I’m on record saying that buying a vacation property is a terrible investment. But that’s also because I bought one in 2007, right before the market really took a dive.
Perhaps if I had bought my property after it declined by 40%, today I would be one of the biggest proponents of spending money on something you don’t need!
Alas, I think not because nobody spends nearly as much time as they think they will at their vacation property. It’s also much better to spend less money and have the flexibility to vacation all around the world in multiple new places.
The only saving grace about mistiming a vacation property purchase is that the error as a percentage of your net worth should get smaller over time. Even if you timed your purchase right, the vacation property as a percentage of your net worth should also decline to the point where you won’t sweat it anymore.
When I bought my vacation property in 2007, my vacation property accounted for about 30% of my net worth. At the time, I thought my income would continue to grow to the sky for years to come. Too bad that did not happen thanks to the financial crisis.
Although my income crapped out, the vacation property now accounts for less than 10% of my net worth. I no longer feel the pain of my financial mistake. In fact, I now feel excitement.