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  • 2nd Home Lake cabin

    We aspire to have a 2nd home on a lake to be used as weekend place to go. With home prices and current finances this is not in the cards for at least next 3 years. Realistically we have no finite time to buy, it could be 10 years from now....

    Assuming all retirement/saving goals being met
    My question: Would you start saving a separate cash account now for a down payment or would you invest this in a taxable account and sell some index funds when you find the right house at the right time?

    We are pretty sure we will buy a 2nd house at some point but since it could be anywhere from 3-10 years I am hesitant to save cash...

  • #2
    If it’s closer to 3 I’d do cash. If it’s closer to 10 then I’d do the market.

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    • #3
      Originally posted by Otolith View Post
      We aspire to have a 2nd home on a lake to be used as weekend place to go. With home prices and current finances this is not in the cards for at least next 3 years. Realistically we have no finite time to buy, it could be 10 years from now....

      Assuming all retirement/saving goals being met
      My question: Would you start saving a separate cash account now for a down payment or would you invest this in a taxable account and sell some index funds when you find the right house at the right time?

      We are pretty sure we will buy a 2nd house at some point but since it could be anywhere from 3-10 years I am hesitant to save cash...
      Not sure what kind of price range you are looking at, but I know exactly what I want and I will buy immediately with cash if I find it. I have a large "E fund" that I would use for it and would just sell off taxable for any that it didn't cover. I would liquidate some taxable for any deficit or if needed after the purchase for an actual emergency.

      You didn't provide any details, but if "prices and current finances" mean that it isn't in the cards, I would focus on optimizing the one piece of that equation over which you have control....

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      • #4
        I'd do taxable for now...probably for the next 3 years. If the market is doing well for the next three years then consider taking some money out of taxable as long as you're not paying too much in taxable gains. If the market is down, keep putting money into taxable and wait to buy until the market has come back

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        • #5
          1 spouse, 1 house, etc.

          If you’re still potentially interested but not certain with such a variable timeline upwards of 10 years I’d do taxable.

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          • #6
            Don't know if this is an option for where you are considering buying the lake home but what we did was buy a condo on the lake we wanted to be at and enjoyed it when the kids were small and then after 16 yrs sold it when we found a home we wanted and used the cash for the equity in the home. We made a 250% gain on the condo in that time. We enjoyed the condo but the home is much better.

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            • #7
              If all of your obligations are met, then find the lake home now, but good luck. The inventory is sparse and you will need to wait 2-3 anyways to find the place your family will love. So in the mean time, rent a house at different lakes each summer and explore the area. This will help you choose what you want in a lake and area activities. I did this and on the fourth year found a lake home. We bought four years later after looking at three dozen homes over the years. Good luck

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              • #8
                Don’t know where you live but we were looking at lake cabins recently. Most are double the price they were just 2-3 years ago. The real estate market is insane everywhere, even at smaller lakes with beautiful views

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                • #9
                  So I would plan to get a mortgage and put 20% down. With current home prices the way that they are we don't quite have enough for 20% (without selling some taxable), thus we need to keep saving.
                  Its more like there is an area of a lake we want to be and when/if the right house comes up we want it. This could be never...

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                  • #10
                    We bought a lake home last year with 20% down. I initially felt guilty for buying a leisure property instead of an investment property but it made the wife happy. After owning the home for 6 months, I started renting it on Airbnb. Since that time it has easily paid for itself. Just an idea, if that interests you it’s an easy way to help you pay for it. We have no regrets.

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                    • #11
                      for those of you who have purchased a lake house, is there anything you wish you would have known about being on a lake?

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                      • #12
                        Originally posted by braindoc View Post
                        for those of you who have purchased a lake house, is there anything you wish you would have known about being on a lake?
                        How amazing it would be? ;-)

                        Our place is on a lake in the mountains so we're not ON the lake, we're above it. The view is amazing and it's just a short drive or walk down the hill to the lake. This is my preference, especially with kids. They can roam outside without my worrying about them drowning. And I don't have to deal with sand being tracked into the house.

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                        • #13
                          Originally posted by BE87 View Post
                          We bought a lake home last year with 20% down. I initially felt guilty for buying a leisure property instead of an investment property but it made the wife happy. After owning the home for 6 months, I started renting it on Airbnb. Since that time it has easily paid for itself. Just an idea, if that interests you it’s an easy way to help you pay for it. We have no regrets.
                          The area we are looking at has fantastic airbnb potential all year long.

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                          • #14
                            Make sure the community and the county allows for short-term rentals, and if so is there a licensing fee/inspection involved (likely). In terms of the lake itself, west facing by far most in demand, followed by South/Southwest >>>> East >> North facing. It's just in terms of how much light you get -- would you rather have a nice sunset, or sun in your face in the AM as you are sleeping in or drinking your morning coffee on the deck (east facing) or be in the shade all day long (north facing, particularly if there's a lot of tree cover).

                            Also check out bathymetry data, how deep is the lake, is there algal blooms and overgrowth, where's the traffic on the lake which is a 2-edged sword but at least it can help reduce the green stuff. Is there a public boat launch and is it close to your property? Any covenants or community association even if it's all single family not condos?

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                            • #15
                              Depending on the situation you're looking at try to be picky on location on the lake. The thing that sold us on ours is the fact it's in an oak grove for shade and has a southern exposure so that we get the predominant breeze in the summer and shade. In the very hot days we feel 10 degrees cooler in the summer than those on the south end because of that combination. Also remember it's your second home so it should be comfortable but you don't need a mansion.

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