This piece was originally written & published on Beyond Your Hammock
My wife and I rarely do anything in what could be described as “the usual way.”
We think outside the box and generally choose to forge our own path instead of following the well-known and mainstream; from the fact that we’re both extremely independent and prefer to work for ourselves to choosing to rent in the city when most everyone else seems to be buying…
…to eventually deciding to skip the whole starter-home idea and go straight for the dream, vacation home when we did decide to buy.
The thought process we used to settle on the idea to buy a vacation home (while continuing to rent our primary residence in Boston) was intensive, and it required a massive amount of financial planning work to get both of us on the same page and in agreement with what worked best.
The biggest thing that our plan for buying a vacation home had to feature? Flexibility, which is not usually a word associated with buying illiquid assets like real estate.
Here’s everything that went into this idea, from what inspired the thought to buy a vacation home (instead of the usual house in the ‘burbs or starter condo in the city), to where our sticking points were in the planning, down to the factors we considered before choosing the home we eventually bought.
The Scenario: Buy a Vacation Home (Before Owning a Primary Residence)
My wife and I have long known we have no interest in buying in Boston at the moment, simply because you don’t get much value for your dollar.
A home to us is a utility (not a surefire investment guaranteed to appreciate and increase in equity; when it comes to investments, we’d rather invest in our business or in the market via a globally diversified portfolio).
But that doesn’t mean we’re against home ownership in general. It was more about what you could get for your money.
At some point, we asked ourselves, “what if we just bought the house we ideally wanted right now — what would that even look like?”
Images of serene lake houses came to mind. Or sweeping vistas and gorgeous views of mountain landscapes. Something big, expansive, in nature, and on a lot of land…
Which, you know, meant Boston proper was not going to be the place we wanted to buy (even if you could get a nice, 2-bedroom condo for less than seven figures).
That lead to the question of, “what if location wasn’t a factor?” and we realized we’d want to stay in New England, but we wouldn’t necessarily choose to commit to the city for the long-term.
Through our questions and thought experiments, what became clear was our ideal house essentially looked like someone’s vacation house.
But why, we wondered, did we have to wait to buy a house in the city, then save up again and find more leverage to buy a second, “vacation” house?
Skipping the Starter Home — and the Leapfrogging Process to Progressively Bigger and More Expensive Homes
In other words, what if we bought the house that everyone else spends 30 years leap-frogging toward — from starter home, to kids-in-school-so-we-gotta-be-in-the-burbs house, to second-house-on-the-lake-because-we-gotta-get-out-of-the-burbs house, to eventual dream house.
What if we just bought the dream house now and didn’t bother with the rest of it?
This is what I mean by we don’t often do things in the usual way. The process of buying our house started with questioning how people usually buy houses.
Our planning started by getting curious and asking questions like:
- Do we know what our dream house looks like?
- Can we buy something now that fits perfectly with our long-term plans, and keep renting something that is optimal for present-day, short-term needs?
- Can we find a property that we could realistically commit to owning for 30 (or more) years and just own that one house (instead of the aforementioned process of buying and selling multiple houses and trying to scale up each time we bought something new)?
A key point here is that planning starts not with answers, but with lots of open-ended questions. Lots of thought experiments. Lots of wondering without having to know (at least, not knowing right away).
We gave ourselves time and space to think and consider what we wanted, and then continued to think and consider how that might fit into an overall, comprehensive financial plan.
How the Idea to Buy a Vacation Home Fits into Our Long-Term Plan
Speaking of comprehensive plan… I’m still not 100% sure we have one. Or at least, we don’t have one that’s set in stone.
That’s because financial planning is a process. We wanted this decision to buy a vacation home to fit into that process — and at the same time, we wanted to ensure it wouldn’t weight it down.
The idea is to keep the house we did end up buying for a long time. Like, the-entire-length-of-the-30-year-mortgage kind of “long time.”
Of course, no one knows what will happen between now and then, but I think our general plan is to maintain this house “forever.” To us, “forever” doesn’t literally mean until we both keel over. I
t just means as long as we want to, because there’s no already-plotted timeline for when we need to sell; there’s no pressure to sell at all if we don’t want — and there’s also no pressure for the house to be an investment and make money. We’re treating it as a purchase and an ongoing expense.
The idea is for this property to serve as our “home base” over the next few decades, and it will be the big constant that we can always come back to whenever we need or want.
Planning for Flexibility, Not Set Outcomes
Maybe we rent in Boston or even explore other places (and rent along the way so we don’t have to make another big, long-term commitment to a place or property).
Maybe we move to our vacation house full-time for a bit. Maybe we look at buying a second property that is the exact opposite of what we bought (which was a big house on a bunch of land on top of a mountain… so maybe condo on the beach?)
Or perhaps we travel extensively in 10 years or so, and rent out the house we bought as a vacation spot for other folks. Maybe we have kids, we’ll live in the area full-time while they’re little, then pick up another rental in a suburb with a great school system later on down the line.
All of this is on the table and that’s exactly what we wanted: a solid base that would support us reaching out in all kinds of directions.
In some sense, I feel like “the plan” sounds as if there’s not much of a plan at all. But what is helpful to our planning process is that when we decided to buy a vacation home, that house was plugged into our plan as a known factor — and we know it works with all these other scenarios we might want to consider but haven’t settled on.
