Do you think a vacation home is a good investment?

[Anonymous]

PP here. This Bald Head Island house sold for $1.475 million is 2005 and is now listed at $1.725 million. It’s been siting on the market for nearly a year. If you look carefully at the sales history, you’ll see the effect of the huge market crash of the late 2000s on prices. North Carolina beach property did not double in value from 2003 to 2018; it crashed by 30 to 40 percent in the middle of that time period and only recently recovered.

https://redf.in/KM6myC

[Anonymous]

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Anonymous wrote:It depends on location, and a host of other factors, OP. To me, it is not worth the investment of my mental energy.

+1. For me its the mental energy specifically. Maintaining our primary home is work enough. I don't need more work. I'll stick to hotels and rentals. If I were uber wealthy and a personal assistant could manage all the property maintenance and contractors maybe, but I'm not.

+1 We sold ours. There's also a huge glut of vacation homes right now since everyone and their brother started doing airbnb/vrbo etc AND insurance market is rapidly changing for areas with climate issues. Insurance for a rental property is always a lot higher. I feel we got out when we should, but I could be wrong. It was nice for about 2 years and then a hassle.

Rehoboth inventory is tighter than northern va and prices are insane. Glad we bought 18 yrs ago. House tripled in value. Will retire here and also work remote here in Rehoboth. 🍷 🏖️

How much time have you actually spent in Rehoboth in the dead of winter? I grew up in a similar beach town, and let me tell you: the winter is brutal. With the money you could get for your house, there are a thousand places that are more pleasant and interesting to retire to.

We will spend Sept 7th through Jan 10 at beach house. Then back to beach 2 weeks in Feb and 3 weeks in March. Just got back today and spent most of the summer there. I love off season! Can’t wait. We are self employed and fully remote so can work anywhere. Heading to mountain home next week but it will be pretty hot next week. Will retire to Rehoboth for awhile. Can always move elsewhere down south in future if feel like it.

Enjoy your unoriginal retirement! That would never, ever work for me.

What a sad, defensive response.

You got made a fool of trying to put words in someone's mouth about how much they'd enjoy their own vacation house, and then when they thoroughly shut you down you had to lash out with an completely irrelevant jab about your personal feelings.

Guess what, it's their vacation house, not yours. I imagine there's a lot of things you think other people wouldn't like because you're a pathetic, hateful person who can't find joy anywhere so you take it out on others.

I’m just saying, I’ve been there and done that. The year rounders in those places are by and large less educated and Trumpy. Even in Rehoboth. I have actual experience with this. This poster does not. She will see that for herself soon enough.

Lol, you have posted this weirdness before about how horrible off season is, and I also have actual, year round experience in Rehoboth. And Lewes. Downtown, not greater Sussex County. It ain’t remotely Trumpy. And I’m 100% certain PP will enjoy it.

[Anonymous]

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Anonymous wrote:It depends on location, and a host of other factors, OP. To me, it is not worth the investment of my mental energy.

+1. For me its the mental energy specifically. Maintaining our primary home is work enough. I don't need more work. I'll stick to hotels and rentals. If I were uber wealthy and a personal assistant could manage all the property maintenance and contractors maybe, but I'm not.

+1 We sold ours. There's also a huge glut of vacation homes right now since everyone and their brother started doing airbnb/vrbo etc AND insurance market is rapidly changing for areas with climate issues. Insurance for a rental property is always a lot higher. I feel we got out when we should, but I could be wrong. It was nice for about 2 years and then a hassle.

Rehoboth inventory is tighter than northern va and prices are insane. Glad we bought 18 yrs ago. House tripled in value. Will retire here and also work remote here in Rehoboth. 🍷 🏖️

How much time have you actually spent in Rehoboth in the dead of winter? I grew up in a similar beach town, and let me tell you: the winter is brutal. With the money you could get for your house, there are a thousand places that are more pleasant and interesting to retire to.

We will spend Sept 7th through Jan 10 at beach house. Then back to beach 2 weeks in Feb and 3 weeks in March. Just got back today and spent most of the summer there. I love off season! Can’t wait. We are self employed and fully remote so can work anywhere. Heading to mountain home next week but it will be pretty hot next week. Will retire to Rehoboth for awhile. Can always move elsewhere down south in future if feel like it.

Enjoy your unoriginal retirement! That would never, ever work for me.

What a sad, defensive response.

You got made a fool of trying to put words in someone's mouth about how much they'd enjoy their own vacation house, and then when they thoroughly shut you down you had to lash out with an completely irrelevant jab about your personal feelings.

