Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much money do you think it is prudent to have in retirement and investments before buying a vacation home (really a condo)? Some facts - have a $1.5m house here with mortgage around $800k. Rate is low, so no plan to pay this off early, plus we deduct the full amount of the interest payments. With vacation home, we would likely pay cash since we are maxed out on interest tax deduct and it is not a necessity. How much would you want in the bank to feel like this is not a stupid thing to do? We would pay costs associated with house out of cash flow (taxes, condo fees, etc).

We are biting the bullet and buying a vacation house, but not without some angst just because it is such an expensive luxury and we are not used to spending like this given our relatively frugal personalities and working class backgrounds. Vacation house is $500K. HHI is almost $2M. About $1.5M saved for retirement, $200K for kids' college, 15-year mortgage on a house worth about $1.2M with PITI about $4K (less than $500K left on mortgage). We have about $800K liquid.

How long have you been earning $2M and how long do you think it will last?

Left gov't before Trump came into office. Will stay in private practice at least as long as Trump is president...

Anonymous wrote:

Anonymous wrote:How much money do you think it is prudent to have in retirement and investments before buying a vacation home (really a condo)? Some facts - have a $1.5m house here with mortgage around $800k. Rate is low, so no plan to pay this off early, plus we deduct the full amount of the interest payments. With vacation home, we would likely pay cash since we are maxed out on interest tax deduct and it is not a necessity. How much would you want in the bank to feel like this is not a stupid thing to do? We would pay costs associated with house out of cash flow (taxes, condo fees, etc).

We are biting the bullet and buying a vacation house, but not without some angst just because it is such an expensive luxury and we are not used to spending like this given our relatively frugal personalities and working class backgrounds. Vacation house is $500K. HHI is almost $2M. About $1.5M saved for retirement, $200K for kids' college, 15-year mortgage on a house worth about $1.2M with PITI about $4K (less than $500K left on mortgage). We have about $800K liquid.

How long have you been earning $2M and how long do you think it will last?

Anonymous wrote:we spent $330k on a waterfront home on the Potomac in SoMD. It's aobut 1.5 hour drive from our primary home.

This is us too.

Listen, a second or vacation has to be viewed as a discretionary expenditure or luxury. Period. Like eating out, driving a car nicer than a Honda, having a primary house larger than 2000 square feet and any of the hundreds of other ways people spend money above what is needed for baseline survival.

We only have an income of $400K. We only have a $2 million dollar net worth. We CHOOSE to spend the money on a second home. Is it an investment? No. Could we save the money and build our net worth? Yes.
But we choose to spend the money on the second home. We also choose to spend an additional $20K to travel yearly. Are we going to die with some sort of massive net worth? No.

You will never convince the wealth builders on this board that buying a second home is "worth it".

Anonymous wrote:How much money do you think it is prudent to have in retirement and investments before buying a vacation home (really a condo)? Some facts - have a $1.5m house here with mortgage around $800k. Rate is low, so no plan to pay this off early, plus we deduct the full amount of the interest payments. With vacation home, we would likely pay cash since we are maxed out on interest tax deduct and it is not a necessity. How much would you want in the bank to feel like this is not a stupid thing to do? We would pay costs associated with house out of cash flow (taxes, condo fees, etc).

We are biting the bullet and buying a vacation house, but not without some angst just because it is such an expensive luxury and we are not used to spending like this given our relatively frugal personalities and working class backgrounds. Vacation house is $500K. HHI is almost $2M. About $1.5M saved for retirement, $200K for kids' college, 15-year mortgage on a house worth about $1.2M with PITI about $4K (less than $500K left on mortgage). We have about $800K liquid.

We spent a little over $1m for a second home. At the time we had around $4m saved. We took out a hefty mortgage and have been paying it off aggressively. We have very little mortgage left on our primary home so our total is below the deductibility limits (which of course didn’t exist when we bought it).

We don’t rent it out so it’s all out of cash flow, which is fine. Agree with PP that it’s not an investment, it’s a luxury/expensive hobby. The house has certainly appreciated but we have no plans to sell it. It’s an extension of our primary house.

I’m surprised you are finding condos/houses that you would rent for $20k week for under $1m. We ski in the west several times a year. The house we rented in park city this season for $6k at Christmas was worth about $800-900k. A house that rented for $15-20k would be much more expensive.

Anonymous wrote:we spent $330k on a waterfront home on the Potomac in SoMD. It's aobut 1.5 hour drive from our primary home.

We have about 2mil saving and a handful of rentals almost paid off.

we spent $330k on a waterfront home on the Potomac in SoMD. It's aobut 1.5 hour drive from our primary home.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The condo fees range from $650-$1000/month. All in, taxes, condo fees and maintenance will be about $30k/year. Right now we are going during Christmas and renting a place is $$$ (ski town).

so for 30K/yr you could rent a ridiculous house in Aspen for 3-4 weeks. Or you could just travel to Utah, Colorado, Wyoming, Austria, France, or Switzerland and ski instead of going to the same place all the time. Your kids will be bored.

