WASHINGTON — If your dream is a vacation home and you can afford it, there are all sorts of reasons to go for it — and maybe some not to.
It might turn out not to be as good of an investment as you expect.
“We’re aware of a home that sold recently 30 years after the client bought it on the Eastern Shore of Maryland. And based solely on the purchase price, the average rate of return on that house was about 5 percent a year,” said Leslie Smith at Chevy Chase Trust. “In that same time period, the stock market returned more than 11 percent.”
A vacation home can be a lot of fun for the family, but she said you should also think about the family after you’re gone.
“The more children you have, the higher the potential for conflict,” Smith said. “Do all of the children share the love for the place? Can they all afford to keep it? Are some geographically close while others aren’t?”
Smith suggests the best vacation home investment may be making it your retirement home. That way you can enjoy it occasionally for years, and then relocate permanently when you reach your golden years.
