Thinking about buying a vacation home? You might want to pause and reconsider. Although owning a second home in a beloved getaway spot sounds like a dream, it often comes with complications and costs that can become a financial headache. These homes require regular maintenance, ongoing bills, and need to be used frequently to justify the investment.
Here are five reasons why purchasing a vacation home might not be as ideal as it seems.
1. High Maintenance Hassles
Owning any home requires upkeep, but vacation homes ramp up the challenge. Image: Shutterstock/ Toa55
Vacation homes are high-maintenance assets, especially if they’re located by the water or in the mountains. That picturesque waterfront property might need a new deck every 15 years due to moisture damage, or that cozy cabin could require a fresh coat of paint every five years, not to mention the smaller issues that go unnoticed because you’re not always there.
2. The Airbnb Myth
Many think renting out their vacation spot on Airbnb will cover costs, but managing rentals is nearly a full-time job. Image: Shutterstock/ BongkarnGraphic
Many people think renting out their vacation home on Airbnb will cover the costs, but being a host is not as easy as it sounds. Managing short-term rentals involves constant marketing, cleaning, dealing with guest issues, and sometimes neighbor complaints. Hiring a property management company might help, but their fees can gobble up any potential profits.
3. Underutilized Investment
People sink fortunes into gorgeous vacation properties only to visit a couple of times a year. Image: Shutterstock/ Halfpoint
It's startling how infrequently most vacation homes are used. Owners might shell out millions only to visit a couple of times a year. Factors like distance, busy professional lives, and seasonality (only visiting during peak seasons) drastically reduce the use of these properties.
4. Ever-increasing Property Taxes
Property taxes have a nasty habit of increasing, even when property values don’t. Image: Unsplash/ Grant Durr
Don’t forget about property taxes, which seem to have a relentless knack for increasing. Even if property values decline, taxes historically tend to rise, potentially adding thousands to your annual expenses.
5. It's Not Liquid
Need quick cash? Good luck quickly liquidating a home. Image: Unsplash/ Mike Scheid
Need cash fast? A vacation home won't help much there. Selling real estate is a long and often unpredictable process involving agents, listings, open houses, and possible contractual and inspection issues. Unlike stocks, which you can sell almost instantly, real estate is a slow-moving investment.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