Guess what, it's their vacation house, not yours. I imagine there's a lot of things you think other people wouldn't like because you're a pathetic, hateful person who can't find joy anywhere so you take it out on others.

I’m just saying, I’ve been there and done that. The year rounders in those places are by and large less educated and Trumpy. Even in Rehoboth. I have actual experience with this. This poster does not. She will see that for herself soon enough.

Lol, you have posted this weirdness before about how horrible off season is, and I also have actual, year round experience in Rehoboth. And Lewes. Downtown, not greater Sussex County. It ain’t remotely Trumpy. And I’m 100% certain PP will enjoy it.

Yea, it’s Trumpy. Old, white, tired, dreary, and Trumpy. It’s a tourist area that folds up and shuts down after Labor Day, leaving the dregs behind. Just the way it is.

[Anonymous]

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Anonymous wrote:With hurricanes and rising tides beach property seems really risky to me. I think people also often buy when they have little kids and then find with other kids that they can’t really use it due to sports and other commitments. The people I know who use them regularly have kids who are kind of introverts and/or don’t do sports or theater or dance or anything like that.

I’ve always found it odd that people list climate change as a reason not to buy a beach house while ignoring that such a huge portion of our GDP and infrastructure are based in coastal cities.

If climate change disaster happens, we’ll all have a lot bigger problems than just a beach cottage being wrecked.

Live your best life now.

But you can "live your best life now" by just choosing to rent when you want to go to a beach cottage/vacation. Plenty of excellent choices to rent and then you don't have to spend the other 50 weeks of the year stressing about maintaining the home. And you can invest your savings, since you don't have a money pit to maintain.

Did you read the full post you replied to? I think not.

DP but it seems silly to say if I put $300k into coastal RE I am no more exposed to climate risk than if I put $300k into a total market index.

Yes climate change is bad for the economy (that is the whole reason institutional investors support ESG as a tool) but it’s clearly worse for someone who might lose their vacation home than for the average person.

That's a claim you have no evidence for.

Beach homes go underwater, so do coastal cities. Water don't G.A.F.

A total market index is not concentrated only in coastal cities.

So NYC, Boston, DC, Miami, San Francisco, LA, and Seattle are underwater and you do think that's going to affect the general market and index funds? Seriously, man, do you hear how crazy that sounds?

I am MUCH more concerned about my uninsured investments than my insured beach house. That's the fishtank in the fire.

I meant this, sorry:

A total market index is not concentrated only in coastal cities.

So NYC, Boston, DC, Miami, San Francisco, LA, and Seattle are underwater and you don't think that's going to affect the general market and index funds? Seriously, man, do you hear how crazy that sounds?

I am MUCH more concerned about my uninsured investments than my insured beach house. That's the fishtank in the fire.

Insurance policies are disappearing right and left on beach houses now (or having skyrocketing rates). Yes, climate change will affect the indexes but there will also be growth industries mitigating climate change. If it's a single mass catastrophic event, sure, we'll have different issues and you'll lose your beach house and everything else and won't care a bit.

Not saying cities won’t be underwater, but Seattle and our 2nd island home will be fine.

[Anonymous]

I'm someone who vacations every year at the same beach, and every year I look at the houses and think about buying one. I never do. Because I can barely keep up with maintaining one house, the one we live in! I cannot imagine the stress of having so much money invested in another house--add in the risk of hurricanes, renters, real estate prices dropping, etc. And I wouldn't want to retire there--I'd want to be closer to wherever my kids end up and/or good medical care.
I prefer index funds, thank you.

[Anonymous]

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Anonymous wrote:We put a contract on our Bald Head Island house in October 2021, when prices had already shot up. Even so, less than 2 years later, we could sell it today for $250K more judging from recent sales.

That more than covers any negative cash flow on the monthly mortgage from not renting out the house as much as we thought we would -- because we prefer to use it during the peak weeks. And we no longer spent $30K on vacations per year (because we were taking big trips for a long time with the kids), so there's that.

I agree that owning a vacation home shouldn't be considered only from the financial point of view. There are better ways to invest. But we'll definitely see a return financially and we've been getting a lot more from this purchase than ROI. We've never regretted it for a moment!

We have very, very good friends who lost their shirts on their BHI house. I wouldn’t gloat just yet.

Then they sold at the wrong time. BHI property values have doubled in the last five years, and they doubled in the 15 years period before that. They must have really had lousy timing.

