to own a home here? You’re vacationing in a great place, far away from the day-to-day life of work and home, it’s idyllic. But owning your home there may not be. Here’s an honest look at the pros and cons.
We spent last weekend with friends in a cabin on Mt. Lemmon – it was a great getaway. Even though the cabin was small, I’d say 600sf give or take, and came with an outhouse (in other words, no plumbing fixtures other than the kitchen sink), there were 10 pages of instructions covering everything from the water catchment and pumphouse system to how to deploy blankets hung from the ceiling to create privacy. It was a kick!
Coincidentally, a good friend recently back in town said to me yesterday “I think we may be over Taos.” They bought a tiny, charming, old adobe home outside of Taos several years ago. It is idyllic but they don’t get there as often as they’d like (it’s a 10-hour drive), this visit the picture window had finally reached the point it needed to be replaced, the weeds were knee high and the neighbor had pulled a travel trailer too close for comfort.
A recent article in the Wall Street Journal detailed the pros and cons of vacation home ownership which has been trending upwards. A survey by the National Association of Realtors found that prices of vacation homes have returned to 2006 pre-housing crash levels – the median price in 2016 was $200k.
Fortunately most people (42%) buy vacation homes for their own use and for family retreats. I say fortunately because the other given reasons often don’t stand up to their promise: we want to retire there, it’s a good buy, it will appreciate, good mortgage rates and it will generate income.
I owned a vacation home in the mountains of Colorado for several years. Below are a few of the tips from the Wall Street Journal article accompanied with my experiences:
Buy it for the right reason – because you want to be there; rental income or profit on a future sale is way too unpredictable. My experience: every locale has its season. We found ourselves competing for time there in the summer while having a very tough time finding a responsible renter for the winter months. Long-term, we found ourselves selling it when the market was down and never dared add up the costs of owning it over the years.
Pick a location that’s good for business – your dream location might narrow your rental pool. My experience: We were a stroll from a beautiful trout stream but 30 minutes from a real grocery store; that wasn’t for everybody.
Don’t delude yourself about costs or profits – rental agents will emphasize the rental possibilities while deemphasizing the costs of upkeep. My experience: Although the rental agent charged extra for the 30 minute trip to check the property, he didn’t go regularly which contributed to the pipes freezing and bursting one winter – oops.
Know that you will have some wonderful and some demanding tenants. My experience: We had both. Summer tenants were great and returned year after year (competing for our time there) but winter tenants were a nightmare – not quite on the order of The Shining but I’ve got some stories.
Bottom line, I like Mr. Money Mustache’s approach. In his blog titled The Black Hole Second Home he says “focus on making your own house the one you want to live in, having more fun close to home, and renting vacation spots when you need them.”
P.S. Dave and I now rent the home I used to own…soooo much easier!