Vacation homes/cottages

[Germany_chris]

For those of you who own vacation homes or cottages do you regret it? Do you still use them etc?

My wife and I are considering buying an apartment in Mallorca, we have no mortgage or other debit so it won't be financilly draining. The intent would be to vacation there and most probably live there after retirement. What says the collective wisdom yes or no to a vacation home.

[AgilisMerlin]

Funny, my 11 year old was asking how to spell Mallorca yesterday.

The condo prices were starting around 120 euro. We were thinking about visiting in the off season.

A time share for the forum, nice :D

http://thecyclinghouseblogdotcom.files.wordpress.com/2012/01/hammermallorca.jpg

[Germany_chris]

Mallorca is one of the most beautful places I've been...I love it there :D

yea they're 120 to 150..seems a little cheap or maybe I've just gotten used to German home prices

[rwsaunders]

Rule of thumb....cost of vacation home x 0.3 = amount of funds that you can afford to have sit, doing nothing, assuming that you are renting the property at a reasonable occupancy rate. In the past, investors have counted on recreational housing appreciating, trusting that this would offset the loss of income from the non-performing funds. Unless you're going to eventually live there or it's that good of a deal, why limit yourself to one location for vacation?

[CNY rider]

We have a small summer camp on a lake in upstate NY.
It's only about 20 minutes away from our primary home. It works for us because we have small children, and we can go back and forth as we please.
It's incredibly relaxing to spend a day on the lake.
There's the usual hassles of a lake side camp: Mowing the lawn in summer, winterizing it, getting dock in and out etc.
Obviously with an apartment those won't be issues for you.

I love having it for my whole family to enjoy together. It has not performed as an investment, but I bought it to enjoy, not to make money.

I would do it again.

Only you can decide if that's the most effective use of your leisure time and money. If you didn't buy the apartment, how else could you use the money and which do you think you would enjoy more? Will you be happy going back to the same place on vacation for many years?

[Germany_chris]

No renting it..

The family can be there leave home and be there in 4/5 hrs. So now we could go there for long weekends vs. Garmisch which is what we do now. I would imagine we'd get there 8 to 10 times a year but that might be an over estimate but thats about how much we get away now.

[verticaldoug]

Chris,

A few things to think about:

1. Our second home was about 3 hr drive away which is a good distance. At three hours, it is far enough that you get away, but not so far it becomes a chore.

2. Children - Our experience was from 3 to 10 was a golden age for us to get away with the children. The children could travel well and we did not yet have conflicts with school and sports. Once our children started middle school, sports/dances/other activities became priorities. So we went away less. Most of my friends are in this camp.

3. Resale - Even if you don't buy the place as an investment, if your situation changes, you want a market that has good turnover so you can get out.

4. Adding Air travel, really really complicates the equation.

5. You may just want to rent for 6 mo to a year to see what you really think. Real Estate is not going anywhere anytime soon.

Douglas

[SamIAm]

I have a mountain home and I love it. It is only about an hour away from Atlanta, where I live. And this turns out to be key for our enjoyment.

We have a beach house that is six hours away and we almost never use it. But we go to the mountains almost every weekend when its not rented.

We keep the mountain home fully "stocked" so its as simple as jumping in the car and driving up there, no packing, shopping etc. required.

We had no intention of renting it, but over time it just made sense. We rent it about 100 nights out of the year and it almost fully pays for itself.

One thing we have really enjoyed is blessing others with the free use of the place, including several forum members. We also give it away to charities for use in silent auctions, for hospice programs, etc.

[zap]

Mallorca is not exactly a "desired" destination among continental europeans who seek finer living. So from an investment standpoint I don't think Mallorca makes much sense.

Before purchasing anything I would recommend renting first for 2-3 years to see if you like the place.

[MattTuck]

Nothing really to add, but a reminder about something I learned in my investments class in B-school.

