The Only Time You Should Consider Buying A Vacation Property

I'm on record saying that buying a vacation property is a suboptimal investment. But that's also because I bought a vacation property in 2007, right before the market really took a dive. This post will discuss the only time you should consider buying a vacation property if you insist on not taking my advice.

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. So think carefully before buying a vacation property.

However, I will reveal to you when buying a vacation property makes sense.

At Least Your Vacation Property Declines As A Percentage Of Your Net Worth Over Time

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. As your net worth grows by saving, investing, and generating more passive investment income, your vacation property's weighting will shrink.

Even if you timed your purchase right, the vacation property as a percentage of your net worth should still decline to the point where you won't sweat it anymore. Instead, what you'll appreciate most about your vacation property are the memories it will create.

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 global financial crisis.

In 2022, we're at a similar time period again. Real estate values have done extraordinarily well since 2009. And since the 2020 pandemic began alone, vacation property prices have gone up. But now, the Fed is aggressively hiking rates and real estate prices should cool over the next couple of years.

Although my income crapped out, the vacation property now accounts for less than 5% of my net worth today. I no longer feel the pain of my financial mistake. In fact, I now feel excitement because I have two kids who can finally enjoy it!

But let me share more about why buying a vacation property is not a good use of your capital.

Buying A Vacation Property Is Irrational

For many, buying a vacation property is an emotional decision. I bought my vacation property in 2007 because the Resort At Squaw Creek is where I had taken my girlfriend and now wife on our first long-distance vacation in 2001.

When the Resort condo-converted in 2005, I felt like that was my chance to buy a fantastic memory once I saved up enough money. Eventually, I wanted to bring her back to the condo and propose up in the mountains. I had strong emotions about buying a vacation property.

The two bedroom, two bathroom, 1,050 sqft condo was first sold for $820,000 at the end of 2005. I then purchased the condo for $710,000 in 2007, which I thought was good value at the time.

As part of our passive income retirement portfolio, our vacation condo generates about $500 a month net. Not a lot. But better than hemorrhaging cash like it once did for the first six or so years.

Planning Ahead To Use My Vacation Property

After I proposed to my girlfriend in early 2008 up in the mountains, I began dreaming of one day starting a family. How amazing would it be to bring my son or daughter to play in the pool and go hiking to see the spot where their dad proposed.

But the financial crisis had other plans. In six months, it wiped out roughly 35% of my net worth. My life was put on hold because, at the time, I felt like an absolute failure. And when a man feels like a failure, it's hard to consider even starting a family.

I held on to my now dear wife for dear life. It was all about regaining what I had lost and then some to feel like I had enough to take care of her and little ones. Thankfully, the market recovered.

Then in 2017, our son was finally born and we didn't go up for the next two years. We were too busy ensuring his survival at home. The last thing we wanted to do was disrupt his sleep in a comfortable environment with a vacation he wouldn't remember.

The Only Time You Should Buy A Vacation Property

The Only Time You Should Buy A Vacation Property

To my delight, we recently got back from a two-week trip to our vacation property and I'm excited to report it was an amazing experience! I feel great about buying a vacation property now that we all got to share it together as a family.

After a 3.25 hour drive, we pulled up to the Resort, had the bellhop take all our bags, and had the valet park our car in the owner's lot. Thank goodness he slept for about two hours each way. The convenience was terrific.

Embracing the 78 degree weather, we walked down to the pool and hot tubs every single day. At the pool, we ordered food and drinks and played until it was nap time for all of us. The weather really improved our moods because it's often in the 50s and foggy during the summer in San Francisco.

After we awoke from our naps at around 3:30 pm, we'd have a light snack and then walk down to the wide-open play area where there are plenty of games for everyone. We'd sometimes even go inside the resort's 40,000 square foot conference hall to play hide and seek as well.

The Only Time You Should Consider Buying A Vacation Property
Massive play area during the summer where the ice rink is

Family Fun Time At Our Vacation Property

Because our boy had such a wonderful time, it's made all the financial waste worth it. Now that we have a daughter, the vacation property will provide even more returns. Owning a vacation property at a resort may be more fun for your children than owning a single-family mansion vacation property!

For those of you who have been fortunate enough to make money on your vacation property, every time you visit, I imagine you will feel like you've won the lottery if you have children.

I feel that any parent would give any amount of money or time to make their kids feel safe and happy. The Resort made us feel this way every day.

The Only Time You Should Buy A Vacation Property

If you haven't guessed already, the only time you should ever buy a property is after you have children. To children, a vacation property is a wonderland, especially if the vacation property also has a pool and other amenities.

Another thing. The best time to own the nicest home you can afford is when you have children too. This way, you can spread out the usage of your nice house across more people. So if you want to have a big house with nice amenities, decks, and a big backyard, the time to do it is when you have kids. After 18 years of raising them, then you can consider downsizing as they leave the nest.

We love resort vacations because once settled, we don't have to go anywhere. It's easy, just like going on a cruise. All the food, entertainment, and accommodations are right there. Once at the resort, we don't have to worry as much about safety either because there's staff constantly looking out for you and your family.

