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[quote=Anonymous][quote=Anonymous]I would only buy a beach house if I could afford for it to be a complete failure as an investment.  I would expect renters or squatters to trash it when I'm not there.  I would expect the cost of insurance to triple over the next 5-10 years.  And i would expect if I tried to sell it, it would be at a big loss.  If you can stomach these real risks, then go for it.[/quote]

This.  You have described exactly what happened to us.  We paid nearly $900k for a beach house in a popular area and ended up selling it about a decade later for less than $600k.  Insurance DID increase by multiple levels — not only that, we eventually couldn’t even find it on the open market and our lender had to force place us.   Renters didn’t trash the place by any means, but they were very very hard on it.  Constant turnover of weekly renters in the summer can really take a toll.

We had a very low interest rate and plenty of renters paying very good money but came nowhere near breaking even on an annual basis and as I said eventually sold at a huge loss — writing a six figure check to the lender at settlement.

Because it was largely a rental, we were able to deduct the loss against our ordinary income and effectively cut it to about half of what it looked like on paper with the tax savings.  So, no, it did not kill us. We made so much more money in the stock market over the same time period and since then so in the overall scheme of things it was just blip on the radar screen.  But, wow, never again. [/quote]

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