As one who sold our holiday home last year, I can help you answer this one!
The short answer is; it depends.
Holiday homes can provide years of enjoyment and fond memories for multiple generations of your family. But trust me; they can also create an extra layer of headaches and expenses that can prove more trouble than they’re worth.
Here are four reasons to think about before buying a holiday home, even if doing so won’t break the bank:
Full-time bills for part-time enjoyment.
Most employees receive around five weeks of holiday time from their employers.
Self-employed “gig economy” workers or small business owners might carve out a few extra days. Or, they might be so busy running their businesses that even a week of holiday time is a stretch.
Regardless, the bills associated with your second home will be there 52 weeks of the year: mortgage payments, electricity, basic upkeep, etc. Will you spend enough time at your holiday property to justify those costs?
“Landlord” is a job.
Many people plan to offset the expense of a holiday home by renting it when they’re not using it. This can be an effective way to earn extra money and make mortgage payments without stressing your finances.
But when you rent out a property you own, you’re taking on a new job: landlord. That means vetting potential renters and dealing with any unruly folks who slip through your screening process.
That means more wear-and-tear on the house, appliances, and furniture. That means repairs. That means complicated insurance and tax issues.
And all that means more work while you’re still working.
Maybe taking on that job appeals to you, especially if you’re retired and enjoy doing DIY. But if you don’t want to add “landlord” to your cv, don’t use renting your holiday home to justify the purchase.
Visit more, travel less.
Buying something new is exciting, especially when it’s a big-ticket purchase, like a vehicle or home. But that excitement can be surprisingly fleeting.
Take your new sports car around the block a few times, and it’s suddenly just your car. Watch a few movies in your fancy home cinema, and suddenly it’s just your TV.
A holiday home could be an exception to that rule, especially if it becomes a focal point for family gatherings. In that case, what you’re really buying isn’t a home: it’s an experience of time shared with loved ones.
The same holds true if your holiday home is near activities you and your spouse enjoy, like a cluster of excellent golf courses, a vibrant restaurant scene, or, in our case, a ski resort!
But if your holiday home is just a lovely house, that “getaway” feeling will become just another part of your routine. Holidaying will start to feel like visiting, or worse, like walking into another set of rooms in your house.
When holiday time rolls around, it’s going to be hard to justify spending additional money on “bucket list” travel when you know your second house is just sitting there, racking up mortgage interest (if you borrowed), waiting for you to replace the leaky water heater, or upgrade floors, doors or bathroom furniture.
Retire TO, not FROM.
So: you don’t want to be a handyman; you dream of crisscrossing Europe, and holidaying for more than 20 days per year in the same place makes you restless.
Yet, if there’s still that voice in your head saying, “We love that place. We have the money. If we don’t buy now, we never will.”….. Why not?
Maybe buying a second house won’t improve your Return on Life right now. But retiring to your favourite holiday destination could be a refreshing change of scenery.
There’s a big difference between putting off your goals until it’s too late and putting a plan in place that will let you hit that goal when it is right.
In the meantime, keep that favourite spot in your holiday rotation. Who knows? After a few more years, the shine might wear off, and you’ll start dreaming about a new retirement destination.
And, as your plans evolve, ensure you keep us in the loop.
Wherever you decide to settle down, our planning process can help you get there sooner, and I’m happy to talk you through aspects you may never have considered!