Your Vacation Property Provides Familiarity, Which Is Wonderful

Buying a vacation property is wonderful for the familiarity it provides. It's really nice to be able to come home to a familiar property and have all your basic belongings, like your swim trunks and hiking shoes there waiting for you.

Over the next 16 years, I can't wait to do the following at the vacation property:

  • Take our boy on a hike to show him where I proposed to mom
  • Go sledding
  • Try river rafting
  • Mountain bike to the lake
  • Go jet skiing or water skiing
  • Teach him how to snowboard or ski
  • Show him how to golf and play tennis
  • Try to fly fish together
  • Teach him how to work remotely
Playing hide and seek or capture the flag in the massive lobby is fun!

Focus On The Vacation Property Lifestyle

On paper, owning a vacation property is a suboptimal move, even after putting down a recommended 30% or greater. But don't forget that the reason why you save and invest so aggressively is to improve the quality of your lifestyle. Never forget the end goal!

Once you have a family, the value of your vacation property will increase immeasurably. For me, that increase feels like 3X. I feel so rich because seeing his joy is a dream come true 12 years after purchasing the property. There was a point when I thought I might never have a family.

The Only Time You Should Consider Buying A Vacation Property
Our vacation property has a ski-in/ski-out blue run

Of course, I could re-create these experiences by renting a place at my resort. But it just wouldn't be the same because most of the time I'd be renting a different apartment property. Further, there's this indescribable feeling of having a property of your own that nobody tells you.

This may sound mundane, but there's something priceless to coming home to your own place and opening a drawer full of your own underwear! (owner units have a private wardrobe and lockers for skis and snowboards)

Mountains Of Memories At Our Vacation Property

In 20+ years, I hope my son will look back fondly at all the great memories he had with his mom and dad up at our vacation property. Then, maybe one day, he'll take up the love of his life there and make new memories of his own.

Financial Samurai Vacation Property Buying Guide

From now on, we plan to spend 45-60 days a year up at our vacation property. When our son turns five, we'll start spending around 30 days in Hawaii so we can diversify our vacation spots between Lake Tahoe, Honolulu, and San Francisco. Then once he turns 10, we'll start doing some long-term international travel so he can appreciate the trips more.

Planning ahead for your desired lifestyle is worth it. Just don't buy your vacation property before having kids! Rent one instead and invest the difference. There are so many great ways to vacation nowadays thanks to the internet.

Recommendation To Build More Wealth

Instead of or in addition to buying a vacation property, strategically invest in low valuation, high net rental yield properties around the country through a specialty REIT or through Fundrise.

Fundrise is the top real estate crowdfunding platform today with over $3.2 billion in assets under management. You can then use the passive income generated from your real estate investments to go on the best vacations anywhere around the world. Simplicity is happiness.

CrowdStreet is also a great alternative if you are an accredited investor. You can build your own select real estate portfolio with CrowdStreet. They focus on real estate opportunities in 18-hour cities where valuations are lower and growth rates are strong.

Personally, I've invested $810,000 in real estate crowdfunding in the heartland of America. With work from home a reality, it's only logical Americans will spread out to lower-cost areas of the country. I'm bullish on the housing market for the next several years.

Do you have a vacation property?

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The Only Time To Buy A Vacation Property is a Financial Samurai original post. For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. To get my posts in your inbox as soon as they are published, sign up here. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.

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79 thoughts on “The Only Time You Should Consider Buying A Vacation Property”

  1. Hi Sam –

    Ive read your many posts regarding vacation propertied and Im wondering what your thoughts are on buying a single family home soley as a short term rental or long term rental. From a tax & investment perspective I see them similar, with short term generating more income but requiring more work.

    I thought soon would be optimal being mortgage rates are on the rise and I dont see dropping anytime soon. Andittionaly I see home prices dropping. I thought of purchasing a small property in the south or heartland with the cash I have on hand. Im just fearful in depleting my savings and taking some time to recoup.


  2. I couldn’t answer your poll. It needed an “other” option. We purchased a property in Lake Arrowhead in the San Bernardino mountains in 2009 with the intention of using it as a vacation property. Our older daughter was a year old at the time and we ended up not getting up there (from Los Angeles) as much as we had hoped. We ended up renting it out for double the mortgage payment + taxes + insurance. We paid $89k and it is now worth (conservatively) $220k so it was a good investment even though we reevaluated its purpose.

  3. rachel frampton

    My husband and I are planning to purchase a vacation home near a lake. We’ll keep in mind to purchase a vacation property after having children because this will be their secret sanctuary. This is a great timing since I am three months pregnant; I hope we’ll be able to find the perfect vacation property.

