Just looking for some opinions from those who are smarter with money than I :) I have a pension through my job as well as a retirement account that I put money into. The wife and I have been looking at a small cottage on our favorite lake here in the area. With the stock market doing as crappy as it has been doing, we have been thinking about cutting back on putting money into the retirement account and going ahead and purchasing this small cottage. The amount we put into the retirement account is equivalent to a house payment. Speaking with the "financial advisor" with the company we use at work for the retirement accounts obviously doesn't want us to cut back on our investing and keep maintaing. I was thinking with the way the housing market is right now that it wouldn't be a bad investment not to mention we would use it constantly from April-October for boating. I have AT LEAST another 20 years before I can retire and start collecting my pension. Any thoughts or opinions would be great.
We too are thinking along the same lines. We have been looking at buying a piece of land on the river and building a metal building with a living quarters in the corner of it(1200-1500sf).. We have some friends that have done this and it is nice as heck. So we are looking at cutting back on what goes into the retirement fund and putting it towardfs something we can have paid off and own outright when we both retire in say 20yrs...
If you know where you want to retire then I would recommend getting the property as the value should outpace the market and you have 20 years to build up your nest egg. A lot of things can happen in 20 years but you can't plan for the unplanned. When you get pay raises reward yourself but take a portion each time and put back into investments. Don't expect your purchase to be an investment for retirement but in 20 years it probably will be.
If I only knew where I plan to live when I retire then I would have bought about three years ago.
Make no mistakes about it, a second home is an EXPENSE. You can convince yourself and/or justify anything you purchase and I did the same as you are thinking with the purchase of our lakehouse. Based on an appraisal done last year when we refinanced, I have lost 10% from the purchase price. Additionally, I have put time, energy and money into various improvements. We've also purchased many toys that are all depreciating every day that they sit.
So, unless we again see the heyday of real estate, consider a lakehouse an investment in family & friends and great memories. NOTHING MORE may come of it and, for us, that is OK.
Originally Posted by wolfeman131
Drew makes some good points. taxes utilities upkeep etc.
Its all a trade off, but to think your buying an investment in a second home can be dangerous. look at Florida for example.
FWIW the stock market (s&p 500 )is up 13.50% through Aug, 18 % YOY and 13.5 average of 3 yrs and 6.5% avg over the last 10yrs.
does not feel like it but the amrkets are doing ok.
I think about it like this....your home(s) is/are your home(s), your investments are your investments....be careful not to confuse the two. At best, a second home is a forced savings (with a negative return), but something you can sell later to get some cash back. Over the long term, very few homes actually have a positive return once you factor in taxes, upkeep and utilities. At the end of the day, if you want it and can afford it, buy it.
as the cool-hip teens like to say "YOLO"
Not to squash your dreams but maybe this can help to put that in a different perspective if you are talking about equities. You all believe in buy low, sell high right? With the stock market doing crappy guess what you're doing each time you add $ to your plan(s)....
Originally Posted by Lawdog
I used to tell people that when their funds/companies are down it's like a sale. Would you rather wait until they jump up 20% higher and then buy? Didn't think so. This is if we're talking strong companies/funds, not crackpot get-rich-quick gambles.
Then again you may want to jump on that cottage and enjoy it as much as you can up until Dec 20 because the next day will... :eek:
We bit the Bullit last July 2011. Could not pass up the Great Deal we got on our place. Think about the Doubles too before you take the plunge
Insurance times 2
It was worth it for us. We spend so much more time better lake because we have the place.
Good luck on Decision
This is the 5th year for our lake house/cottage. We love it....but... the travel time, the upkeep of two homes, taxes, insurance, etc are both physically and financially draining. We are lucky enough to afford it, but once/if that changes we will need to decide which place to sell, not looking forward to that day.