You might want to double check your math. If they doubled in the last five years and doubled in the 15 years before that that means they are going for four times the price today that they were in 2003. I just looked pretty hard on Redfin and couldn’t find a single house that appreciated nearly that much.

+1 There's a lot of magical thinking and memories about house prices.

[Anonymous]

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Anonymous wrote:It depends on location, and a host of other factors, OP. To me, it is not worth the investment of my mental energy.

+1. For me its the mental energy specifically. Maintaining our primary home is work enough. I don't need more work. I'll stick to hotels and rentals. If I were uber wealthy and a personal assistant could manage all the property maintenance and contractors maybe, but I'm not.

+1 We sold ours. There's also a huge glut of vacation homes right now since everyone and their brother started doing airbnb/vrbo etc AND insurance market is rapidly changing for areas with climate issues. Insurance for a rental property is always a lot higher. I feel we got out when we should, but I could be wrong. It was nice for about 2 years and then a hassle.

Rehoboth inventory is tighter than northern va and prices are insane. Glad we bought 18 yrs ago. House tripled in value. Will retire here and also work remote here in Rehoboth. 🍷 🏖️

How much time have you actually spent in Rehoboth in the dead of winter? I grew up in a similar beach town, and let me tell you: the winter is brutal. With the money you could get for your house, there are a thousand places that are more pleasant and interesting to retire to.

We will spend Sept 7th through Jan 10 at beach house. Then back to beach 2 weeks in Feb and 3 weeks in March. Just got back today and spent most of the summer there. I love off season! Can’t wait. We are self employed and fully remote so can work anywhere. Heading to mountain home next week but it will be pretty hot next week. Will retire to Rehoboth for awhile. Can always move elsewhere down south in future if feel like it.

Enjoy your unoriginal retirement! That would never, ever work for me.

What a sad, defensive response.

You got made a fool of trying to put words in someone's mouth about how much they'd enjoy their own vacation house, and then when they thoroughly shut you down you had to lash out with an completely irrelevant jab about your personal feelings.

Guess what, it's their vacation house, not yours. I imagine there's a lot of things you think other people wouldn't like because you're a pathetic, hateful person who can't find joy anywhere so you take it out on others.

I’m just saying, I’ve been there and done that. The year rounders in those places are by and large less educated and Trumpy. Even in Rehoboth. I have actual experience with this. This poster does not. She will see that for herself soon enough.

Lol, you have posted this weirdness before about how horrible off season is, and I also have actual, year round experience in Rehoboth. And Lewes. Downtown, not greater Sussex County. It ain’t remotely Trumpy. And I’m 100% certain PP will enjoy it.

Yea, it’s Trumpy. Old, white, tired, dreary, and Trumpy. It’s a tourist area that folds up and shuts down after Labor Day, leaving the dregs behind. Just the way it is.

The gays would like to have a word.

I almost admire the steadfastness of your convictions, though, misguided as they are.

[Anonymous]

Anonymous wrote:I'm someone who vacations every year at the same beach, and every year I look at the houses and think about buying one. I never do. Because I can barely keep up with maintaining one house, the one we live in! I cannot imagine the stress of having so much money invested in another house--add in the risk of hurricanes, renters, real estate prices dropping, etc. And I wouldn't want to retire there--I'd want to be closer to wherever my kids end up and/or good medical care.
I prefer index funds, thank you.

+1 I get tired just thinking about dealing with my own home We’re planning to travel the world when we get older.

[Anonymous]

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Anonymous wrote:It depends on location, and a host of other factors, OP. To me, it is not worth the investment of my mental energy.

+1. For me its the mental energy specifically. Maintaining our primary home is work enough. I don't need more work. I'll stick to hotels and rentals. If I were uber wealthy and a personal assistant could manage all the property maintenance and contractors maybe, but I'm not.

+1 We sold ours. There's also a huge glut of vacation homes right now since everyone and their brother started doing airbnb/vrbo etc AND insurance market is rapidly changing for areas with climate issues. Insurance for a rental property is always a lot higher. I feel we got out when we should, but I could be wrong. It was nice for about 2 years and then a hassle.

Rehoboth inventory is tighter than northern va and prices are insane. Glad we bought 18 yrs ago. House tripled in value. Will retire here and also work remote here in Rehoboth. 🍷 🏖️

How much time have you actually spent in Rehoboth in the dead of winter? I grew up in a similar beach town, and let me tell you: the winter is brutal. With the money you could get for your house, there are a thousand places that are more pleasant and interesting to retire to.

