A cool oceanfront breeze, freshly stirred (not shaken) cocktails, and the feel of soft sand between your toes — that’s the vision most homeowners have when dreaming of their perfect vacation home.
But, according to LendingTree’s latest vacation home survey released on Monday, the majority of vacation homeowners never bring that fantasy to life. In the survey of 461 homeowners, 37 percent use their property one to zero times a year. Another 37 percent make a visit less than five times per year, and only 26 percent stay in their home more than five times per year.
For homeowners who purchased a vacation home as a way to generate income through rentals, only 41 percent ever do so. Even smaller is the percentage of homeowners who manage to bring in happy vacationers year round (31 percent).
Owning a second home can be an expensive endeavor, especially when the monthly mortgage, utilities, taxes, and overall upkeep is factored in. In an Inman essential guide published last August, it was reported that vacation homebuyers were expected to have a 30 percent down payment and mortgage rates .25 to .375 percent higher than a primary property.
The Inman guide also revealed that vacation homeowners shell out thousands on additional insurance for accidents and property damage caused by guests, HOA fees, utilities, and any other extras they may want to offer to guests, such as a fully-stocked fridge and restroom, or other amenities.
Considering that 58 percent of vacation homeowners in LendingTree’s survey made less than $100,000 per year before taxes, a failed investment or rental plan could easily spell financial trouble.
Twenty-nine percent of vacation homeowners sold their property because they needed the income from selling it, and 14 percent said it simply became too expensive to keep. Fourteen percent said they no longer enjoyed visiting the home’s location or simply wanted to buy another property. Twelve percent said their decision to sell was spurred by a life change, such as a divorce.
Before going all in on a vacation home whether its simply for personal use or not, luxury real estate agent Peter Lorimer says the biggest consideration should be the long-term return on investment, which factors in upfront renovation costs, proper marketing (if you’re renting it), and how properties in your area are expected to appreciate in value.
“I’ll calculate the acquisition cost plus renovation cost, and we all want to be in the positive,” Lorimer told Inman last August. “But I would rather be slightly in the positive in a great area over being massively in the positive in an area that’s questionable.”
LendingTree commissioned Qualtrics, an experience management firm, to conduct an online survey of 461 Americans who currently own or have previously owned another home in addition to their primary residence. The survey was fielded from May 31-June 7, 2019.