakefront realty market!

I think 2 hours is just a bit too far.

[Tangler]

I think it's pretty darling and the location/drive sound great. I bet you'd use it a ton. Ours is a 2 hr drive and we're there every weekend in the summer pretty much. I'm typing this from our vacation home. I don't think I'd ever get tired of being up here. Let us know how the viewing goes!

Saw this house. Love it. Wife will likely veto:

https://redf.in/kjJ4rY

[wideopenspaces]

Saw this house. Love it. Wife will likely veto:

https://redf.in/kjJ4rY

How come??

[Tangler]

How come??

She is:
1. smart, realizes the math on rent vs buy vacation house. She is almost as frugal as MMM
2. Thinks the cape is overpriced (it is, IMO, but it will not go down substantially, it will cool off, flatten, go up more slowly is my guess) (limited land area)
3. She would rather just own one home and she likes the city more than the country (city mouse vs country mouse)

The second house is like a bento box. Space perfectly organized. It was a down to the studs renovation and it looks amazing. It is small, but did not feel small. Perfect fishing “camp” yard is awesome. Location is close to water but not a big risk to flood.

Here is the big question: why not rent a place instead?
Answer: I currently live in a townhouse (no place for boat) but the town house is perfect for our needs (Near hospital where her mom is getting chemotherapy each week, near hospitals where we have been working, near city stuff my wife likes, near hiking trails I like and we have a nice garage that stores my kayaks etc.
This “country house” would be mostly a consumption item for me. At some point (perhaps now?) she and I will have to agree on spending some $ for stuff we don’t need for fun. (current situation: summary: zero debt, no mortgage, no kids, net worth >6M, spending 120-160k per year. working part time with plans to retire in 1-5 years)
I am perhaps not being totally fair in my description of wife. She is amazing person, and certainly a big part of why we are wealthy.

[Mitchel674]

She is:
1. smart, realizes the math on rent vs buy vacation house. She is almost as frugal as MMM
2. Thinks the cape is overpriced (it is, IMO, but it will not go down substantially, it will cool off, flatten, go up more slowly is my guess) (limited land area)
3. She would rather just own one home and she likes the city more than the country (city mouse vs country mouse)

The second house is like a bento box. Space perfectly organized. It was a down to the studs renovation and it looks amazing. It is small, but did not feel small. Perfect fishing “camp” yard is awesome. Location is close to water but not a big risk to flood.

Here is the big question: why not rent a place instead?
Answer: I currently live in a townhouse (no place for boat) but the town house is perfect for our needs (Near hospital where her mom is getting chemotherapy each week, near hospitals where we have been working, near city stuff my wife likes, near hiking trails I like and we have a nice garage that stores my kayaks etc.
This “country house” would be mostly a consumption item for me. At some point (perhaps now?) she and I will have to agree on spending some $ for stuff we don’t need for fun. (current situation: summary: zero debt, no mortgage, no kids, net worth >6M, spending 120-160k per year. working part time with plans to retire in 1-5 years)
I am perhaps not being totally fair in my description of wife. She is amazing person, and certainly a big part of why we are wealthy.

Your wife sounds eerily like my wife. Logical, rational and frugal. Mine is also amazing, but I cannot seem to convince her to spend the money on a lake house I know she would enjoy. She prefers to rent.

[Tim]

She is:
1. smart, realizes the math on rent vs buy vacation house. She is almost as frugal as MMM
2. Thinks the cape is overpriced (it is, IMO, but it will not go down substantially, it will cool off, flatten, go up more slowly is my guess) (limited land area)
3. She would rather just own one home and she likes the city more than the country (city mouse vs country mouse)

The second house is like a bento box. Space perfectly organized. It was a down to the studs renovation and it looks amazing. It is small, but did not feel small. Perfect fishing “camp” yard is awesome. Location is close to water but not a big risk to flood.

Here is the big question: why not rent a place instead?
Answer: I currently live in a townhouse (no place for boat) but the town house is perfect for our needs (Near hospital where her mom is getting chemotherapy each week, near hospitals where we have been working, near city stuff my wife likes, near hiking trails I like and we have a nice garage that stores my kayaks etc.
This “country house” would be mostly a consumption item for me. At some point (perhaps now?) she and I will have to agree on spending some $ for stuff we don’t need for fun. (current situation: summary: zero debt, no mortgage, no kids, net worth >6M, spending 120-160k per year. working part time with plans to retire in 1-5 years)
I am perhaps not being totally fair in my description of wife. She is amazing person, and certainly a big part of why we are wealthy.

The proverbial “It’s me or the dog. Sure am gonna miss you.”
Vacations for a month or a summer are a trip. Nesting instincts are difficult to change. Remember #3.

[jfoxcpacfp]

When you reach FI, spending becomes less about the math and more about the enjoyment. Of course, there are limits to profligate spending, but I don’t understand all of the angst about the math in this thread. I might if you were wanting to spend that much on NetJets but not on a piece of real estate that is still standing when you want to visit. But, then again, I don’t look at real estate as a consumption item and don’t understand that argument.