Stop if this sounds familiar: Summer’s coming to a close, and you’re feeling wistful. The long, lazy days in your favorite vacation spot will soon be a distant memory. But then a wild idea comes to you, like the last ferry to the Hamptons: If you just buy a place in your chosen getaway destination, the fun doesn’t ever have to end, right?
That would be nice if it were true. And granted, sometimes it is. But before you drop a wad of cash on a vacation property, you should be certain that this investment is right for you.
“Nobody actually needs a vacation home. People just want one,” notes Heather Caine, a real estate investor and founder of Caine Premier Properties in Florida. “Oftentimes, they don’t realize the level of commitment—financial and time—that it takes to own a second home stress-free.”
Do you have what it takes to own a vacation home? Check out some of the most common reasons why buying a relaxing retreat can end up stressing you out.
1. Vacation homes often require a larger down payment
Unless you’re paying in cold, hard cash, “the cost of financing your second home can be an unexpected drawback,” points out Marc Carver, principal at the Carver Property Group in Atlanta.
“Depending upon the location, condition, and market value of the property, as well as your financial status and credit history, a typical 15- to 30-year mortgage for a non-owner-occupied property usually requires a 20% to 30% down payment of the sale price,” Carver says.
2. You might need special insurance
Depending on where your home is located, you could be required to have additional insurance coverage—and that can add up fast. On top of a higher policy cost, coastal home insurance policies could include a separate hurricane or windstorm deductible.
No matter where you are, flood insurance could be a smart move. And if you have a pool, you might want an umbrella policy—especially if you’re renting out the place.
3. You’ll need to pay someone to be on speed dial
Let’s say your home is more than an hour away from your primary residence and you’ve chosen to rent it out to offset some of the cash you’ve poured into it. What happens if your temporary tenants get locked out, discover your fridge has gone on the fritz, or worse, trash the place?
“It’s best to have someone local oversee the affairs of your property,” advises Cedric Stewart, a residential and commercial sales consultant and team leader of Entourage RG at Keller Williams in the Washington, DC, area.
A property manager can do a lot of the heavy lifting—for instance, meeting guests before and after rentals, doing spot checks before releasing deposits, and offering emergency support.
And, even if you’re not planning to rent out your place, you’ll still need someone to keep eyes on it if you live a distance away, Stewart says. After all, what happens if the rising tides seep into your idyllic beach home—but you’re not there to know about it until after water damage and aggressive mold sets in?
4. Routine maintenance costs time and money
Just like with your primary residence, you’ll need to be prepared to shell out for stuff that breaks or simply to keep things running smoothly.
“From repairing or replacing an HVAC unit and utilizing plumbing services when there’s a leak or clog to replacing major appliances and upgrading your windows to hurricane-proof grade, all can end up costing hundreds, if not thousands,” says Dina Dwyer-Owens, co-chair of The Dwyer Group, which specializes in home service and repair.
Plus, there’s the time involved. That’s one problem that John O’Brien’s encountered in the past 27 years he’s owned a Lake Michigan vacation home.
“Being a somewhat incurable do-it-yourselfer, the term ‘vacation home’ has become an oxymoron,” he admits.
Aside from a few notable exceptions—like when the pipes in his home froze and burst one winter—O’Brien takes care of all the home maintenance and repairs himself. That’s included putting in a new sump pump, replacing split-rail fence posts, and building a porch, shed, and two patios.
“My vacation home has become just another house that I work on, and my ‘vacations’ are spent, in part, doing so,” O’Brien says.
5. Renting out your vacation home can actually cost you money
In theory, renting out your new home should make you some money—but it could also raise some of your expenses beyond the cost of a property manager.
“Utility costs can be surprisingly high on vacation rentals,” Stewart points out. “People that don’t live in your home tend to take a less considerate approach to water and electricity usage.”
You’ll need to budget for this during your peak season. Otherwise, adds Stewart, “your projected return on investment could be significantly diminished.”
And aside from those monthly electric, water, cable, and heating bills, you might also have to pay for lawn care, snow removal, or pool maintenance. And don’t forget about the cleaning fees every time your guests depart.
6. You’ll spend a small fortune on furnishing and stocking the place
“It’s easy to get so excited about the purchase of a second home that you forget to calculate the associated costs of decorating that home,” says Bee Heinemann, designer for Vant Wall Panels.
How much cash you drop depends on the type of abode you buy, and whether you plan to rent it out when you’re not there. For instance, “an off-the-grid cabin may not need all the elements of good design, but if we’re talking about a beach home or mountain retreat? The cost of decorating can be substantial,” Heinemann notes.
We don’t just mean sofas, chairs, and tables; we’re talking window treatments, flooring options, appliances, towels, bedding, lamps, dishes, flatware, bakeware, lawn mower or snowblower, washing machine, dryer, vacuum cleaner, etc.
7. Your passport could gather dust
“After paying a significant amount of money each month for a second home, some buyers feel obligated to constantly visit the property to justify their significant investment,” Carver says.
That’s what happened to Judy Woodward Bates. For 18 years, she and her husband maintained a vacation home on Alabama’s Lewis Smith Lake.
“We made some great memories there, but my husband felt we shouldn’t spend time traveling anywhere else since we already had a vacation house,” she says.
After recently selling it, “we’re enjoying not having all that responsibility,” Bates admits.
What they’re also enjoying? Recent sojourns to Norway and Spain.
We’re not trying to dissuade you from going all-in on a vacation getaway. It can truly be your own little slice of paradise—as long as you know what you’re getting into. And if you do end up buying a relaxing retreat? Just let us know when to mark our calendars for a visit.
Watch: Buying a Vacation Home? You’d Better Watch This First