Is buying a vacation home a wise financial decision VS staying @ a hotel for ppl who have few annual vacations

Question

I know several people who have purchased vacation homes. They generally use it about two weeks a year and on some weekends. Most of these people are not rich - they are in the medium income bracket, so the purchase of the vacation home has set them back a bit. Since they use this house sparsely, I was wondering what is the point of spending hundreds of thousands of dollars on a vacation home and having a second mortgage if they will only use it for about 2 weeks a year? Instead, they could simply stay at a nice hotel without any of the hassles having a house entails. In a case like this, why would anyone want to purchase a vacation home versus staying at a hotel?

Answer 1

It usually doesn't make sense - but sometimes it does. Here are some instances when it might work:

1. The vacation home could also serve as a retirement home. If you plan on retiring there, then it could be substantially paid for by the time retirement comes around. Your current primary residence could either be sold or rented out.

2. Some homes can be rented out for part of the year, and then used for vacation in the off-season. I live in San Diego, where there are some homes near the beach that command upwards of $2-$3 thousand per week. Some people simply rent them out during the summer and can use the houses themselves the rest of the year.

3. You can buy with several other parties and reduce the costs substantially. If 4 parties bought a $300,000 house, they'd only have to come up with $75,000 each and could each have the house for 13 weeks per year.

I have to agree with you, though, that to really afford to be able to buy a vacation home that you otherwise don't use for 50 weeks per year, you'd have to be obscenely rich.

Answer 2

ok, are you talking about a real 2nd home or a timeshare? if it's a timeshare, i would have to say ABSOLUTELY NOT. don't ever do it. it is MUCH easier to get a hotel, you have more flexibility and can go whenever you want. only get a timeshare if you are really old and you know your EXACT schedule for a couple of years in advance. as for an actual 2nd home, well, real estate investment of that sort is always a good thing and you can likely resell for a profit; it could be nice to go back to somewhere that you are familiar every year, and even be able to leave some of your own stuff there, and your own furniture, etc. are you the type of person who wants to vacation in the SAME place every year? or who likes to experiment and see new places? that would make a big difference in your decision. the key is to know yourself and what you can afford.

Answer 3

Well, it probably doesn't make sense, unless for some reason they wan't a tax write-off on the 2nd mortgage interest.

Now, if they're able to rent it out (either themselves or via a management company), they can at least mitigate some of that cost.

Overall, its probably not the best decision, unless you can get a steady stream of rental income on the unit/home. You're better off investing any excess money, and then renting the hotel only when you need it.

Answer 4

Short answer: it depends.

Long answer: option a) X number of days on vacation * hotel price = total cost. (For arguments sake, let's say 10 days of vacation times $150 a night equals $1500 in hotel costs).

option b) buy a house (or timeshare). you have your mortgage costs, your maintenance costs, your insurance costs, property taxes, assessments (if in a resort community or condo) etc.

Option B sometimes may be a better choice if you absolutely want your personal space, like a hunting lodge or oceanfront place. Financially, option B may also be better IF (and a BIG if) the area that you buy has increasing housing prices.

Bottom line: take a piece of paper, split the paper down the middle and write down all the costs of "option a" in the left column and all the costs of "option b" in the right column. Also include any potential profit (from selling your property in the future) in the right column.

Then decide for yourself which option best suits you.

Answer 5

holiday residences are often extra take care of in that the home household projects team does not are available on a daily basis to "clean". and that they are able to easily be decrease priced than inns. The "prolonged stay" inns often have a refrigerator, range, etc. maximum inns are somewhat risk-free. yet holiday abode condominium is a solid purchase in the suitable section.

Answer 6

It really depends on how often you're going to use it.

Even if you don't use it a lot, you can always rent it out when you're not using it yourself, and earn extra money.

If you're willing to take on the responsibilities of being a landlord, it may be a good investment.

Answer 7

Under your question/example its all about the prestige and social status. Logic does not apply.