Ahhh, the end of summer. So many clients with stories about their fabulous vacation, and they’re having a hard time accepting it’s over. They come home refreshed, and more importantly, with fiscally responsible ideas…
- If the house received a face lift they wouldn’t be so desperate for a costly vacation.
- If they had a pizza oven and a pool, they could vacation in the backyard all summer.
- If they remodeled the bathroom, the spa getaways would be unnecessary.
- If they owned a timeshare, they could take the same vacation for a discounted price.
- If they bought a vacation home, they could vacation longer and/or make rental income.
My first question for a home renovation is how long you’ll remain in the home, and how much use you really see yourself getting from the renovation. If you’re considering moving or downsizing in about 5 years, the cost of repeating your great vacation during that time likely pales in comparison to doing any major renovation to your home. In particular, outdoor renovations often add little value to your home and can cost big bucks for land and hardscaping.
The idea of purchasing a vacation property is also something to seriously consider prior to committing. In my experience it’s a lot easier to buy into a vacation property than it is to unload one. The expenses are often minimized and the practical use of the property exaggerated due to the excitement surrounding the purchase.
For instance, my husband would love for us to have a lake house where he can dock his boat. The nearest lake he’d consider is a good 2 hours away. While the idea was fun, it would involve packing up the family, driving 4 hours, supplying the lake house, catching up on cleaning, tackling random maintenance issues, and landscaping. I envisioned the family on the lake and me pulling weeds.
That sounded exhausting, and not a fun way to spend my 2 day weekend. We opted to put in a pool instead so I could contain my issues to one location! Not the right decision for everyone, but the right decision for me.
If you’re thinking about a second home, here are some other questions to consider:
- Do you want to buy an inexpensive fixer-upper?
- Who will fix it up? Do you have time to manage this project? Are you confident on the cost of the project? Who will physically oversee its completion?
- Are you able to afford a move-in ready place?
- Does this require you to go back into debt, or further into debt? How does tying up assets in real estate affect your retirement and education goals?
- Are you sure you want to rent?
- You spent so much time making this your home away from home, are you comfortable having strangers stay in the house? How much would a property manager, cleaning service, and general maintenance cost? What are the tax and insurance implications? What would you need to charge to make a profit, and does this jive with the market rate?
- Lastly, what’s the cost to get there? Are you able to get the time off from work? Is it more expensive to eat, shop and be entertained there?
I know plenty of people with timeshares and vacation homes. Some absolutely love and manage their decision well, others have nothing but cautionary tales. Before deciding, always take the time to investigate the full scope of the expense involved, what your other options are, and how it all plays a role in your long-term vision. Consider working with POWWOW to tackle these questions and be referred to professionals that may provide more insight to your specific situation.