• Hugh F. Wynn

Vacation Properties May be an Investment Worth Avoiding

Vacation homes bring joy to many people, and if your family is one that dreams of owning place for weekend getaways and spur-of-the-moment holidays, I strongly recommend that you familiarize yourself with the costs associated with such a luxury.


In this week's Q&A, I give food for thought based on my personal experience with owning a vacation home. Names and personal information are excluded to protect privacy. NOTE: Since I’m not a credentialed financial advisor, the answers (observations) I give are strictly my opinion.


Q: Our family retirement portfolio is in great shape and we are considering the purchase of a nice vacation property as a future gathering spot for the family. Should we take the plunge?

A: As you embark on your vacation home consideration journey, the primary consideration is to familiarize yourself with the high cost of such a luxury.


Whether you’re considering a seashore, lakefront, or mountain getaway, remember that these homes – by definition, mostly used on a seasonal basis – cost you year-round. Yes, it’s nice to have a comfortable second home that’s readily available for family or extended family and close friends to use, but that convenience comes with a hefty price tag. I would simply ask that you perform an exhaustive due diligence on the true cost of a play-cation villa. Hiring an expert might be worth the cost. Or get some input from family or friends who own or have owned a second home. And keep in mind that there is an abundance of vacation properties available for rent in most resort areas!


If a cash purchase is unaffordable, be prepared to make a larger down payment, pay more interest, and comply with stricter requirements than for a mortgage on your primary residence. And that’s just the beginning.


Remember that disclosure form you received prior to closing on your first home? The one that laid out the mortgage terms, loan fees, closing costs, etc.? Shortly thereafter came the series of sticker shocks when those additional costs of home ownership surfaced: homeowners insurance, homeowner association fees, property taxes, new furniture and curtain expenditures, landscaping installation and yard maintenance, and years later, a new roof, HVAC repair, etc. I suspect I’ve overlooked a few hundred other expenditures.


Now adjust all of those aforementioned numbers for inflation by a multiple of two or so. And if you’re looking at a seashore property… one subject to an occasional hurricane breeze… add wind and flood insurance to your second homeowners’ insurance policy (that’s right, three insurance policies on a house instead of one); the cost of sturdy, flying objects-proof exterior blinds; and the corrosive effect of saltwater on exterior paint, HVAC systems, and other metal fixtures exposed to salt-laden air. And don’t forget the initial landscaping and lawn irrigation system outlays, and those frequent indoor and outdoor maintenance expenses, which can be an even greater nuisance factor than back at the old homestead.


Since a second home is frequently vacant (unless you rent it out), security, overseer, and occasional maid services can be hefty cost factors. Some vacation retreats come with expensive built-in country club amenities regardless of your social or golf proclivities. Whoops, I forgot to mention a second complete set media entertainment devices, internet, and utility and garbage collection bills. Who wants a second home that’s missing life's conveniences?

And who do you suppose is going to do all of the odds and ends repair work on the “honey-do” list? Probably the same guy that repairs things back home or local handyman who charges double on weekends and holidays.


Yes, I know you’re foregoing the “opportunity” to sell that second home at a huuuge profit down the road, but when you do sell it, be sure and deduct the true carrying cost of owning versus renting during those many… yes, they are enjoyable… years of ownership.


I’m not suggesting that you avoid buying a vacation home. I’m merely suggesting that you look at the numbers – and perhaps avoid the multiple headaches of second home ownership, including worrying about those stinking hurricanes forming off the African coast a gillion miles away.


As Sinatra once warbled, “Regrets, I’ve had a few, but then again, too few to mention”.



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