Benefits of Second Home

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kayli69
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Benefits of Second Home

Post by kayli69 »

Good morning everyone

I have been a long-time Boglehead. I am constantly reading about the detriments of a second home and how everyone advises against it.

Several years ago, my wife and I happened across an old but well maintained farmhouse with 113 beautiful wooded acres, miles of walking/ATV trails, and a million dollar view of one of the fingerlakes outside of Rochester NY. The house was only 30 minutes from our residence. Against all of my Boglehead principles, we bought the property.

I would not trade this property for anything. It has brought us so much pleasure, has introduced our children to the outdoors and hopefully fostered in them a love of the woods. It has given me phenomenal deer hunting and the stress relief from this as well as maintaining my own wood lot is priceless.

Yes, there are taxes and upkeep needed. However, the stress relief provided by being able to hike my woods or relax with a cold beer on the deck overlooking the lake is priceless.

Even though second homes are advised against strongly on this board, I have no regrets. Anyone else with similar stories?
Sconie
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Re: Benefits of Second Home

Post by Sconie »

Oh yes, I have had a similar experience-----my summer home up on the shores of Lake Superior! Wonderful "psychic" rewards even though there are times when it is costly and a "hassle." Lots and lots of good times for the family and I!
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lthenderson
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Re: Benefits of Second Home

Post by lthenderson »

We have a cabin in the Boston mountains of Northwest Arkansas on the edge of the Buffalo River National Park... literally. It is like owning a home with a million acres of hiking trails with a floating river running through the center. It is a small cabin that is better than a motel room by far but not nearly as nice as a house. It gives us comfort and a place to kick up our feet but without the expense of owning a 'complete' home. I have been using it for 30 years and wouldn't trade it for the world.
psteinx
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Re: Benefits of Second Home

Post by psteinx »

I think one key to the OP's happiness is that his 2nd home is only 30 minutes from his first.

For many folks, the optimal 2nd home location (near beach/mountains/woods by river or lake) is not close by, or the very limited number of such locations that ARE nearby are also very pricey. A 2nd home that is 4 or 6 or 10 hours away is not likely to be used as much, and may feel more like a burden than a source of joy, after the novelty wears off.
Boglegrappler
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Re: Benefits of Second Home

Post by Boglegrappler »

Congratulations.

My sense of your situation is that it is importantly influenced by the close proximity to your primary home. How often do you spend time there, and what's typically the longest span of time when you don't visit the second home? How do you handle keeping it heated during the winter?
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Hayden
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Re: Benefits of Second Home

Post by Hayden »

We have a weekend house and I find the hassle considerable. However, as we approach retirement age, what you refer to as the "psychic" benefit of the house may actually enable us to work longer than we would have otherwise. We're now thinking about spending half time at the house, one week here, one week there. So, the house may allow us to continue our income stream longer than we would have otherwise.
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kayli69
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Re: Benefits of Second Home

Post by kayli69 »

During the summer and hunting season, we are up almost every weekend. The longest I will go without visiting is probably 2 weeks. It is heated with oil and during the winter we keep it at 50 degrees when not there. When we are there, I heat it with the wood stove. It costs me about $1500 in oil a year to heat. I honestly would not trade it for the world.

We were also able to purchase it with an owner-held mortgage for 30yr, 3% interest so for me taking the mortgage and not paying cash was a no-brainer

Another benefit was that it has about 1/2 the purchase price in timber value if I ever decide I want to harvest some timber. It is such a pristine, beautiful forest with no logging for 80yrs that it is hard for me to even consider doing that. It is so rare around here to see a forest with 25-30" oaks and maples as most people high grade their woods and cut everything down to 14" for quick cash

I even get enjoyment cutting the lawn with the tractor with the awesome view of the lake and try to make it up after work one day a week to do so in the summer. My wife thinks I am pathetic!!
ktd
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Re: Benefits of Second Home

Post by ktd »

It's great that you are happy but I just don't understand buying a second home in a cold place when you are already living in a cold place. I guess I just hate the cold.
BuckyBadger
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Re: Benefits of Second Home

Post by BuckyBadger »

Wow, is that you, Mom and Dad?