  4. We have friends with a Lakehouse 40 minutes from our home & while visiting them some years ago my wife intimated to me a Lakehouse was on her bucket list. So I found one 2 miles from our friends, (now it’s happy hour & dinner at their place most Fridays), but it was a discombobulated 1 bedroom, 1 tiny bathroom so we low balled them & paid cash. But the structure was large, uninsulated & the old 80’s kitchen was a mice haven. So my wife & I literally re-built the entire interior & converted it to a 4 bedroom, 2.5 baths with ensuite laundry & she has her own 1/2 bath ensuite to the master bedroom. I then blew out the old insect infested porch facing the Lake & built her a new 23×12 kitchen with no upper cabinets just huge 7×5 picture windows to the Lake. The tranquility is amazing & we are deep in Amish country.
    We escape there every Wednesday-Sunday & we’re inundated with our kids, grandkids & friends when they can get away & the usual ‘expensive’ Lake toys soon followed. We have been offered $2000/week to rent it out, but we don’t need to & my wife shudders at the intrusion of strangers.
    I often look across the Lake & wonder if our Lakehouse was on the Canadian side would it be worth close to the $1million Lakehouse our friends there ‘inherited’ from their parents that is half our size & in dire need of updating.
    However, since we are heavily invested in Real Estate, (30+ years), we decided to invest in 3 large multi-unit rental properties in a town near our Lakehouse to cover costs. These currently gross a combined $8700/month which more than compensates any Lakehouse expenses & they are all managed at arms length so we just get the Venmo deposits every month like clockwork. My wife has the unique financial knack of having the operating costs of all our homes paid for by our rental property incomes & because of this literally everything we own is free & clear & has been for many years.
    Since 1990 (& with upstate NY winters) we have always owned a vacation home in Florida (initially for our aging parents to winter in), but we have spent many weeks over the years there as the kids grew up. Then more by luck than planning we sold the first home just before the crash for a very nice profit & paid cash for a larger home at the bottom of the market.
    While at the Lakehouse this last week with ALL the grandkids & my son, his wife is at our Florida home with 5 of her close college girlfriends all celebrating their 30th year birthdays together. After our parents all passed we did rent this home to friends & family. In fact our family of nine were just there in Florida for10 days ‘bonding’. Our maintenance guy of 13 years charges us $10/month to do a walk through & keep an eye on it & our ‘dust & vacuum’ cleaning lady just raised her rates to $35 each visit & she does an amazing job.
    For many years we also did the all-inclusive vacations throughout the Caribbean but
    for us the memories & the ‘tranquility’ of our own vacation home negates any implied financial cost.

  5. We are in a very similar situation and are actually considering purchasing one of the units for sale at Resort at Squaw. It’s definitely dropped a lot. The only thing stopping us is the damn “resort fee”. Is it true that even if you use it as the owner, you have to pay $30 per day for a 1 bedroom/studio unit and $60 per day for a 2b/2ba place like yours?

      1. Oh wow that is indeed a nice perk for the owners. But if owners stay you do have to pay for cleaning still, right? Like $250 per cleaning?

        1. Yes, if you don’t want to clean yourself, which you can.

          I like the perk of driving up to the front and having my car valeted for free.Also the owner locker room and the ski/snowboard concierge where they bring your equipment out and take it back in each day you’re there.

          You also get a 10% discount on all food.

          Not bad! I plan to go up again in August for a week or two.

          1. It looks like you’re renting out your unit through Vacasa/Airbnb. So that’s why you can clean it yourself, right? If you use the Reaort’s rental program, you have to have them clean it, right? Speaking of which, how come you decided on using Vacasa instead of the Reaort’s rental program? Is it the commission rate difference (35% vs 56%)?

  6. Additionally, I’ve always thought of vacation homes as great coordination mechanisms for enticing adult children to hang out with family. For example, when FS Jr is in away at college or living with his own wife / baby, you’ll want him to visit as much as possible. What better motivation than a free place to stay with his mom / dad at Lake Tahoe? I’ve seen many older parents do this successfully in later stages of life. Buy it and they will come… – DeForest

  7. Why not sell your place in Tahoe while the vacation real estate market is still liquid and wait until the next big correction to go back in and buy a better unit with a 5-10% cap rate? Even at 10% of your net worth, it’s pretty foolish to emotionally justify a poor financial investment and hope the market will correct your mistake.

    1. I’d like to get some family use out of it For the next 5-10 years and then revisit.

      Property is worth much less than 10% of my net worth. It really doesn’t matter much anymore. It’s all about the experience now.

        1. True. Do you suggest I sell now? If so, what would you suggest I do with the proceeds? So far, I’ve invested $810,000 in real estate crowdfunding, which has provided a good passive return over the past three years. This year, I’ve received about $55,000 in income so far. But I expect the big windfall to be in 1-2 years after most of the projects have sold.

          I just like to write about various topics and my experiences to keep things interesting and have a log for my son. I hope that’s OK with you. If you have any topic ideas you think I should write about, let me know. I only address about 10% – 20% of the topics that are on my mind or going on in my life.

          Please share your vacation ownership experience. Where do you take your family for vacation and what works best for you? I’m always looking to improve my finances and this site. Thanks!

          1. I’d sell now, try to minimize my losses and put the money into something more conservative until I have a better idea on where this trade war is heading.

            If you follow Ray Dalio or Bridgewater at all, you should have 10% of your net worth in precious metals as a hedge against central bank policy/MMT.

            Take some videos with your son next time you take him to Tahoe and he will have all the memories you want him to have wherever he goes; maybe your grandkids will get to see it too.

