Vacation Home Bargains?

Some real estate experts believe now is a good time to buy a vacation home because second home prices have declined.  I wrote about finding deals in affordable vacation homes two years ago. More recently, CNN/Money published a slide show of homes currently for sale that (according to CNN) are located in vacation destinations.

I’m not certain I agree with the assessment that the eight vacation homes highlighted by CNN are bargains.

Let’s first start with these three financial principles that I espouse for those who are on a retirement glide path and considering purchasing a vacation home:

1. Do not buy a vacation (or other second home) just because it appears to be a “bargain.” (More about this later.)

2. Do not buy a second home just for vacations. If you will use it a lot when you are retired, that’s a different story.

3. Do not buy a second home if you must rent it to make it affordable. That’s just too much risk to take on when you are close to retirement.

I speak from experience. We bought our second home ( a lakefront property) eight years ago. When we purchased it, we envisioned using it for vacations and weekend getaways now and as at least a part-time residence when we retire. That is still our plan.  Therefore, several years ago we paid off the mortgage on our second home. We have never rented it. So far, so good with our plan.

So what about the “8 great vacation homes” featured by CNN/Money? Three (in Massachusetts, New Jersey, and Texas are well over $1 million asking price, so those don’t even count as second homes in my book. They are extravagances for the very wealthy.

Five are on the ocean which is nice except I think lake living is better for a retiree.

While that cottage in Myrtle Beack looks like a deal at under $150k, note that the house sits on a land lease at $8200/year. That’ s no bargain at all.

The listing that is closest to my heart is the chalet-style home on a small lake in Kentucky. I’m partial to that style because our second home is on a very large lake in Kentucky (Lake Barkley). There are some serious deals to be had right now on Kentucky lake front property. Kentucky is also friendly to retirees plus the weather is moderate.

Even if you are not in a position to buy a second home bargain right now, it can’t hurt to look!


  1. says

    Since moving down to South Florida from the Midwest back in 2004, our entire concept of ‘vacation home’ has changed. With golf, waterfront, great weather, and a growing biotech corridor, many soon-to-be retirees are finding that it makes sense to buy their future retirement home now and rent it out until they are ready to move down here. The rental market here is extremely strong, so whether they choose to rent during ‘season’ (which runs from about October 15th to early April) and also use it as a second home during the off season, or rent it annually, buying now while prices are so low and using it as a secondary source of income can be a great idea.

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