Have you looked at prices at these places? Week at Christmas in Aspen for a 2 bedroom condo it is $20,000 at a place that is nice but not crazy. Last year we spent $15k for a week in Park City at Christmas time.

I have no idea what you are looking at, that has not been my experience at all and we do at least 2 weeks out west each year. Honestly are you the same person who insists that it costs $1,500/nt to stay in Manhattan (as if the Mandarin is the only gig in town), when in reality you can get a great room for $700?

I'm actually booked AT Snowmass in Crestwood this coming Christmas, check in 12/26, check out 1/1. The condo is slope side and is ski in ski out. The community has all amenities, including boot and ski storage, concierge, heated outdoor pool, fitness center and is in the village. For a 2 bedroom,I'm paying $4,700. We did Aspen proper last Christmas and liked Snowmass best because you cannot ski in/out in Aspen and have to take a shuttle everywhere. Plus Snowmass has more for the kids.

If it were me, I would want $5 in the bank earmarked for retirement. minimum
I would pay off my primary house. The mental health value is more than the tax incentive.
College completely saved for all children. minimum
$500k in emergency fund. minimjm

Then I could think about something as frivolous as you are proposing. However, I would want to be able to use it at least monthly.

If you had a second home where you rent it out when you are not using and thus paying for itself, then I would lower my minimums.

Anonymous wrote:

Anonymous wrote:The condo fees range from $650-$1000/month. All in, taxes, condo fees and maintenance will be about $30k/year. Right now we are going during Christmas and renting a place is $$$ (ski town).

so for 30K/yr you could rent a ridiculous house in Aspen for 3-4 weeks. Or you could just travel to Utah, Colorado, Wyoming, Austria, France, or Switzerland and ski instead of going to the same place all the time. Your kids will be bored.

Have you looked at prices at these places? Week at Christmas in Aspen for a 2 bedroom condo it is $20,000 at a place that is nice but not crazy. Last year we spent $15k for a week in Park City at Christmas time.

Anonymous wrote:The condo fees range from $650-$1000/month. All in, taxes, condo fees and maintenance will be about $30k/year. Right now we are going during Christmas and renting a place is $$$ (ski town).

so for 30K/yr you could rent a ridiculous house in Aspen for 3-4 weeks. Or you could just travel to Utah, Colorado, Wyoming, Austria, France, or Switzerland and ski instead of going to the same place all the time. Your kids will be bored.

Anonymous wrote:

Anonymous wrote:How far away is it? How old are your kids?

We’ve had and have a few. The ones that are far away or are in a place that’s not too far and the traffic is bad really negatively affected the pleasure derived from them. If the kids are in any sports or time sucking activities that matters as well because it affects the amount of use. If neither of those things matter, the amount would have to be low enough that if I lost it all, it wouldn’t matter. We don’t know enough information about you to answer this. For example, you could pay cash but does that put a dent in your savings? Is resell easy? Would you easily have money and people to do maintenance.

Plane ride. We go there 3-4 times a year now. Spouse will also sometimes stay there for work. Yes, it will of course put a dent in our savings. We are going to take $ from it to pay for the condo. Plus then the monthly expenses associated with it will come out to cash flow. Resell is pretty easy in this place.

I own a vacation home in Bethany and it is cash flow positive (booked solid 2 years out, bringing in 5-6K/week for 9 weeks, plus a few weeks here and there in the off season). We originally bought it to NOT rent it, but kids got older, tired of going to the same place and had sports and friends they preferred to hang with.

I will say I would NEVER buy a home that is a plan ride away, unless it is strictly for investment purposes. Even that is risky since 2nd homes an vacation areas are the first places to suffer in a down economy (trust me I know first hand).

Personally I think this would be a purchase for a financial illiterate. You don't sound like you have anything remotely close to FU money (if you did you would not be on this site asking this question) For 1M, you could rent 1,000 nights in a $1,000/nt room, not even factoring in taxes, insurance, association fees, upkeep, and the plane rides.

Buying a vacation home is not a financial investment, it should be considered an expensive hobby.

If you have the flexibility to buy and maintain (taxes on waterfront properties can be very high, second homes don't qualify for homestead exemptions, insurance , esp flood insurance, is expensive, and you'll need to hire a property manager if you can't be there often), then it's an incredible way to spend time with friends and family. Also, when you buy, you get to know the neighbors and a community in a way that you don't when you rent.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much do you want to spend on the second home? $300k or $1m.

$750k-$1m

At least $6 million

Thanks! You are the only one who answered! This is about what I think.

That's because almost no amount of cash on hand could convince me that this isn't a stupid thing to do.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How much do you want to spend on the second home? $300k or $1m.

$750k-$1m

At least $6 million

Thanks! You are the only one who answered! This is about what I think.