My parents bought a place on one of the smaller, cheaper Finger Lakes about 35 minutes from their place in Rochester. They LOVE it. The spend a lot of time there in the summer and still enjoy it in the winter. It's a beautiful area when covered in snow and my Dad goes ice fishing. It's also smaller and cozier than their main house so it feels like a little getaway.

I think eventually they're going to keep the lake house and buy a second place in a warmer climate, but they like the situation as it is right now.
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Kenkat
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Re: Benefits of Second Home

Post by Kenkat »

I think a second home is an expensive luxury. You have been successful enough financially that you can afford this luxury. So long as it is not jeopardizing your financial future in terms of retirement and other goals, I think you should continue to enjoy the fruits of your labor.

I think where people get themselves into trouble is to spend money they don't really have on a second home and this excess consumption impacts their ability to save. So long as that's not you, I don't blame you a bit - sounds like a wonderful place to get away.
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powermega
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Re: Benefits of Second Home

Post by powermega »

My wife and I bought a quarter-share of a condo at a ski resort last year. We enjoy going up there and really love the idea of our young children having fond memories up there as they grow up. My wife and I like to ski and be in the mountains in general (hunting, hiking, camping, climbing, etc). My parents used to have a vacation house in the same area that I stayed at a lot, so I am very familiar with the area and used to being up there. Being in the resort village, it always feels like a vacation being up there. The quarter-share arrangement splits the costs, and it's unlikely we would be up there more than once every 3-5 weeks anyway. We don't have any pressure to rent the home, like we would if we owned a full share of a vacation condo.

There is no other way to describe this but as a luxury. Our perspective is that we would be spending considerable time and money on hotels and rentals if we didn't have the quarter-share. Compared to the potential costs of renting, the quarter-share looks like a good deal, but even that rests on the assumption that you would consistently be in a hotel or rental every 3-5 weeks. We understand the fact that this is a luxury, and overall we consider it worth the costs because we are committed to getting up there as much as possible.

There are some things that I think make this kind of thing work better:
1. The home must be relatively close. Our condo is two hours way, perfect for making a point of getting away, but close enough that you don't consider it "traveling". I would see the second home as a hassle if it was far away and/or a pain to get to.
2. The home should offer something different. We walk to the ski lifts from our condo; the great outdoors are right there. These things are much different than the place we live at. I don't think it would be as good if the second home was just like your main home and didn't offer access something "different".
3. The home can't impact your necessary retirement planning. Max out your retirement accounts first. You can't count on some kind of gain in the home to be part of your plan either.
4. Use it or lose (sell) it. It doesn't matter if it's not too far away, offers access to different great activities, and is not a financial burden. If you don't use it, it is a complete waste of money. Use it as much as possible.
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angelescrest
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Re: Benefits of Second Home

Post by angelescrest »

I had to chuckle upon reading this. Of course I would enjoy an amazing home as described; it's about the expense not whether or not one would appreciate the space. And 30 minutes from primary residence leaves me scratching my head. My plans for a second home would be in a very different part of the country.
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kayli69
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Re: Benefits of Second Home

Post by kayli69 »

boroc7 wrote:I had to chuckle upon reading this. Of course I would enjoy an amazing home as described; it's about the expense not whether or not one would appreciate the space. And 30 minutes from primary residence leaves me scratching my head. My plans for a second home would be in a very different part of the country.
The whole point of the thread was that simply looking at Boglehead philosophies buying a second home is not typically recommended. I deviated from my typical Boglehead behavior and in this circumstance have no regrets. Of course there is expense and the point of the thread was that in my circumstance the expense was well worth the experience for me and my family.