            1. This is a hilarious sub thread. Dan, not only were you belligerent, you were 100% wrong. Waiting on the sidelines for corrections rarely works. I bought my first property in 2007 so I know prices can go both ways, but I have seen so many people waiting for a correction that they never start and meanwhile my NW has increased 100x in the ten years since I started investing aggressively, with a watchful eye to liabilities.

              1. Gotta admit, it does feel good to make a lot more from real estate since 2019! Prices have truly done well post pandemic. I wonder if Dan is still renting and/or out of the stock market? At least he invested based on his beliefs and risk tolerance.

                Everything is rational in the end. I do like the memories that I’ve been able to create at our vacation property in Lake Tahoe with our kids. It really is about the experiences now.

    2. It’s been really great to ride the real estate boom since the pandemic began. Prices are up so much in Lake Tahoe and the property is such a small portion of my net worth now. I’m excited to use it with my family as kids grow older.

      1. Looks like it was a good idea not to sell but hold! I was surprised it only generates $500/month, at what point would you sell or upgrade? Our vacation property has increased $900k in last few years and we contemplated selling at the high valuations, but its too hard to give up $300k in rentals per year. Maybe a good topic for an article.

        1. Yeah, net $500/month. But actually, it’s probably higher now as everything has gone up. Maybe $750/month net on average. But peak seasons, like winter and summer, it nets over $3,000/month.

          If you’re interested in writing a guest post on your thoughts on vacation properties, let me know!

          1. Are you allowed to self manage your rentals in Squaw or is the management required in bylaw?

            I fell in to vacation rental investment/management as a side hustle after outgrowing a ski condo I acquired before marriage & kid. It’s definitely not passive but I enjoy it. I’m a fan of your site and content, I’m 43 with a 5 year old and can often relate. I would consider doing a guest post for sure.

            1. I could, but it would be way too much of a PITA for me with two little ones. I’m happy to pay a 25% commission for a vacation property manager to fill my unit and take care of it when it needs to.

              My vacation property is also worth less than 5% of my net worth now, so I don’t want to spend any time on managing it.

              1. 25% isnt too bad, it can easily be 45% in my neck of the woods.

                Secondary home markets have more volatile pricing than primary. If the dems restrict the 1031, increase capital gains and increase operating taxes on rental properties (eliminate 20% pass through discount trump passed plus net investment tax), how much capital depreciation from present value is at risk?

                There was a big drop in vacation property values in 80s after tax changes limiting deductions. Your cap rate on holding is ~2 – 3%. My threshold for holding vacation property is >= 10% cash on cash return, is your gratification of ownership worth ~$45,000 annually to you in opportunity cost?

                I am contemplating selling 2 vacation rental condos, to 1031 i n to a new construction vacation home in the same market while values are inflated. Does seem high risk/high reward.

  8. I was happy to see this post after having reading your two previous posts on the vacation home I can totally relate.

    I bought my place about 7 or 8 years ago….loved it at first, then I had to dump some real money into it. Then I had my first kid, then a second. I didn’t get to it as much (although under 100 miles), but kept seeing the cash flow out for taxes, heat, upkeep, etc. But this year my oldest is REALLY enjoying it. The memories we have are awesome, and as my wife says “this is he life we want”, its relaxed and its being away.

    I was looking at some changes to my place but it will take some investment to do so (actually expanding the lot, and building but it gets me out of some of the existing headaches I have with the current place, but I was unsure, and read your article about not being happy owning a vacation home and what sounded like some regret and that got me stressing, but now I see this article and it’s 100% where I am at….one of my kids is about the same age.

    So even with the re-build of my place and the cash it will occupy it comes in under 12% of NW. We are now looking at using it about 50+ nights/year. I think it is worth it….but still not 100% certain what I should do so somewhat on the fence.

  9. I’ve been lucky enough to have family with vacation homes in awesome places for all of my life. I remember plenty of great times as a kid in these places, and it is true even for a kid that having a place that feels like (is) home makes the vacation even better, maybe even more so, because you are in a great place, with all the people that love you in the world and there is nothing to do but have fun! My kids were/are heartbroken that my mom sold her beach house a couple of years ago, so I know that they have had the same experience. They are in their teens now, and we have been getting into the long distance/international travel. In the back of my mind, though, I am thinking of where that awesome vacation home for the grandkids should be. I figure there is time to wait on something that makes financial as well as emotional sense. Maybe if I wait long enough, I can move up from ‘cabin with plumbing’ to something fancy!

  10. Time share in Maui, Hawaii…the worst financial investment I ever made, but the best emotional, quality of life ROI. Our kids love it and so do we. Every time we go, we have the time of our lives…someday I hope to escape the Bay Area rat race and buy my dream home upcountry to retire to a life of surfing, paddling, hiking and a life of building ‘ohana in a down to earth community….

  11. CrystalBermuda

    Completely agree with this article, ironically we ended up purchasing our property when I was around 39 weeks pregnant as we got worried we would never ski again! We bought a partial share where we get 5 weeks a year (that vary) in Whistler but ski in and ski out.

