Unlike buying a primary residence, where I believe you should buy one as soon as you can afford to, purchasing a vacation property is a different matter.
Nobody needs to buy a vacation property; it’s a luxury expense that everyone can do without. Chances are, you won’t use your vacation property enough times a year to justify the expense, making it likely to be a suboptimal investment.
My own experience has left me somewhat jaded. I bought a vacation property in Palisades Lake Tahoe in 2007, just a year after the property market peaked. Despite getting about a 15% discount from its 2006 price, the property continued to decline in value by 50% during the depths of the global financial crisis!
Certainly, my perspective might have been more positive if I had purchased the vacation property at the market’s bottom. However, I still maintain that owning a vacation property is a suboptimal investment.
A Vacation Property Becomes Worth It After Having Children
As a single individual or couple, you’re unlikely to use your vacation property enough times a year to justify owning it. After all, most Americans take vacations totaling less than 30 days a year, and it’s doubtful you’ll spend all 30 days in your vacation property.
During the 330+ days you don’t use your property, it’s essential to rent it out as much as possible. Otherwise, you’ll find yourself in the red with property taxes, potential HOA fees, and maintenance expenses. It would be wiser to forgo owning a vacation property and instead use your cash to vacation wherever you desire in the world.
Even with all the freedom I had after 2012, I didn’t spend more than 30 days a year using my vacation property after retirement. With just my wife and me visiting, we preferred to diversify our travels