Having a second home on the Fingerlakes or Great lakes is actually quite common in this area of the country. Living in suburbia, having a 110 acre paradise 20min away where I can hunt, fish, ride ATVs, and hike provides much greater benefit to me than a home half way across the country
Call_Me_Op
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Re: Benefits of Second Home

Post by Call_Me_Op »

Strictly a matter of preference. Most of the benefits you cite would be aggravations for me.
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Epsilon Delta
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Re: Benefits of Second Home

Post by Epsilon Delta »

kayli69 wrote:Having a second home on the Fingerlakes or Great lakes is actually quite common in this area of the country. Living in suburbia, having a 110 acre paradise 20min away where I can hunt, fish, ride ATVs, and hike provides much greater benefit to me than a home half way across the country
I'll add that here's a decent chance that the combined value of both homes is half that of a 1000 sq ft place in coastal CA (and other high cost regions). Back when tax free gains on a principal residence were once per lifetime it was fun to watch people relocated from CA try to buy property in Rochester that allowed them to shelter the gains.

Although personally I regard a home as a source of work, and a second home as a source of unnecessary work.
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kayli69
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Re: Benefits of Second Home

Post by kayli69 »

Epsilon Delta wrote:
kayli69 wrote:Having a second home on the Fingerlakes or Great lakes is actually quite common in this area of the country. Living in suburbia, having a 110 acre paradise 20min away where I can hunt, fish, ride ATVs, and hike provides much greater benefit to me than a home half way across the country
I'll add that here's a decent chance that the combined value of both homes is half that of a 1000 sq ft place in coastal CA (and other high cost regions). Back when tax free gains on a principal residence were once per lifetime it was fun to watch people relocated from CA try to buy property in Rochester that allowed them to shelter the gains.

Although personally I regard a home as a source of work, and a second home as a source of unnecessary work.
Very true. We are blessed by very low home prices here. You can have a 2500-3000sq ft home in a nice suburb as well as a cottage on the lake for under $600K. My friends in other areas cant even find a 1500-2000sq ft home or condo for much more than this
Carefreeap
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Re: Benefits of Second Home

Post by Carefreeap »

kenschmidt wrote:I think a second home is an expensive luxury. You have been successful enough financially that you can afford this luxury. So long as it is not jeopardizing your financial future in terms of retirement and other goals, I think you should continue to enjoy the fruits of your labor.

I think where people get themselves into trouble is to spend money they don't really have on a second home and this excess consumption impacts their ability to save. So long as that's not you, I don't blame you a bit - sounds like a wonderful place to get away.
Exactly. I only set folks straight when they start talking about it as an "investment". For most of us it's a "toy". You go in with your eyes wide open, and enjoy for as long as it's enjoyable. But at some point you out grow your toys and you'll need to let them go. I just roll my eyes when people talk about going to make a killing in a vacation rental. Um yeah. Make sure you take a hard look at the expense and total vacancy side of that equation. :wink:
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OpenRoad
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Re: Benefits of Second Home

Post by OpenRoad »

kayli69 wrote:The whole point of the thread was that simply looking at Boglehead philosophies buying a second home is not typically recommended.
Why do you consider this to go against Boglehead philosophy? I don't think it has anything to do with it.

The only time it comes in conflict is when you are choosing to purchase something that causes an impact on your investment strategy for retirement. And that could be said of any purchase - whether its a second home, a new car, a latte, or bottled water.


P.S. With that said a truly boglehead approach to land stewardship would say you should diversify the humans you allow to deer hunt your property. I would be glad to help you with that. :D
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gasdoc
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Re: Benefits of Second Home

Post by gasdoc »

kayli69 wrote:
boroc7 wrote:I had to chuckle upon reading this. Of course I would enjoy an amazing home as described; it's about the expense not whether or not one would appreciate the space. And 30 minutes from primary residence leaves me scratching my head. My plans for a second home would be in a very different part of the country.
The whole point of the thread was that simply looking at Boglehead philosophies buying a second home is not typically recommended. I deviated from my typical Boglehead behavior and in this circumstance have no regrets. Of course there is expense and the point of the thread was that in my circumstance the expense was well worth the experience for me and my family.