    It is the only place we travel with our daughter and we could not be happier with it. Having a large 4 bed property with a kitchen, amenities and a locker is amazing. The simplicity of knowing where you are going makes it feel like a second home. Also we have learnt to enjoy the summers in Whistler.

    Saying all this, we do travel a long distance to get there, and we have to do deal with time change, and it sucks out cash as we can not rent it out much, but once we get there we love it. We are able to have friends and family join us on trips and we view the break even cost is renting a 2 bedroom house for two weeks. Instead we have a 4 bedroom place for 4-5 weeks which currently we are using for now.

    Our daughter is 1.5 years old and we have been there 3 times already for 2 weeks at a time.

    Would not trade this at all. If we find we are not using it, we could always rent out our weeks to friends and family or sell. The re-sale is pretty good in Whistler especially at this price range.

    Interested to see what our thoughts are 5 years time though.

    1. How long do you guys have to travel to get there?

      I think you’ll like the place even more when your daughter grows older because she will be able to do more things and with you guys.

      Vacationing for yourself is one thing. Going on vacation and seeing the joy on your child is another level.

  12. It’s nice to see that you are getting such a big bang out of your buck now with your vacation home. Having a kid really changes your life including your perspective on different things.

    My wife and I have, at least once a year, a debate about purchasing a vacation home. We can see the benefits of having one but, for the number of times we can go, would not be smart economically.

    We would also have to worry too much about the vacation home when we are not there (what happens in the event of a storm, hurricane or blizzard).

    I think for us, for the foreseeable future, buying a vacation home would be nice to dream about but I don’t see it happening. Renting just makes more financial sense.

    1. Thx. Do you have kids?

      I guess the bigger your family, the more you can amortize the cost to more people and spread more joy. And for my friends who aren’t really hurting for money, they just let their friends stay at their place for free when they’re not there.

      I don’t think I could buy a vacation property that was a standalone without any amenities. It’s either going to be at a resort where everything is taken care of, so there’s no stress, or have like a mansion where there is an on the ground caretaker. But that cost a fortune.

      1. I do have kids. I have 3 under the age of 8.

        Ironic to your situation, my kids is one of the reasons why it is harder for us to buy a vacation home. My kids tend to have a lot of activities to do over the weekend, including attending birthday parties of friends and classmates. That makes getting away during the weekend to use the vacation home even harder.

        Additionally, I want to give my kids more exposure to the world (even if it’s just hanging out at a beach, I would like them to see different beaches) and want to travel to more places with them. I only have so many days for vacation and going to the same place constantly is not my current preference.

        1. that’s why it’s just better to rent a place when you do have the time available to get away

  13. Interesting article. We currently have a “vacation” cabin in Shenandoah County, VA and we make close to $20K/year gross (about $12K net) using it as an airbnb – and we own it outright (it’s worth just under $200K). We use it about 10-15 times/year.

    We’re a military family, retiring next year and (hopefully) moving back to Florida. We plan to buy at least two more airbnb “vacation” rentals (we figure we can make more using it as an airbnb vs. long term rental). I think the article is a bit off – unless the buyer makes an uninformed/emotional purchase. Also, the market is too high right now to expect any sort of quick returns. But if the property is in a desirable area it should be turning a profit.

  14. Paper Tiger

    I tried to have the best of both worlds in one home. Fifteen years ago I was transferred out West by my company and could live anywhere we wanted. We previously lived 5 years in SF and while we loved it, we just didn’t want to go back to the traffic and cost of living. We decided to buy where we thought we might like to retire someday.

    We have now lived in Scottsdale for the last 15 years and really enjoy it. Arizona is a great state to retire and we are within driving distance of many awesome places. We have a great house in a private golf community and a nice setup in case we have to care for in-laws at some point. Living here kind of fulfills many of the advantages of a second home. Yes, the summers are toasty but my wife and I come from NC and TX so we know all about hot and humid summers and AZ really doesn’t bother us that much. And if it does get to me, I simply run outside and jump in the pool ;)

  15. We have been vacationing the same place in Lake Michigan my whole life and have family there (parents, grandparents, and its a hub for other family to visit). We plan to buy there eventually when prices aren’t so high and after we finish some major repairs on our current home. In the meantime its fun to go check out the houses that are for sale and decide where we really want to be. When we do buy it would definetely also have to be set up as a rental.

  16. It can be done, but dont expect huge returns upfront.

    My parents bought two houses in Capemay, Nj. First one bombed in the 80s and they sold to break even.

    2nd one they use all the time and tripled since 1997.

    When I inherit, plan to Airbnb for several weeks to cover the taxes and expenses, maybe eek out a profit and then use for my kids.

    But to start off profitable is tough, you only get maybe at best 10 solid rental weeks a year.

    1. Sounds like a plan. I’ve never had someone comment “when I inherit.” How did you guys have a conversation that you will inherit the vacation property? Does knowing that you get to inherit vacation property make you not want to save up to buy one for yourself?

      I’m just trying to think about in the future for my son, because I don’t think I’d feel good if my son talked about his inheritance openly.

