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May 13, 2016

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Still the Lucky Few

If only we could see into the future when contemplating a vacation home! I've never heard of a 'good' story. Mostly people don't use it, and lose money. It's sort of like owning a sailboat (never a good idea, I've always thought!)

Retired Syd

Lucky: I guess it's one step better than a sailboat, at least it's an appreciating asset. But I do relate to that joke my step-mom told me years ago: Wha't the second happiest day in a boat owners life? The day he bought the boat. Then what is the happiest? The day he sells it!

Sue

We just purchased a Park Model in a 55+ community in Arizona. It's just under 400 sq ft and wasn't all that expensive. Our plans are to get out of the Colorado winters and live in AZ for 6 months. Then we can enjoy the Colorado summers. We are so looking forward to staying in our AZ tiny home, starting this winter.

We haven't invested that much money, so hopefully can do this for many years to come.

Mark

I never put in a pool when the kids were younger because I interviewed about 10 people who had them. They pretty much all said: the first summer you will use it every day, the second summer a couple days a week, 3rd summer some and the rest of the years you just pay a pool man and look at it.

Cindi

After 10 years, we sold our Newport, RI beach house for $50,000 less than what we paid. Throw in, in order to sell the home the EPA forced us to replace our septic at a cost of $37,000. Add in the brokers fee and I'm looking at a $100,000+ loss. At the closing our attorney congratulated us on our loss because he said the state of Rhode Island was going to kill us out-of-towners taxes.
Go figure.
I don't think about money anymore. I can't take it with me. All I know is that my family had a blast in the beach house for 10 years and yes! we owned a sailboat. After a while, I have forgotten the lost money and just remember our good times. The happiest day of my life was selling that albatross AND that sailboat! LOL.
As for that $100,000 loss, my NY home has appreciated as much this past year. So, it's awash also.
Think I'm cured?
I just closed on a Florida condo this past Tuesday. Eventually DH and I WILL retire here but in the interim we're balancing two houses again. Our plan is to sell NY, reign in all that lovely equity....but as you and I know, we humans make plans....God laughs!
It is what it is, Syd. At this point, I don't think about money anymore. I just want to enjoy the rest of my life, for however long that's going to be. We have enough and that's all that matters.
Glad you are back writing again.

Retired Syd

Cindi: The best thing about those wonderful memories we made in our vacation homes (or on our boats) is that we don't actually have to continue to own the albatross to still have the memories! Right?

Sue: Smart move--400 sq. feet. Low cost and low maintenance. That will make you much happier in the long run.

Mark: Not to mention the risk of someone drowning!

Janis

Better to be one of those friends who visits other people's vacation homes! Fortunately, my brother lives near Napa, so we have a free place to stay when we go wine tasting. I think that when people really run the numbers as opposed to letting their emotions guide them, a vacation home seldom pencils out. But, it really is only money and, for some people, vacation homes are the right decision. Your Calistoga home looks beautiful; it must have been tough to let it go.

dgpcolorado

Your experience is familiar: my family had a vacation home at Lake Arrowhead in S. California. So, I learned about vacation homes early on and never went that route for myself. However, I did get a timeshare in Avon (Beaver Creek/Vail) many years ago, which was a tiny mote of an expense compared to a vacation house. And I used it for more than a dozen years. Although I can't sell it — the best way to buy a timeshare is to pick it up for nearly free on the resale market — I do rent it out every year so it is nicely cash-flow-positive. Except for having to file Schedule E every year, I can't complain.

One curious thing about retiring young is that every day is a vacation! One reason I stopped using my timeshare is that I live in a nicer, prettier, place now and when I was at the timeshare I'd find myself just wishing I was home. With my cat...

Unlike you, Syd, I really, really don't like to travel. I'll go explore for a day or two with a tent, but that's as exciting as it gets for me. But, then, having gorgeous mountains and the red rocks country of Moab in my "back yard" certainly helps!

Retired Syd

dbpcolorado: You'll see in tomorrow's post that I am getting a lot closer to you on the whole travel thing. But I'll never gravitate toward camping. This much I know.

Retired Syd

Janis: It was not tough to let it go--that's the subject of an upcoming post. And yes, that's what I want in my next life: a FRIEND with a vacation home! Totally worth it then!

Joyce

I had a vacation condo in Mammoth Lakes, CA for 14 years. Although I didn't get to spend as much time there as I would have liked, I did love going up there in all seasons. Even though I always missed our cats when I was there, it was kinda nice not having litter boxes to clean :-) .

Like you, I had hoped to be able to move there/make it my primary home after retirement for a couple years for tax purposes. However, I decided to sell it when my job got eliminated in late 2012. I figured I'd rather retire then than keep working a couple more years just to finish paying off the mortgage + the annual upkeep. Plus, my elderly parents were needing more assistance which reduced the time I was able to get away. Although I made the right financial & "life-circumstance" decision, and absolutely love being retired (and, yes, there aren't enough hours in the day!), I still really, really miss having my home away from home getaway place. Even after 3 years, I still frequently have dreams about being there and wonder what changes the new owners made.

Retired Syd

Joyce: You can always go rent a place up there and see if that fulfills your desire to be up there? And when you leave you have no ongoing responsibility for it!

Joyce

It just wouldn't be the same at all. Too many memories of what I no longer have. Thanks for your reply though. I enjoy your blogposts!

Tom Sightings

Yes, glad to see you back; hope we see many more posts. Question: I've had a rental unit for 20 years, and my acct. tells me if I moved there for 2 years as a primary residence, then sold it, I could only deduct 2/20nds of the gain, not the whole gain. Has the law changed? Comment: Yeah, but renting is expensive, too. We're looking to rent near Charleston, SC, and it'll be $5 or $6K for a month, and that's shoulder season, not high season. Seems like a lot!

Retired Syd

Tom: Hmmm, I'm not sure what the rules are when you used your home as a rental, but when you sell your primary residence, you get to exclude up to 500k of gain if you are married. The rule for primary residence is that you lived there for 2 of the last 5 years. So I am unaware of any rules that say you must prorate the gain. Perhaps that is something particular to rentals? I guess I've been out of the tax business for too long . . .

As far as renting, we could rent the house we used to own for three months before it would be more expensive than the carrying costs for one whole year! And that's not even counting the lost income on how the money could have been invested if it hadn't been invested in the house. But I'm sure the economics vary by location.

Donna Connolly

A few years ago, while still working and living overseas, we bought a condo in Las Vegas (when the property costs were rock bottom). Our plan was to use it as a vacation home when we retired. In the meantime, we rented out the property. That worked out so well for us--we just continued renting it out after we finished working. No matter what door you choose there are always the "what ifs". So the condo never did turn into our "get-away/family+friends-vacation-spot/memory-maker" that we originally envisioned that it would. But the property has brought in a steadily monthly income which has been helpful.
So glad that you are blogging again. I've missed your posts!
Donna
www.retirementreflections.com

Retired Syd

Donna: Thanks for your nice comment. Now renting it out, that's a whole other proposition. In that case, I think you can make the economics work out. And even if you then use it in the future for a vacation home, you've already been paid back so much of the money already. I would consider that if I ever ventured down this road again.

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