Having a second home on the Fingerlakes or Great lakes is actually quite common in this area of the country. Living in suburbia, having a 110 acre paradise 20min away where I can hunt, fish, ride ATVs, and hike provides much greater benefit to me than a home half way across the country
Yes. The thing to keep in mind is that this is not a survey of the Bogleheads' feelings about buying a second home. This was a request by the OP for stories from people who think their second home is worth the admitted expenses. We all have some amount of discretionary income/assets. It is up to each of us individually to decide how best to enjoy them! :beer
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kayli69
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Re: Benefits of Second Home

Post by kayli69 »

Carefreeap wrote:
kenschmidt wrote:I think a second home is an expensive luxury. You have been successful enough financially that you can afford this luxury. So long as it is not jeopardizing your financial future in terms of retirement and other goals, I think you should continue to enjoy the fruits of your labor.

I think where people get themselves into trouble is to spend money they don't really have on a second home and this excess consumption impacts their ability to save. So long as that's not you, I don't blame you a bit - sounds like a wonderful place to get away.
Exactly. I only set folks straight when they start talking about it as an "investment". For most of us it's a "toy". You go in with your eyes wide open, and enjoy for as long as it's enjoyable. But at some point you out grow your toys and you'll need to let them go. I just roll my eyes when people talk about going to make a killing in a vacation rental. Um yeah. Make sure you take a hard look at the expense and total vacancy side of that equation. :wink:
I agree with this. In this case I got really lucky and could tap into a sizeable timber value if desired. I knew there was significant timber value when I walked the property before I bought just by experience. When I had an inventory taken by a professional forester, I was pleasantly surprised to learn that there was $210,000 worth of oak and maple on the property which should increase in value by a projected 8-10% every 5-10yrs. This value is over 75% of the purchase price
2 bits
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Re: Benefits of Second Home

Post by 2 bits »

So it is Friday afternoon, I am out of work early and whe DW gets home we will headed to the 2nd home. We don't have the lake view but the trailer in the woods is a nice getaway. We sleep better there and the beer tastes pretty good on the porch. One day we will get organized and shift to a spot on the river a mile away. Then the morning coffe on the porch will taste better too! :sharebeer
Sure there have been some major repairs to keep us busy. The over all cost is modest and we know we will walk away loosing money but we are spending it where we want.
Proximity: the place is 2 1/2 hours away, 3 1/2 if we stop for bbq or at the brew pub. Two hours would be better.
Zero heating oil but we do run the AC when away to fight back the mold. Hey, it is humid around here.

In the past we always set New Year's resolutions to get away more often, some nice B&Bs, et. al. But that seldom happened. Now it is easy to go. And my shorts and toothbrush are already there.
It is a lot of work, and the place needs a new roof but that is just part of the deal. Where else can we put up a pole barn, mostly just to keep the grill master out of sun and rain.

Bogleheadish? If the money was in my retirement account, I would be saving it for a place in the country. So there we are, early.


Consider it, it could be nice.
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oharaj
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Re: Benefits of Second Home

Post by oharaj »

I'm in agreement with many of the points raised -

1. It is a luxury. We don't consider this an investment, but a lifestyle expense like any other (cars, dinners out, etc). The question is whether we want to fund this lifestyle.
2. It is an hour away. Not too near but not too far. I'd like it to be in a different climate, but that would negate the proximity and ease of getting there.
3. It is a different environment. It's a shore house with views of the ocean - completely different from our house outside a major metropolitan city.
4. It is an attraction for our children. The grown children like to visit the vacation house (and beach) more than simply returning to the homestead, so we get more family time.