      Maybe it’ll be understood, but I don’t think I’m gonna tell him.



      1. Paper Tiger

        If John happens to be an only child and has a good relationship with his parents then you probably can make some assumptions. That is the way it was for me as an only child although, as my parents advanced in years they did mention their plans to me.

        Funny thing is when my Dad died 4 years ago and I was helping my Mom settle his affairs, I got my first look at their Will and realized there was no provision for their assets once the surviving spouse passed on. They did their Will over 25 years ago and just assumed they had things covered for me once they were both gone. Back in the day, they had a lot of trust in their lawyer and I doubt they even read the final version and just stuck in the safety deposit box. My Mom had to hire an attorney and make sure things were set up as she and Dad had intended.

        It just goes to show how important it is to have this kind of conversation with aging parents and check everything out before you find yourself in a pickle because affairs were not handled properly. Avoiding these conversations can have unintended and expensive consequences.

      2. Haha, it’s just two sons, myself and my brother so it’s all coming to us….

        Unless my brother wants to sell it, I would think we would keep it in the family. But hes a teacher and uses it alot more than I do )

  17. I honestly never got the desire people had to buy 2nd/vacation homes or timeshares.

    By making that choice it seems like you are committed to going there instead of traveling to other places to justify the reason in the first place (another sunk cost fallacy ideology).

    Granted there are some perks I am sure of being an owner (as you mentioned, owner parking lot, owner wardrobe, etc) but I feel that if I rented out that same place for the time I was going to use it, I would have 95-100% of the same enjoyment without the owner perks.

    As a renter I would avoid 100% of the pain that an owner would feel that would instantly wipe out the above perks: managing rentals/cleaning between rentals (yes you can have someone else take care of that but it is a cost); HOAs, any assessments levied on owners (when roof needs replacement, HVAC), increasing property taxes, etc.

    The pains of ownership would be WAY more painful to me and outweigh the benefits of visiting a vacation property I own.

    With timeshares you are also typically locked into a certain time to visit which adds a degree of hassle as well to coordinate.

    Banking on assumed appreciation of the rental property is not always a given (as you even mentioned the condo you bought was priced $110k less than it was originally sold for, that is one expensive vacation for that original owner).

    I can spend an extra $2-3k on a week vacation to upgrade from basic lodging and achieve an almost exact level of luxury/owner’s lifestyle and be done with it if I choose and not tied down to the same locale for my next vacation.

    1. All good points. One of the things that I realized having a vacation probably did was encourage me to take more vacations at my vacation property.

      If you are a super gung ho person who was working all the time and trying to make money and all that, the path of least resistance is to keep on working. But once you have kids, vacation property, and other things that bring joy to life, it’s natural to just do more of that.

      So I say, a vacation property you may force you to enjoy life more. And when you look back on your life, you’ll be appreciative of all those wonderful memories you had. Nobody’s going to wish they had more money when they die.

      1. It looks like a balling spot! Enjoy it! If you can afford it, why not. That kid is gonna crush the mountain. Ski in/out. Forget about it!

    2. What about the value of getting longer inflation, if that supports your view and fits the rest of your portfolio?

      It seems to me that given the effect of inflation on real estate, if you have the means to put 30% down and not tie up >20% of your net worth like you mentioned, that buying a vacation property is a great investment. If you can earn income above the maintenance cost and mortgage payment you are making (somewhat) passive income while also increasing your equity. And you can survive short to medium term noise and devaluations. In an event like the financial crisis, all investments are at risk except your shorts and cash, not just your rental property.

      So it seems to me that the vacation home is a great way to add leveraged, long inflation, passive(ish) income earning diversity to your portfolio. Plus you can reduce your annual vacation costs and it has a water slide and memory fuel.

  18. My wife has recently been pushing for a vacation property in La Jolla CA. We could get a 2 bed 2 bath condo for under 10% of our net worth. Her reasoning is the same as yours. She wants a spot that she can leave her clothes, just show up, and its ours. I on the other hand am dead set against it. For the price of the condo we could spend 80 weeks at a 4 star resort anywhere we wanted and that doesn’t include the extra HOA fees, taxes, and ongoing maintenance.

    Perhaps, in a few more years I can get my business to the point of being 100% passive and then I think I’d be more willing to get a second home. Until then I just can’t justify the expense no matter how much money we have.

    Thanks, Bill

    1. It’ll be interesting what you guys decide! Having a location independent business or not passive income where you don’t have to live in one place really boost the value of a vacation property.

  19. Oregon Trail

    In 1970 my parents bought 30 acres on the Deshutes River in Central Oregon, so they could park their trailer there with friends and go fishing, rafting, canoeing, feed the deer and birds, have campfires and sleep out under the stars. 10 years later they built a cabin and continued those traditions with their 4 grandchildren, teaching them how to use a chain saw, look for animal tracks and be good stewards of our land. They passed away a few years ago leaving us a beautiful wildlife refuge where we meet every year to maintain and enjoy this magnificent property we inherited. It is a treasure that will stay in our family for generations to come.

