Rent vs. Buy

WSJ had an excellent article this morning on the perils of buying a vacation home. Ironically, the “Financial Samurai” provided outstanding advice.

For Every Vacation-Home Fantasy, There Is a Harsh Financial Reality…

Sam Dogen, creator of the Financial Samurai website and author of “Buy This, Not That,” said people need to understand that their property may not appreciate as much as they expect, especially in the current market, where some experts expect prices to slide.

Mr. Dogen bought a two-bedroom condo in Lake Tahoe for about $715,000 in 2007. The asking price was $810,000, so he thought he was getting a deal. However, the property ended up plummeting in value by about 40% over the next several years due to the financial crisis.

Today, the property is still worth less than what he purchased it for, he said.

“It was a poor investment,” he said.


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Very much depends on what one intends. If you are buying it as an investment, then it can be good or bad depending on when/where you buy, and when you sell.

If you’re buying it for enjoyment, then the investment importance is greatly reduced. I don’t expect my car to appreciate in value (though it conceivably could). It’s my car. Same for my house. Or a vacation house if I owned one.

I know people (here and in RL) who invest in property expecting a return. Often they rent the property. I have no interest in doing that. Too speculative for me (e.g. what’s the next “hot” housing market?). Others seem to like it, and I won’t criticize. I just say it isn’t for me.


If you have a lot of family…and can buy a vacation home not too far away on a lake…then you might get enough personal use out of it to justify it - or if you or the wife and kids can spend the summer there, great.

For me, single, there are few places I would want to go year after year after year - unless I became a snow-bird traveling south in winter and north in summer - two residences.

My parents did it the old way back in 1950. Bought a lot across the road from Culver Lake NJ - an hour and half from the main house in suburban NJ near NYC.

Over the next few years, with help from brothers, dug foundation. Laid cinderblock walls for 20x30 foot ‘bungalow’, roofed it, finished off inside with a kitchen, a future bathroom area, living room with stone fireplace all hand built, and 2 bedrooms downstairs and a loft upstairs. Oh first dug the hole for the outhouse and built outhouse/toolhouse.

We had ‘running water’. Grab a bucket and run to well on next property, pump full, and run back with 5 gal of water. Drinking water was brought from home.

Kitchen had small refrig, sink that drained to drywell, and two burner electric hotplate type ‘stove’. Had outdoor fireplace to cook the hamburgers and hot dogs. built on weekends. Dad wired the place.

we headed up there every weekend during summer. During winter, dad built a couple boat kids - 8 foot rowboat (Tubby) and then 12 foot rowboat with 5 HP Evinrude engine (used), and lastly 13 foot water ski boat with 40 HP motor. Plywood boats, ski boat fiberglassed. Had that place for 25 years and sold it when he retired along with Jersey house. Before then, he had well dug and had decent septic system put in so you had indoor toilet/shower. That’s about the only thing he didn’t do on the whole place in Sussex County NJ. It was a 3 min walk to the ‘right of way’ down to the lake from our house. Various relatives would come for a day - and a outdoor picnic at the large (homemade) picnic table that sat about 14.

we did take 2-3 weeks a summer (dad’s vacation) to travel around the country - tent camping.

Dad/mom had a small mobile home in very nice park in FL and spent winters there. Summer at house on Lake George in upstate NY…right on the lake.

Now? 750K condos…ouch… heard pitches for condos in HI, condos in FL…not interested…I don’t need to spend my ‘vacation’ or time at the same place every year, year after year, and no family to use it.

Sister still has the Lake George house. Uses it 3 months a year and now the grandkids come for weeks at a time, so she enjoys it even though it is ‘expensive’ cost and tax wise. Over 10K a year in real estate taxes!

Too much hassle for me to even think about a rental place… I just buy some REITs instead…lots of risk in a single investment. With rising interest rates on mortgages, all housing prices likely to slide down a bit.


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Ages ago we looked at a summer home up in the Sierras, 3 or 4 hours from here in Sonoma County, but, in the end didn’t really want the maintenance, and being locked into one area… We campered, trailered, rented homes up the coast for us, family, it’s worked out well…

I did help my eldest brother build a ‘cabin’ near Sonora, CA, at about 35oo feet elevation… Many weekends, and later other weekends with them over the years, kept my XT500 bike up there to play on the Stanislaus forest fire trails… But now he’s passed, SIL can’t bear to part with it, their kids are scattered, can’t afford the upkeep, at some pint they’ll have to decide what to do when she passes… I don’t want it, it’s about a 5 hour drive, and I see all the problems, its time is past…Fure insurance is sky high, one day that may be the solution… His '45 Jeep is still going, but it has a really odd wiring mesh-mash, it all needs to be stripped and a whole new loom, I’ll pass on that, too and again, their kids haven’t the means…

DD’s inlaws at one point owned homes locally, Clearlake, Carson City and Puerto Vallarta, MX… We’ve spent time in all, but lately as we all age, less and less, so the places are either on the market or already sold, the local home was gifted to our DD & SIL, they bought a new 4 car garage home in NV, their forever home… But, none of these homes were bought as investments, all were bought as new adventures, getaways for the family, shared with all of us… Each has their own character, but it becomes way too much work, maintenance, like myself, mostly DIY, but now contracted… Blow n go contracted…

So lots of changes, concerns, growth, kids, grandkids scattering, working, or in college… New marriages, new interests…

Time marches on… Investment, nope…



Ironically, the “Financial Samurai” provided outstanding advice.

The article is paywalled, but in general the Financial Samurai is as dumb as box of hammers. For some reason, he apparently has access to a checking account. The courts may which to revisit his mental competency.