But we think we have approached it with a "Bogle" point-of-view.
1. We work hard to keep expenses low. No phone or cableTV, just internet. Lots of cooking at home and little/no entertaining expenses. Highly automated to manage gas/electric usage.
2. We take a long-term approach. We plan to turn over to the next generation when required.
3. We clearly identify any risk (to our overall net worth and lifestyle) and work to manage that risk.
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CABob
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Re: Benefits of Second Home

Post by CABob »

I don't recall conversations critical of second homes, but, I'll take your word for it that they exist. What I suspect, however, is that those critical are suggesting that such a purchase is not a good investment financially. Where you get a lot of pleasure and piece of mind and can afford it, I say more power to you.
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Boglegrappler
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Re: Benefits of Second Home

Post by Boglegrappler »

The issue with second homes is basically the ongoing out-of-pocket costs (carrying costs plus travel to get there and back) vs how often you get to utilize the place. If you can get to it relatively cheaply and often, it really does change the nature of the ownership compared with somewhere that's a 2 hour flight plus airport travel time. In one case you can go over for an afternoon to get some task done, or whatever. In the other case, if you make it there four times a year you find theres always some project that consumes a serious part of your time.

It really is in the eye of the beholder. If you have enough savings to meet your living expenses til, say, age 98, there's not much point being overly frugal to make sure you could meet them til age 120.
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Toons
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Re: Benefits of Second Home

Post by Toons »

CABob wrote:I don't recall conversations critical of second homes, but, I'll take your word for it that they exist. What I suspect, however, is that those critical are suggesting that such a purchase is not a good investment financially. Where you get a lot of pleasure and piece of mind and can afford it, I say more power to you.

+1
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dhodson
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Re: Benefits of Second Home

Post by dhodson »

This board is mostly about making smart financial decisions. Buying a 2nd home would be difficult to quantify in this aspect as well as the risks involved. There are lots of things i purchase that dont make financial sense. I enjoy them and ive decided to pay for them regardless that they dont make financial sense. If you feel you can safely afford a 2nd home then this is no different. You might or might not come out financially ahead just like any financial gamble. Frankly the same is true for your primary home vs renting.
OutInThirteen
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Re: Benefits of Second Home

Post by OutInThirteen »

I guess we're lucky - primary residence is five miles from my former (relatively) high paying job, and it's basically in the great outdoors. Crossing only six paved roads/streets, including the street we live on, you can walk over 250 miles and be smack dab in the middle of the Colorado Rockies. A two-minute walk down the street to the mountains, canyons, and forests - great hiking, camping, rock climbing, snowshoeing, mountain biking, fishing, hunting, you name it - and no crowds whatsoever (there's only a slight chance you will run into someone else in a long day outdoors). Glad we don't like big city activities, they're nowhere to be found!
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Kenkat
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Re: Benefits of Second Home

Post by Kenkat »

kayli69 wrote:I was pleasantly surprised to learn that there was $210,000 worth of oak and maple on the property...
And priceless for the aesthetic beauty and positive impact on the environment that they provide.
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Cosmo
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Re: Benefits of Second Home

Post by Cosmo »

psteinx wrote:I think one key to the OP's happiness is that his 2nd home is only 30 minutes from his first.

For many folks, the optimal 2nd home location (near beach/mountains/woods by river or lake) is not close by, or the very limited number of such locations that ARE nearby are also very pricey. A 2nd home that is 4 or 6 or 10 hours away is not likely to be used as much, and may feel more like a burden than a source of joy, after the novelty wears off.
Yes. This. In this case, you are much better off renting a beach/mountain/lake house 3-4 times per year versus purchasing.

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Lars_2013
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Re: Benefits of Second Home

Post by Lars_2013 »

My grandparents bought a second home in the 1970s (when they were done paying for their kids' colleges) in "upstate" NY, about 1.5 hours from their primary residence in Brooklyn. My grandmother was a school teacher and spent all summer there, while my grandfather came up weekends (he would take the bus and my grandmother would pick him up in New Paltz). They also both did weekends in the spring and fall. There was some hassle involved in maintaining it, but they loved being able to get out of the hot, humid city. And it gave them access to a whole second set of friends. They absolutely felt it was the right decision for them, and I loved going up there for long visits as a kid. It wasn't a huge upfront cost, since it's not in a trendy area (Ulster County) and when they bought it was just one bedroom (they then finished the attic by adding a real staircase, 1/2 bath, and two small bedrooms, making it a total of 3 bedrooms). At the time my grandparents did not have significant retirement savings (those came from selling my grandfather's repair business and, eventually, both their homes as they became too much to manage), but they could look forward to my grandmother's very generous NYC teacher's pension, which ended up being more than enough to cover their retirement living expenses.