We will spend Sept 7th through Jan 10 at beach house. Then back to beach 2 weeks in Feb and 3 weeks in March. Just got back today and spent most of the summer there. I love off season! Can’t wait. We are self employed and fully remote so can work anywhere. Heading to mountain home next week but it will be pretty hot next week. Will retire to Rehoboth for awhile. Can always move elsewhere down south in future if feel like it.

Enjoy your unoriginal retirement! That would never, ever work for me.

What a sad, defensive response.

You got made a fool of trying to put words in someone's mouth about how much they'd enjoy their own vacation house, and then when they thoroughly shut you down you had to lash out with an completely irrelevant jab about your personal feelings.

Guess what, it's their vacation house, not yours. I imagine there's a lot of things you think other people wouldn't like because you're a pathetic, hateful person who can't find joy anywhere so you take it out on others.

I’m just saying, I’ve been there and done that. The year rounders in those places are by and large less educated and Trumpy. Even in Rehoboth. I have actual experience with this. This poster does not. She will see that for herself soon enough.

Lol, you have posted this weirdness before about how horrible off season is, and I also have actual, year round experience in Rehoboth. And Lewes. Downtown, not greater Sussex County. It ain’t remotely Trumpy. And I’m 100% certain PP will enjoy it.

Yea, it’s Trumpy. Old, white, tired, dreary, and Trumpy. It’s a tourist area that folds up and shuts down after Labor Day, leaving the dregs behind. Just the way it is.

The gays would like to have a word.

I almost admire the steadfastness of your convictions, though, misguided as they are.

The year round population of Rehoboth is barely 1000, and the gays are not the predominant group in the year round population. The typical year round residents are old white straight couples.

[Anonymous]

We are considering purchasing a condo in a ski resort in Colorado. We’d be up there 2-3 times a year and keep it rented out as much as possible otherwise when it’s not mud season. It’s always been a dream of ours and we are VERY hyper, problem solving end entrepreneurial people, so managing everything in Airbnb and being a landlord in practice would be something we’d really enjoy. The rental income would offset the mortgage and we could swing the mortgage in full whenever needed. So for some folks it makes sense, for others the the stress and hassle would be their down fall.

[Anonymous]

Anonymous wrote:We are considering purchasing a condo in a ski resort in Colorado. We’d be up there 2-3 times a year and keep it rented out as much as possible otherwise when it’s not mud season. It’s always been a dream of ours and we are VERY hyper, problem solving end entrepreneurial people, so managing everything in Airbnb and being a landlord in practice would be something we’d really enjoy. The rental income would offset the mortgage and we could swing the mortgage in full whenever needed. So for some folks it makes sense, for others the the stress and hassle would be their down fall.

Great, except it’s NOT a vacation home. It’s a real estate investment. A rental property. A business. Totally different.

[Anonymous]

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Anonymous wrote:We are considering purchasing a condo in a ski resort in Colorado. We’d be up there 2-3 times a year and keep it rented out as much as possible otherwise when it’s not mud season. It’s always been a dream of ours and we are VERY hyper, problem solving end entrepreneurial people, so managing everything in Airbnb and being a landlord in practice would be something we’d really enjoy. The rental income would offset the mortgage and we could swing the mortgage in full whenever needed. So for some folks it makes sense, for others the the stress and hassle would be their down fall.

Great, except it’s NOT a vacation home. It’s a real estate investment. A rental property. A business. Totally different.

Gosh, if I’m vacationing there it’s still…a vacation home.

[Anonymous]

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Anonymous wrote:We are considering purchasing a condo in a ski resort in Colorado. We’d be up there 2-3 times a year and keep it rented out as much as possible otherwise when it’s not mud season. It’s always been a dream of ours and we are VERY hyper, problem solving end entrepreneurial people, so managing everything in Airbnb and being a landlord in practice would be something we’d really enjoy. The rental income would offset the mortgage and we could swing the mortgage in full whenever needed. So for some folks it makes sense, for others the the stress and hassle would be their down fall.

Great, except it’s NOT a vacation home. It’s a real estate investment. A rental property. A business. Totally different.

Gosh, if I’m vacationing there it’s still…a vacation home.

DP: It's classified in taxes as a real estate investment based on your description. You can call it whatever you like, but this thread is about whether a vacation home is a good investment. A property classified as a vacation home is rarely a good financial investment (but it may be a reasonably appreciating luxury purchase and occasionally a good financial investment). A rental property that you occasionally use to vacation may be a good financial investment or not depending on the factors you usually apply to assessing rental properties.

