Second home vs. market investment: pros and cons?

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  • #94071 Reply

      Just saw a post that got me thinking…when you are able is it a better investment option to buy a second home or invest more in the market? Traveling and staying at Airbnb less stress? Better returns? Financial wise than buy and investing in second home? I know depends on what you want but do pros and cons out way one than the other when you achieve FI to some degree?

      #94072 Reply

        There is almost zero investment value in a second home, unless you are talking about a rental. A second home is an expense that must be insured, will be taxed and will cost money to maintain.

        Don’t confuse consumption with investing.

        #94073 Reply

          Invest in market is better. 2nd home is a pain to maintain and upkeep. Your returns won’t be as good, plus all the work.

          When traveling/vacationing, much easier to just rent and less expensive and leave with no responsibilities of ownership.

          Suggested: How to allocate my first paycheck for retirement and investment?

          #94074 Reply

            A second home is a lifestyle not an investment decision.

            #94075 Reply

              My second home, purchased in 2014, is by far the very best investment I’ve ever made. It has more than doubled in value, it is revenue producing and has allowed my family more than 8 weeks a year in the mountains. It is work, it’s not passive. It pays for itself.

              Totally worth it.

              #94076 Reply

                I just don’t wanna be a landlord. Some like it. To each their own.

                #94077 Reply

                  I considered it. I love Colorado and figure to get what we want (small modern cabin), it would be $500k. Not even considering the upkeep and taxes, I could spend $25k annually to stay wherever I wanted investing in a golden ratio type portfolio and withdrawing 5%.

                  Then I’m not limited to that one spot either.

                  It’s a no brainer for us.

                  Don’t miss: Do you think it is wise to have your investments in more than one place or go with all your eggs in one basket?

                  #94078 Reply

                    I think this is a personal choice. I don’t want to be a landlord. Ever. So I invest in the market.

                    #94079 Reply

                      A 2nd home will almost never be an investment. You’d have to be traveling to that location practically every weekend just to break even. It’s a simple calculation.

                      #94080 Reply

                        Been wondering the same thing. We’ve been looking at a second place about 5 hrs where we often vacation. Feels like renting Airbnb is throwing money away but it’s also low stress of not worrying about upkeep and all.

                        Would be different if able to split time more.

                        So, if the 2nd home could be used regularly or thinking of setting it up as a STVR then could be worth it.

                        Have you seen: Best areas to buy investment rental property near Georgia?

                        #94081 Reply

                          We own a seasonal cabin that we purchased in2008. We go there almost every weekend in the summer. I’m 99% certain I’d be FIRE had we invested that money instead. BUT the family memory ROI is infinite.

                          I don’t regret it (most days).

                          #94082 Reply

                            My in-laws have had a second home for years and it’s definitely a lifestyle choice and not an investment. They are very Money savvy and this was just something they wanted. They snowbird between a cold state and a warm state. They stay in each home about 50/50 and they do not rent either out when they are not there.

                            I’m not sure it would even be financially profitable to do so as there would be minimal demand for these two locations in the off season. The properties have definitely increased in value but the expenses are much more as they have had both properties long enough now that they are having to do things like replace appliances and even windows in both locations.

                            It works very well for them and they have good friends and activities in both locations which is a plus for their happiness and well-being.

                            It has definitely made me think that I would not choose to do that.

                            Even if we decided to “snowbird” every year I think I would choose to rent.

                            #94083 Reply

                              A second home as in a place for you to go instead of paying for hotels? Or for renting out? Or both?

                              For me, it’s a hard no in either case. I have zero interest in being a landlord (though I know that’s a large part of many people’s path to FI).

                              And I definitely don’t want to feel like I have to keep going to the same place to make the purchase of a second home “worth it.” I prefer to travel to new places. Let alone the cost and hassle of maintaining it.

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