My grandparents kind of wanted my parents to buy the "country house" from them so that it could stay in the family, but it was too far (5.5 hours) from my parents' primary residence to make any sense. So they sold it to a single dad who also is a NYC teacher, which made my grandparents feel good. I think being a reasonable distance from the primary home is a big part of what makes a second home worthwhile. My parents considered getting a second home somewhere closer to where they live and decided it wasn't worthwhile for them considering the costs versus benefits (air conditioning makes staying in a city more feasible in the summer).
flyingaway
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Re: Benefits of Second Home

Post by flyingaway »

Financially speaking, a second home is not a good idea for most people.

However, if you are financially sound, a second island will also bring some benefits.

My friend's boss is a chief surgeon and makes $700K a year, he has a farmland outside the city and likes it very much. He pays his neighboring farmers to take care of the cows and chickens (to reduce taxes) and hunts deers on his farm.
texasdiver
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Re: Benefits of Second Home

Post by texasdiver »

I would love a second home/cabin in the country.

Unfortunately my wife's entire family lives in Chile and my entire family lives in the Pacific Northwest so at least 50% of our available time off is spent flying down to South America or out to the west coast. Not that it is a bad thing. Her family has a nice beach house in Chile. Now with 3 school-age girls nearly every weekend in the spring and fall is filled up with soccer games and swim meets so we don't even have weekends free and I barely have a chance to pull the camper out of storage for weekend trips to state parks.

So those of you with the kind of setup as the OP....well I'm just jealous. We do travel a lot, we just make extensive use of VRBO and AirB&B
travellight
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Re: Benefits of Second Home

Post by travellight »

I love my second home. It is 12 hrs drive away in a completely different setting. I fly there; cost is about $200 round trip but lately for the past two years, flights have been free due to credit card miles. I go there about 8 times a year (40-50 days).... $1600 travel cost but no hotel costs for the 40+ days I am there per year (12K in rental costs offset). Utilities are about 2k per year, taxes and insurance about 4k per year. So, about 6k net costs versus 12k if I were to travel and rent or pay hotel fees for comparable.

Primary home is beach/coastal, second home is mountains/ski area. I paid 140k for 2500 sq ft house on 13 acres with amazing views; it is now zillow for over 800k.

My primary home can be cashed in some day and I can live in this house, paid off, through retirement if I wish.

I feel like I had my cake and ate it too.... enjoyed the luxury but it made financial sense as well.
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likegarden
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Re: Benefits of Second Home

Post by likegarden »

We do not have a second home, but one 2 hours away in the mountains might be nice. So I do all my enjoyment of the outdoors daily in my half acre yard in the suburbs via gardening (except winter). People going into retirement should also consider that you will need quick access to very good hospitals as you age. I.e. I suddenly had bad chest pressure (was stress) and was half an hour later at a very good hospital in the city. OP has such an arrangement being only half an hour from Rochester, NY.
stonerolled
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Re: Benefits of Second Home

Post by stonerolled »

I may try a second home in retirement. Being single, i have to do all the chores for one household which takes up a lot of the weekend. My recreational time has to include cycling and weight lifting to keep long term knee problems at bay so this takes up more precious weekend time too. It would also be nice to approach seven figures at least taxable starting off retirement and loading up on a bunch of items that dont get used does not help that goal.
john94549
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Re: Benefits of Second Home

Post by john94549 »

The Maui condo. It keeps the wife sane, the kids (and grand-kids) love it, and (accordingly to my wife) "pays for itself" with rentals.
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