Five reasons not to buy a vacation home

President Obama's vacation homeSummer's winding down, but you might be tempted to make it last forever. With the depressed real estate market, reduced risk of bidding wars and decent interest rates, you might think the time is right to finally take the plunge and buy a vacation home. But have you considered what else the purchase might do to your lifestyle?

Real estate agents will find lots of reasons that you should buy a vacation home. But consider these reasons why you shouldn't:

1. It locks you into vacationing in one place for years. This is one of the most taxing reasons, and the one that people seem to consider the least. The world is wide, and experiences beckon everywhere. If you get tired of your one small corner of beach, lake shore or forest, that's tough. Your financial stake will force you to return long after the magic might be gone, and your ongoing financial outlay may mean you'll never get to see a dream destination such as Paris or Australia. Some people don't mind returning to the same spot every year. But even people who prefer consistency may change their preferences over time, or their family size may change, altering their tastes.

2. It's one more expense. Paying for a second home dents a day-to-day operating budget. You'll essentially have to double everything you pay now -- mortgage, tax, water bill, fuel bill, and so on. Before you sink your surplus cash into a second property, make a list of the things you could use that money for back home. Paying off debt? College fund? Improvements on your primary home? Emergency fund? If you don't have true disposable income, or if your employment future is murky, you should think hard about chaining yourself to the expense of a second home.

3. Maintaining a seasonal property can be fraught with trouble. Vacation properties frequently go empty for weeks and months at a time, so the potential for undetected disasters -- leaks, burst pipes, mold -- is higher than in homes that are occupied year-round. That's where managing agents step in, but remember that you have to pay them, too.

4. There's no guaranteeing rentals. It's true that renting a vacation home for a week or a month at a time can often net higher-than-market rates than an equivalent property that is leased on an annual basis. In fact, it's not uncommon to make back your year's mortgage with about 12 weeks of rentals, especially if those fall in peak season. But it's also true that many holiday markets are soft, prone to suffering the exaggerated effects of economic downturns, and generally unreliable. When people don't have much money, they don't vacation and they don't rent your vacation home. So you may not be able to get a renter when you're not there. Can you afford to float your second place in lean times? If you're buying real estate with the expectation of ongoing rental income, look at permanently residential areas first.

5. You can currently expect less-than-optimal resale value. If you're thinking that you can just sell your house if you tire of it, think again. Even people who want to buy places are having a harder time getting the banks to agree. Time-shares can be even less attractive to buyers. What's more, these days, vacation markets are soft on jobs. Ocean City, Md., is 91% vacation homes, which isn't a marker for significant industry. But among the most secure areas for real estate investment are up-and-coming areas where jobs are plentiful, high-paying and preferably growing. Beach towns, lakes and other rural getaways do not often match up with some of the leading indicators of a market that will see you making money when you sell the property again. Before buying, ask local agents about where property values are heading.

The real estate industry will ply you with lots of attractive reasons why you should plunk down the cash and buy. These five reasons may lead you to a more measured decision.
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