Total Return = Financial Return (from property appreciation, debt financing) + service flow (the enjoyment you receive from owning/having access to the asset)

So, be aware of what's going on in greater Europe RE: the euro, sovereign debt issues (which I am sure you are) and if you buy, make sure it is with the intent on drawing a service flow much bigger than your expected financial return.

A better recommendation from the forum is to rent a few years before buying. This makes a lot of sense.

[Germany_chris]

It is desired for Germans remember most famous Germans have homes there. When we go there everyone is Dutch or German with a few brits thrown in. I don't have an issue renting it out, my wife will have the issue. I'm trying not to think of it as an investment more as a pleasant place to spend weekends. When we go in late May early June this year it'll cost 1800 euro one week all inclusive when we go again in August it'll be 2500 or so one week all inclusive. Our weekends in Garmish run around $500 each. Add that all up and we spend about 10k traveling a year. It'll be more to own the place but not significantly so, and it'll provde another mortgage free place to stay when we retire. It really boils down to th 5hr travel do we realistically think we'll use it enough for a mortgage.

[nm87710]

i'm trying not to think of it as an investment more as a pleasant place to spend weekends...and it'll provde another mortgage free place to stay when we retire.

+1

[tiretrax]

We rent the same house each year in Carmel, California. As much as we would love to buy, it doesn't make much sense financially for us. Mallorca as an alternative to Germany does if you want a warmer place to go in winter and beaches in summer. You'll have to weigh flights, taxes, etc. to determine if it makes financial sense for you. I would highly suggest renting for a long term to determine where you want to be on the island, type of place you want (you may end up wanting a small villa style place rather than an apartment), a particular building (who are the other residents), and many other factors.

[SEABREEZE]

I have a mountain home and I love it. It is only about an hour away from Atlanta, where I live. And this turns out to be key for our enjoyment.

We have a beach house that is six hours away and we almost never use it. But we go to the mountains almost every weekend when its not rented.

We keep the mountain home fully "stocked" so its as simple as jumping in the car and driving up there, no packing, shopping etc. required.

We had no intention of renting it, but over time it just made sense. We rent it about 100 nights out of the year and it almost fully pays for itself.

One thing we have really enjoyed is blessing others with the free use of the place, including several forum members. We also give it away to charities for use in silent auctions, for hospice programs, etc.

The Mtns of Georgia is a favorite, especially around Lake Hiawasa.
If I lived in the greater area of Hotlanta, I too would have a place there. Living in Fl, and a 10 hr drive each way, thanks, but no thanks..

On occassion, we do travel there with our RV , pulling our boat, and enjoy a few weeks of tranquility.

[xjoex]

We have a place in Greece. Its beautiful. When we are there the cost is for amazing food and entertainment is so low it is unbelievable.
http://robonza.com/joe/2009/06-01_greece/IMGP0478.JPG

However when you do have it, you feel you need to go there. I don't think that is bad, sure we have passed on other euro trips to go to Varkiza, but we would not have gone on those trips if it weren't for our place.

-Joe

[Ken Robb]

After 36 years as a real estate broker let me second the idea of renting before buying. I mean rent a place on a year lease if that is possible. Once you have committed to that you will probably be inclined to go more frequently because the housing is already paid for so the incremental cost of a visit is almost entirely transportation. You can leave it "fully stocked" ala Sam I Am so each visit will be easier due to minimal packing and knowing exactly what equipment/amenities the home will have.

After a year you will have a pretty good idea if you want to buy a place and if so when you should make the purchase. I have had clients fall more and more in love with their second homes in our area until they became their primary homes. OTOH I have also seen some get bored going to the same place for their "vacations" and consequently use them less and less. As was mentioned by others, sometimes kids schedules can become quite inflexible and family trips are difficult to schedule.

I think you can estimate ownership costs fairly well but who knows what future airfares are going to be? If they doubled in 10 years would that cutail your visits?

Overall I think a second home in an area you really like can be a wise purchase for many people as long as the cost and maintenance required aren't a big burden.