    1. Wonderful. This is what it’s all about. The memories, the nostalgia, and being able to re-create new memories. At the end of the day, what is money and investing for? These type of experiences.

  20. Your charts are seemingly dead-on with the descriptions. We can get a cabin in the woods or maybe one with indoor plumbing. And that’s exactly what we’ve been lightly considering.

    Thanks for the article. We’ll probably end up just moving somewhere else when we retire. Although, roots and friends and family may keep us here. But oh, to have a place to go that’s ours…

  21. I could reap all those benefits but with a lot less headaches and impact to my bottom line, even after kids.

    Which is why I would just rent.

  22. Great to hear that your vacation home is generating some passive income. That’s the only way I’d buy a vacation property. Otherwise, it’s just psychology. It doesn’t make any difference to me if we stay in the same unit or keep our swimming trunk there.
    I’d love to buy a small beach house if we can make the numbers work. Otherwise, we’ll stick with hotels & Airbnb.
    Great to see your kid enjoy the resort. That’s pretty cool. I don’t think it matters to him if you own the place or rent, though. He’ll have fun either way.

  23. Purchased extra home on Oregon Coast when we had $ to invest from selling property in Midwest. (1031 ex) I was too cheap to pay capital gains on the few hundred thousand of profit. So purchased the place to postpone taxes.

    The coast property is used as Vacation rental. Income covers expenses. This also means we seldom get to use the place except in off season. I am OK with that because while a beautiful coastline, OR coast is cold and one generally cannot go in the water. Frankly I prefer panhandle of FL for fun.

    I sure hate HOA fees and rules.

    Currently the place represents about 6% of NW. There has been some appreciation since purchase but if I had to do it over again, I would have rolled $ into a multifamily unit in Portland or Vancouver WA. Appreciation would be better and I think I would like more flexibility with my free time. This are background thoughts though. We are by no means in terrible situation and hate the place.

    You cover some good points but to me biggest factor for those considering a vacation home is: Do not underestimate expenses!. Many expenses are beyond your control like HOA and Property tax. Many vacation homes are located in snottsville little burgs run by morons that think your tax $ is theirs to waste.

    1. Yes, for sure. That is the more economical route. Don’t think there was Airbnb back in 2007.

      I could re-create these experiences by renting a place at my resort. But it just wouldn’t be the same because most of the time I’d be renting a different apartment property. Further, there’s this indescribable feeling of having a property of your own that nobody tells you.

      This may sound mundane, but there’s something priceless to coming home to your own place and opening a drawer full of your own underwear! (owner units have a private wardrobe and lockers for skis and snowboards)

      1. GirlOnAMission

        I believe Jake is asking if you would consider renting the property out on Airbnb when not in use and make up some of your losses?

        Also this is off topic but I am going to San Francisco in October for work and turning it into a family vacation with my then 8 month old. We’ve never been so any must see suggestions that aren’t super touristy? Thanks!

        1. Ah, The property is run full-time buy a rental property management company and it is cash flow positive by about $500 a month.

          San Francisco is wonderful in October. It’s worth going up to the palace of fine arts, Grandview Park, the Lyon Street steps, Crissy Field, Marina Green, And to Wine country.

          1. I run our vacation rental myself. It can be stressful at times, but 90% of the time it’s mindless/easy.

            Our net is ~$3000/month which is good for MCOL vacation city in California.

  24. Thanks for sharing, Sam!

    It was easy to relate as we’ve gone through similar experience albeit with a high-priced fractional ownership in Tahoe that we bought in 2007. We took a beating on the value and it never really recovered BUT it was only an investment in family time and memories for us and our kids. We kept it for 10 years while they grew into their tweens at which time we saw that we were not utilizing the property. As the kids entered middle school, Lake Tahoe and Disneyland vacations turn into France, Japan, and “visiting the grandparents” vacations with our precious time during school vacations. So great memories in Tahoe for sure but it’s time ran its course for us and super-high HOA fees and negative cash flow all but ensured the decision to sell (renting the fractional is not profitable).

    So the idea of a vacation place still appeals (Hawaii? NYC?) but friends and family all argue that Airbnb or hotels are the way to go these days for maximum flexibility and I can’t disagree except for the emotional appeal. One definitely should spend months/year in their vacation home. Otherwise it’s not worth it. Managing a property remotely is a huge headache but hopefully is cash-flow neutral at the least.

    There are amazing places to go and like you said, we work and save to experience them. Hope everyone finds their “vacation” home whether it’s one place or many!

    1. Hi Norm, how was your experience selling your home? Were you able to get out? Selling is something we considered, but we feel we’re now JUST getting started, 12 years later with our boy. So I’m looking forward to the next 16 years, or at least the next 8-10 years before going on international trips becomes more regular. Can’t wait for those trips either!

      Man, time flies. Gotta make the most of it.

      Given we are location independent, one of my goals was to live in Tahoe for 1-2 months a year, 1-3 months in Honolulu, the remaining in SF. I will make this happen!

      Glad you guys had some great memories!

