Stats for purchasing a second home and is it a good idea?

[Anonymous]

We bought a second home in fall 2020 and it has been the best thing. Really, really great for our whole family.

We're in a fairly similar position to you, cash flow-wise, and the main thing I'd suggest is that it's financially fine in terms of our regular cash flow. But in times when expenses in our regular life get lumpy (kid starts orthodontics or therapy, summer camp payment is due, we book flights for travel elsewhere), the "pinch" - and associated brain stress of that - is a bit more acute.

[Anonymous]

Interesting how all the posters can answer this question without any information on OP's age and retirement assets/plan. Probably the two most important pieces of information to factor into this decision.

[Anonymous]

Anonymous wrote:Ps my cottage has a water view and was $275k in 2020.

View of what? A storm drain?

[Anonymous]

Lol, what? No, second homes are for rich people, not for people making 300K.

[Anonymous]

Anonymous wrote:Lol, what? No, second homes are for rich people, not for people making 300K.

Meh. We bought one when we made about that and had 2 kids in daycare. Kids are now older and it’s Airbnb most weekends, but at that income and even with daycare we still were able to max out 491k, I was able to contribute to my mega Roth, and we were able to save in our brokerage. We had enough cash saved for 20% down, some construction updates to our taste and to fully furnish every room in the house

[Anonymous]

I think it's a great idea, but I would ride out this financial cycle. Those "remote work" home in rural areas will get hit first and the hardest in the housing downturn. I wouldn't pay the current prices unless you had a 20+ year time horizon to ride it out.

[Anonymous]

Anonymous wrote:Lol, what? No, second homes are for rich people, not for people making 300K.

My sister's family makes about that and they only recently bought furniture instead of living in an empty house (this is in their late 30s). They are big into FIRE and saving/investing though.

[Anonymous]

OP, this is a decision of the heart, not the wallet.

Do you have the funds to put into this? Will you be OK losing those funds if something goes wrong? As long as the answers to those questions are yes, then go ahead and listen to your heart.

[Anonymous]

How do you feel about renting it part of the time? This could offset some of the costs but obviously, short-term rentals come with their own challenges. It wouldn't necessarily be something you need to do forever but maybe for 5 years or so.

[Anonymous]

Save you money and just take nice vacations. Why lock up your money in a property you're likely to use no more than 3x a year? Too many people think they'll be vacationing each weekend when in fact once your kids get older they'll have no interest in your house by the lake.

[Anonymous]

Just take a portion of the money you would spend on it and put it in a travel fund and just regularly book airbnb's as a way to explore where you might want to purchase in a 2 hour radius. After doing that for 2 years you can see if you still really think it's a good idea and you'll have a better idea of what you really want. If nothing else, you'll commit to regular low-key vacations this way.

[Anonymous]

I bought a vacation place when kids 6, 10 and 12 back in 2013. I used it a grand total of 7-8 nights. First few years had a couple who rented off season sept to may. I vrbo it 3-4 weeks in summer. But getting it prepared vrbo a pain and getting ready off season a pain. Kids did not want to stay as no friends there and always activities and stuff.

I full time rented it in 2018 and have not even seen place in four years.

I don’t regret it as worth $150k more and I net $1,500 a month on it every month now that year round.

[Anonymous]

You need to be realistic about what $300k will buy and whether that's were you would want to spend time. Our second home cost more than our house here, partly because it is bigger to accommodate visitors. If you are looking for something that can be a family gathering place including your parents, a little cottage isn't likely to be it. And will your kids be able to bring friends to a little place.

Maintenance, utilities, etc. do add up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ps my cottage has a water view and was $275k in 2020.

View of what? A storm drain?

lolol. No: https://m.facebook.com/photo.php?fbid=10159867661807530&id=745912529&set=a.441409987529&source=11

[Anonymous]

Anonymous wrote:I think it's a great idea, but I would ride out this financial cycle. Those "remote work" home in rural areas will get hit first and the hardest in the housing downturn. I wouldn't pay the current prices unless you had a 20+ year time horizon to ride it out.

Sort of agree. It may be that remote work will last forever, and these areas will continue to grow, but I live in an area that has boomed during covid due to remote work and the real estate price increases here make the DC real estate market look tame. I live in a small town in "fly over country" that most of you have never heard of and the 2 bedroom house across the street just sold for over a million (and it is not waterfront or water view). I won't mind if it holds, since we bought our house pre-covid, but I wouldn't count on it.

I also agree that a relatively inexpensive small cottage on a great waterfront lot is very, very difficult to find. If the lot is great, or even just good, chances are that someone has, or is going to, buy it to tear down and build a very expensive house. Even if you can afford an expensive house and just don't want that much square footage, small houses in great locations are hard to find and go very quickly.