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Message
Saving/investing for vacation home
Posted on 11/9/24 at 5:05 pm
Posted on 11/9/24 at 5:05 pm
Curious as to the board’s thoughts. In a good position with retirement, have a 2.75 rate on primary residence, kids college is funded, and have built up pretty significant cash savings.
I’d like to invest the lump sum and add additional monthly contributions to a brokerage account with the ultimate goal to pay for a vacation property with cash in 3-5 years.
Willing to take out a loan if rates are reasonable and timing is right on a property that we want. In the meantime, I just figured I’d throw it in VTI/QQQ and let it ride until we’re ready to pull the trigger. I’m interested in opinions and strategies to assist with this. Outside of cap gains, what am I failing to consider?
I expect to be in an even stronger financial position in a few years, which should allow for larger monthly contributions, but also a desire for a much more expensive property.
Thanks in advance
I’d like to invest the lump sum and add additional monthly contributions to a brokerage account with the ultimate goal to pay for a vacation property with cash in 3-5 years.
Willing to take out a loan if rates are reasonable and timing is right on a property that we want. In the meantime, I just figured I’d throw it in VTI/QQQ and let it ride until we’re ready to pull the trigger. I’m interested in opinions and strategies to assist with this. Outside of cap gains, what am I failing to consider?
I expect to be in an even stronger financial position in a few years, which should allow for larger monthly contributions, but also a desire for a much more expensive property.
Thanks in advance
2
Posted on 11/9/24 at 5:22 pm to Costanza
One alternate plan I had considered:
Buy a much less expensive property now, enjoy it for a few years, and then 1031 exchange it into a nicer long term property. That’d obviously limit the brokerage investment potential, but could benefit from appreciation.
Buy a much less expensive property now, enjoy it for a few years, and then 1031 exchange it into a nicer long term property. That’d obviously limit the brokerage investment potential, but could benefit from appreciation.
Posted on 11/9/24 at 7:39 pm to Costanza
I like this idea. Like a carousel, it’s easier to move around when you’re already on a horse. Getting on that first one is the toughest. At least for some people.
Posted on 11/10/24 at 9:31 am to Costanza
I did something similar. I would not count on appreciation over such a short period of time. It will appreciate, but hard to say it will gain more than stock market returns. It might still be good for you, though. You gain value in having a vacation home to use.
What made it work for me is that I had a good realtor find me an under priced lake house. We bought a small 2 bedroom house that was not lakefront, but had a great view of the lake. It was a street away from lakefront in a hilly area that provided a nice view. We used it as a short term rentals, with us using it as well. Spent some money on it bringing it up to date and sold for a nice profit 3 years later (100k). The combination of finding one under priced that needed some updates worked in our favor. Buyers are willing to pay a premium for someone else to make improvements so they get a property where the improvement costs are rolled into their mortgage. Having cash to make the improvements allowed us to get a nice return on the money once we sold.
We were able to upgrade to a much nicer 4 bedroom on the lake with a boat slip. Plan to eventually use new home as part-time rental, but haven't done so yet. Have had the new one for a year or so, and just using it for friends and family so far. Paid cash for both houses so that helped lower total cost of ownership. Only time will tell as far as the return I get on this money compared to stock market, but I like the diversification aspect for this money. And we are enjoying using it as a lakehouse. It is a mini vacation every time we use it.
What made it work for me is that I had a good realtor find me an under priced lake house. We bought a small 2 bedroom house that was not lakefront, but had a great view of the lake. It was a street away from lakefront in a hilly area that provided a nice view. We used it as a short term rentals, with us using it as well. Spent some money on it bringing it up to date and sold for a nice profit 3 years later (100k). The combination of finding one under priced that needed some updates worked in our favor. Buyers are willing to pay a premium for someone else to make improvements so they get a property where the improvement costs are rolled into their mortgage. Having cash to make the improvements allowed us to get a nice return on the money once we sold.
We were able to upgrade to a much nicer 4 bedroom on the lake with a boat slip. Plan to eventually use new home as part-time rental, but haven't done so yet. Have had the new one for a year or so, and just using it for friends and family so far. Paid cash for both houses so that helped lower total cost of ownership. Only time will tell as far as the return I get on this money compared to stock market, but I like the diversification aspect for this money. And we are enjoying using it as a lakehouse. It is a mini vacation every time we use it.
Posted on 11/10/24 at 12:01 pm to turkish
Another way to think of it is that the only way to ensure that today’s $$ keeps pace with that sector of the economy is to put it in that sector of the economy.
Posted on 11/10/24 at 12:46 pm to turkish
Less the transaction fees on each home…so thousands of dollars.
Posted on 11/10/24 at 1:07 pm to lynxcat
Fair. Depending on volatility of the market, could be a big argument against the strategy or not.
Posted on 11/10/24 at 2:31 pm to Costanza
I own a vacation home in mexico. Will likely be buying one in italy and north Georgia here soon. Super tough to manage if you aren't close
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