  25. We bought a vacation home a few years ago – a house on a lake. The dream and the reality are two different things. I like the home, but it’s a money pit. A second set of bills (utilities, maintenance, taxes, mortgage, insurance, …), add in all the toys you need (boat, jet skis, kayaks, …). It also limits your other vacations. It’s really hard to justify going on vacations to places other than your vacation house. My wife and I both work full time, so we spend much less time at the vacation house that we thought we would. We do get to spend some time with our teen-aged kids there, so that is good. In hindsight, I think it would have been better to just go on 2 really nice week long vacations a year.

    1. Absolutely agree. You’ve got to be oozing cash to afford a vacation property, and then vacation somewhere else while still having your property. That’s like paying 3X to live since you can only live in one place at a time!

      But once my vacation property got down to below 10% of my net worth, I really didn’t care. And, the property gets rented out during the summer and winter to generate cash flow, so it’s OK.

  26. Love the Resort at Squaw Creek! Especially during the summer. Great place to spend time with the family. All that north Tahoe offers is right there, but you’re not in the middle of the crowds. That pool has the best views!

    We rent a place every summer for a week. Generally costs about $1600-$2000 all included (food, resort fee, drinks, and a spa visit for my wife). We take food so breakfasts, most lunches, some drinks and snacks are covered.

    It would take a long time to get whole on a $710k investment! Although I will say you picked well in that Tahoe is a year round place, with a totally different experience summer to winter. And you are right about the family aspect, your son will always remember it and that place is great for kids. At 3% of net worth, all good. At 30%, no way. Btw – do you have HOA dues?

    For me, I’d rather have the choice to go wherever I wanted, and not feel obligated to go to “the cabin” once again to try to earn back on the investment. But glad it worked out for you!

    1. Yep, big HOA dues. But even after the dues and 20-30 days of vacation up there, we now net $500/month. So it’s fine now. But not for the first ~6 years.

      If the property had appreciated to $1M from $710K, I would feel super giddy like with this post:

      The best is living for free and experience appreciation. Win some, lose some, then eventually win some again.

  27. It was really fun, as a regular FS reader, to read this post because it’s awesome to see you and your family enjoying this vacation property so much.

    In light of all the helpful and thoughtful advice you dispense to the FS community, I hope you enjoy every moment of your vacations. You really help a lot of people with what you do on FS.

    1. Thank you! We feel blessed. Wait or last or hold long enough, and some good things eventually happen I’ve found. It feels great to finally be able to fully experience my initial intentions when I first bought the property.

  28. Rather than a vacation property, what if you summer and winter in different states and reap tax benefits in doing so… Do you feel it is negative in this situation?

    This is common on the east coast between the Northeast and Florida.

    1. I should have bought on the Nevada side of Lake Tahoe, moved residences there for 6.1 months of the year to save on California state tax.

      BUT… maybe not bc/ Nevada side is another 30 minutes away, we didn’t make much money after I left my job in 2012, and prices on the Nevada side are higher due to this arbitrage.

      Tahoe in summer and winter are different and awesome. Love hot tubbing when snow is falling after 3 hours in deep powder on our private run.

  29. Anthony Tolbert

    Such a beautiful place, my wife and I traveled there once before we were married.

    I have been wanting to buy a vacation property on the Lake Michigan shoreline in Michigan for years now. Ive been looking and watching since around 2011, since the downturn prices have returned, doubling in some places Missing out on ’11-’14 prices is what has held me at bay. I feel like now is the time to save and wait for another bump in the road. We shall see!

    1. Yeah, it would be awesome to have bought in 2011-2014. Oh well. Next life!

      That’s the thing though… life is what happens when we’re too busy doing other things. Not everything is about maximizing the value of the dollar.

      I feel more strongly as I get older about spending on convenience and joy than trying to make more money.

  30. I find it hard enough to deal with one house, so I don’t think I’d get another one ever. I was a fairly reluctant home buyer. This was my first property at the age of 50! What I’m wondering is how people manage lots of travel together with children’s school schedule. We’ve always travelled quite a lot internationally and have done quite a bit since our first child was born 3.5 years ago (when I was 51)… especially as there is only a 2 week school holiday in July here in Australia when it is good weather in the Northern Hemisphere (actually July is often too hot up there…).

    1. Wow, first child at 51! Please share your thoughts on what took you so long and how old is the mom? That’s incredible and makes me rejuvenated that I can keep on going at 42 no problem, and to stop complaining when my back is sore!

      My property is fully taken care of in a property management program. Zero stress. Just gotta pay.

  31. We close on our 2nd home in 2 weeks! It’s in a resort area on the Atlantic Coast and it’s in a real neighborhood where you cannot rent to tourists. My husband works “from home” and am a soon to retired stay at home parent (youngest of 4 will be a senior in HS) we will spend. Lot of time here -it’s 4 hours from primary residence.

  32. Great pics! That’s wonderful you were able to have such a nice time up there. Tahoe is beautiful during the summer. It’s special during winter too but I‘m not a big skiier and prefer summers.

    I remember almost getting sucked into a timeshare vacation property on Kauai a long time ago and while I’m sure it might have been nice I felt super relieved I escaped the super aggressive sales team.

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