Residential real estate can be divided into three categories: primary residences, investment properties, and vacation homes. When it comes to vacation homes, there is plenty of disagreement over whether or not investing in one is wise. Vacation homes are viewed by some as unnecessary luxuries that only eat up financial resources and steal valuable time.
What do you think? If you do not own a vacation home, would you ever consider buying one? And if you do own a vacation home, what was your primary motivation for acquiring it?
There are no easy answers to the question of whether or not a vacation home is worth it. Value is in the eyes of the beholder. Still, there are plenty of valid reasons people do it. Below are the top five.
1. Long-Term Investment Value
Vacation homes are intended to be leisure properties. But some people buy them as long-term investments, too. In other words, a couple might buy a vacation home in their forties. They enjoy regular vacations until they reach their mid-sixties. Then they sell and live off the proceeds.
This is not a bad plan. In fact, it can work very well if you purchase the right home in the right market. But there is always a risk that your long-term investment will not pay off. It is a risk you have to be willing to take.
2. Creating Residual Income
Most Americans only get two or three weeks of paid vacation annually. What do you do with a vacation home the rest of the year? Choose the right destination and you could potentially have renters year-round. Your vacation home suddenly creates residual income to supplement what you earn at your job.
Of course, some of that income goes to pay the mortgage, insurance, and maintenance. But the rents are high enough in some vacation destinations that you can make a tidy profit even after paying your expenses. The downside is that renters will not necessarily treat your property as well as you do.
3. Enjoying Cheaper Vacations
Assuming you buy a good house at a reasonable price, it is entirely possible that you could spend less on a vacation property than you would on 20 years of vacations spent at hotels and resorts. You could potentially save tens of thousands of dollars over your lifetime. Most people don’t because they splurge on their vacation homes. They spend big because, after all, it is a vacation home.
4. Enjoying More Vacations
Some people buy vacation homes within driving distance of their primary residences for the sole purpose of enjoying more vacation time. They have their two or three weeks of paid vacation to start with, then they supplement with occasional weekend trips. Owning a vacation home affords the opportunity for lots of mini vacations throughout the year.
5. Accessing a Specific Activity
Lastly, gaining access to a particular activity is another reason for buying or building a vacation home. Architect firm Sparano + Mooney in Park City, UT designs vacation homes for people who love skiing. The entire Park City area is essentially a ski resort. Many of the property owners don’t have access to skiing back home.
In Florida, there are plenty of people who own vacation homes on the coast. They are people who love the ocean but are far from it at home. They spend their vacation time surfing, fishing, boating, or just relaxing on the beach.
Vacation homes are not for everybody. As for those who invest in them, they have plenty of reasons for doing so. Those discussed in this post do not even scratch the surface.
