9 Major Reasons Buying a Vacation Home Could Be a Mistake

Many people consider a vacation home a great real estate investment. While such a purchase can make sense for many people, you should think long and hard before buying any real estate investment, especially a vacation home.

A second property often comes with headaches. And that means a vacation property might not be a good lifestyle fit if you are busy with other things, or simply don’t think you will use the home much.

Skipping this purchase may be a great way to avoid wasting money . So before you buy a vacation home, think twice if you are one of the following types of people.

Workaholics

Are you chained to your desk all the time? Buying a vacation home might seem like an excuse to get away from your job.

But if you are a workaholic, you are more likely to just grab your laptop and spend much of the time at the second property working instead of enjoying a vacation.

If you aren’t taking advantage of vacation days now, expect to continue that habit even after you buy a second home.

Those who don’t like to travel much

If you're a homebody, a vacation home might not be a great choice.

Chances are good that the second property will be some distance from your primary home. That means you will face the dreaded tasks of packing and driving or flying to a different location.

Those who dislike travel might enjoy less frequent getaways. If that sounds like you, skip the vacation home and stick with the occasional hotel or Airbnb.

Anyone who hasn’t saved enough for other goals

Investing in a second property likely means a lot of your money will be tied up in two pieces of real estate. That leaves less cash for retirement accounts or saving for your kid’s college tuition.

If the money in those other accounts isn’t what you would like, reconsider adding another home to your portfolio. It may push you further behind in your overall savings goals.

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People who like variety

Some people love to try a variety of new experiences when they travel or enjoy time off. A vacation home, however, means you will be in the same place doing the same things vacation after vacation.

It’s fine to crave variety when you’re taking a break. But that spirit does not fit with owning a vacation home that you return to over and over again.

Those who already own multiple properties

Owning rental properties can be a rewarding way to make extra cash . But if you already have investments tied up in real estate, do you want to add more?

A vacation home — even if you plan to use it yourself — is another property in your portfolio. You might want to consider diversifying your investment portfolio instead of adding more real estate to it.

Folks who can’t handle the extra costs

Before buying a vacation home, consider the extra costs. They might include:

• Utilities
• Insurance
• Upkeep and repairs
• Taxes

It’s a good idea to sit down and create a budget for all your estimated costs. This might include everything from winterizing your home to hiring someone to care for it between visits from you.

Busy people without time to keep up the place

A vacation home needs the same level of care as your main residence. You’ll be responsible for mowing the lawn in the summer and removing snow in the winter. You should also take into account maintenance and repair issues.

It can be daunting to take over the care of two homes instead of just one. So, factor in any time you will have to spend caring for the property, or finding other people who can care for it while you’re gone.

Investors who dream of owning an Airbnb

A vacation home can seem like both a good place to stay and something you can rent out to visitors when you’re not there.

But do your homework first. Some cities and towns that are popular vacation destinations have increased regulations or even banned homeowners from using their homes as Airbnbs.

And even if you are allowed to rent out a vacation home, doing so can be more of a headache than you think.

Confused folks looking for a place to invest money

If you have a lot of money but don’t know where to invest it, a vacation home can sound like a tempting solution.

But before you simply throw that excess cash into a vacation home, check with a financial advisor to get a better idea of what else you can do with the money.

Perhaps there are other ways to invest it that make more sense than simply sinking cash into a vacation home.

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Bottom line

For many people, buying a vacation home is not the right choice. However, others may feel differently.

Still want to own a vacation home? Check with lenders about rates and costs associated with closing on a vacation home.

If you buy a second home, get in touch with local rental agencies to see if there are ways to earn extra income with your property and boost your bank account when you’re not using it.

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).