[Anonymous]

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Anonymous wrote:The negative naysayers who jump on here making vacation homes seem like such a drag to own are transparent airbnb vrbo grifters. Or poor people who hate that they know owning a second home is a signal you've made it. And lacking one makes you feel poor.

You sound crazy.

I’ve owned two houses before. It’s a pain in the ass.

I grew up with vacation homes and we have owned one for over 20 years. Pain in the butt sometimes…..sure. But wouldn’t trade it and the experiences for the world. It’s like Range Rover owners complaining their truck is always at the dealer for service issues……but they trade in for the new one when it comes out. Or private school parents complain about tuition……but their kids are private school lifers. People complain. Rich people complain. End of the day vacation homes are awesome. And every investment portfolio should have some real estate. Only owning a primary house is very abnormal past a certain income level.

No matter your money, you can only live in 1 place at a time.

The opex on a second home is astronomical unless it’s a condo or something. Taking the cost of the house out of it, taxes+insurance+lawn care/landscaping+snow removal+utilities can easily run 50k per year before repairs and maintenance. And that’s not counting high insurance costs associated with coastal areas.

Lacking a second home makes me feel rich after experiencing the money pit.

I’ve had my second home for 15 years. Own it outright and the carrying costs aren’t that bad. LCOL area so taxes are cheap, insurance isn’t much, it’s a wooded area so zero landscaping or lawn maintenance. My costs are taxes ($1750), insurance ($900), utilities ($100/month electric, $100/month water, $38/month internet), pest control ($400), HOA dues ($100/year) and repairs as needed- some years I don’t need any repairs. I’d estimate all in it averages about $6k-$10k/ year to own. I definitely don’t consider it an investment and I would have done MUCH better over the years if I’d have invested in the market. But I use the house all the time and it’s so nice to have a place to go unwind. I don’t vacation there, I spent a night or two every few weeks.

You don’t exactly have a wealthy persons 2nd home.

What you describe sounds like a dacha for a Moscow subway worker

This topic isn’t about how huge or expensive someone’s vacation home is, it’s about whether a vacation home is a good investment. This may be the only type of vacation home that would be a good investment.

[Anonymous]

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Anonymous wrote:With hurricanes and rising tides beach property seems really risky to me. I think people also often buy when they have little kids and then find with other kids that they can’t really use it due to sports and other commitments. The people I know who use them regularly have kids who are kind of introverts and/or don’t do sports or theater or dance or anything like that.

I’ve always found it odd that people list climate change as a reason not to buy a beach house while ignoring that such a huge portion of our GDP and infrastructure are based in coastal cities.

If climate change disaster happens, we’ll all have a lot bigger problems than just a beach cottage being wrecked.

Live your best life now.

But you can "live your best life now" by just choosing to rent when you want to go to a beach cottage/vacation. Plenty of excellent choices to rent and then you don't have to spend the other 50 weeks of the year stressing about maintaining the home. And you can invest your savings, since you don't have a money pit to maintain.

Did you read the full post you replied to? I think not.

DP but it seems silly to say if I put $300k into coastal RE I am no more exposed to climate risk than if I put $300k into a total market index.

Yes climate change is bad for the economy (that is the whole reason institutional investors support ESG as a tool) but it’s clearly worse for someone who might lose their vacation home than for the average person.

That's a claim you have no evidence for.

Beach homes go underwater, so do coastal cities. Water don't G.A.F.

A total market index is not concentrated only in coastal cities.

So NYC, Boston, DC, Miami, San Francisco, LA, and Seattle are underwater and you do think that's going to affect the general market and index funds? Seriously, man, do you hear how crazy that sounds?

I am MUCH more concerned about my uninsured investments than my insured beach house. That's the fishtank in the fire.

I meant this, sorry:

A total market index is not concentrated only in coastal cities.

So NYC, Boston, DC, Miami, San Francisco, LA, and Seattle are underwater and you don't think that's going to affect the general market and index funds? Seriously, man, do you hear how crazy that sounds?

I am MUCH more concerned about my uninsured investments than my insured beach house. That's the fishtank in the fire.

Insurance policies are disappearing right and left on beach houses now (or having skyrocketing rates). Yes, climate change will affect the indexes but there will also be growth industries mitigating climate change. If it's a single mass catastrophic event, sure, we'll have different issues and you'll lose your beach house and everything else and won't care a bit.

Not saying cities won’t be underwater, but Seattle and our 2nd island home will be fine.

I'm not sure I'd call living in Seattle's heat dome fine. But nowhere is really fine.