Buying a vacation home isn’t like buying your main house. It’s not a necessity, it’s a luxury. And honestly, most people don’t use their vacation homes enough to make the cost worth it. I learned this the hard way. I bought a vacation home in Palisades Lake Tahoe in 2007, right after the housing market had peaked. Even though I got it for 15% less than its 2006 price, it still lost half its value during the financial crisis.
Now, I’m not saying that vacation homes are always a bad idea. If you have kids, they can actually be a great investment. Here’s why:
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More people can enjoy it. The more people you have to use the vacation home, the more valuable it becomes. For the first 12 years I owned my vacation home, it was just me and my wife. We could have saved money by just renting a hotel room. But now that we have two kids, we can fully utilize the space.
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The cost is spread out. The more people you have, the more the cost of the vacation home is divided. For example, our vacation home rents for between $500 and $1,500 a night. If it was just me and my wife, that would be $250 to $750 per person per night. But with four of us, the cost per night is only $125 to $375.
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It’s more comfortable for a family. Renting a room for a family vacation can be cramped and uncomfortable. But if you own a vacation home that fits your family’s needs, you’ll have a better layout and a more comfortable vacation.
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It’s a stable second home for kids. Owning a vacation home gives your kids a familiar place to build lifelong memories. You can keep pictures, clothes, toys, and other personal items there, making it feel like a second home.
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It gives you more time to build wealth. Kids are expensive and time-consuming. So it’s a good idea to build up as much wealth as possible before they arrive.
But here’s the thing: you should wait until your youngest child is at least three before buying a vacation home. Before that age, kids don’t really care where they vacation. But if you’re eager to buy and you’re not sure how many kids you’ll have, wait until your first child is five.
Looking back, if I had waited until my first child was five to buy my vacation home, I would probably be $500,000 richer today. But hey, at least we had some good times at the property. Good luck with your purchase!