It gives us a solid place to reach out from, but doesn’t feel like something that’s weighing us down.
Flexibility was factored into our planning via our homebuying budget. According to the numbers, we could have bought something that was double the price of the property we ended up with… but that would be more of a weight rather than a flexible utility.
The Factors and Decision Criteria We Used While Financial Planning to Buy a Vacation Home
Our budget was the big foundational piece in this whole thing. If it didn’t work financially (or even if we had to stretch to “make it work”), we were not interested.
We saw the decision to buy a vacation home a complete “want.” Not an investment. Not an opportunity. Not a need.
There was no reason to jeopardize our short- or long-term financial security just to spend money that we really did not have to use for this purchase.
We got to a specific “we can afford this” number by doing rather conservative planning. We assumed:
- A lower income than we realistically expect to earn
- Higher expenses than we currently run at
- We’d continue renting forever (okay, not literally, but we assumed we would keep renting at Boston rates and rising at 3% per year until age 75. It’s very unlikely that we will actually do that, but it’s another way we built wiggle room into the plan: it’s a much bigger expense that we are likely to have for that long)
How conservative we went with our assumptions might have actually been the biggest point of disagreement for us; my wife always want to build the Doomsday Plan that will work even if the world explodes (and who knows, the way 2020 is going, that might just happen before the year ends).
She’s constantly pushing to assume the worst, although she’s self-aware enough to know that she tends toward an extreme in wanting to protect against bad “what if” scenarios. She’ll be the first to admit she’s not good at even considering the possibility of scenarios like “what if everything is… okay?”
While I do like to use conservative assumptions, I also like to operate in the realm of reasonably realistic rather than plan for the true worst-case disaster.
You can be too aggressive with your projections (meaning you assume everything goes right) or too conservative (and assume everything always goes wrong) — and either way you have an unrealistic plan, because life rarely stays at one extreme or the other. It fluctuates and changes between the two.
So building out a scenario plan to stress test was probably the hardest part for us as a couple because of how we view things so differently when it comes to these kinds of projections.
But I’m really glad we spent so much time and effort in planning mode because it allowed me to focus on what we actually wanted beyond the numbers, once we had those set.
Accessibility to Boston was a big factor once we started looking. When we first started tossing this idea around, what got us thinking about it was the possibility of buying something in a place like Key West.
But after thinking through the logistics (and also — things like hurricanes and flood insurance requirements) it didn’t really fit with what we wanted to do since that would virtually mandate flying in order to reach the place.
We decided we wanted to stay in driving distance to Boston so that we were more free to come and go without extensive planning, and without reliance on anything but our own mode of transportation.
It would be stress-free to bring our two cats with us, and it would mean that more friends and family could enjoy the place with us since almost all of our family and friends are somewhere in New England.
Another major factor was something we realized after we began literally seeing listings.
After our first day of looking at houses, I said something to the affect of, “I’m not interested in buying ‘just a house.’ If we wanted to do that, we’d buy in Boston and stay there. This has to be a place that I would rent for a week for vacation.”
Yes, that’s a subjective measure — but outside of the tangible financial side of things, that metric is what made this whole process to buy a vacation home (when it was also serving as the only home we owned) successful for us.
It was extremely helpful in helping us quickly cross potential properties off the list; we could look at 99% of listings in our price range and say “nope” immediately. That made the decision process much easier, because there was no agonizing over a ton of choices.
It really did a great job in cutting off “well we could make this work…” kind of thinking.
There had to be something compelling about it that would pull us to come out and stay. That was the bottom line question when we considered and property: “would we rent this for a week if we were going on vacation?” If the answer was no, we nixed it.
Another very critical item any property had to have before we could choose to buy a vacation home? High-speed internet!
It’s amazing how many towns still do not have reliable, high-speed internet access, and we had to pass on a lot of wonderful potential homes because the only connectivity was DSL or satellite.
That wasn’t going to work if we were going to be able to run our business from outside the city even part of the time. Thankfully, our home that we chose not only has high-speed internet, but it actually has fiber — so is even faster than the Comcast cable we have at our apartment back in Boston.
One last factors that was very specific to our personal preferences: the more we looked the more we realized privacy was a big deal to us.
We didn’t mind being proximate to neighbors (and in fact we liked the idea of being rural but not remote. There’s a difference! It was very important to us that we not isolate ourselves), but we did not want to see someone else’s house from our property. We get enough of that in Boston living on top of everyone else!
If you’re interested in this kind of process (or even just the process to buy a vacation home in the traditional way, as a second home to your primary residence), you’ll probably find specific factors like this crop up for you as you begin looking. (We didn’t think the privacy thing was a huge deal until we were actually standing on properties and walking through houses.)
The Actual Search: How We Found the Perfect Home for Us
It all came down to hours and hours and hours on Zillow.
Okay, it was more than just that, but we did look at HUNDREDS of listings all over New England on Zillow. We also ran tons of different searches with different filters to make sure we didn’t missing anything.
We found the map-based search most helpful because it helped keep location in perspective, and we made heavy use of the satellite feature to better understand proximity to roads, neighbors, etc.
Eventually when we chose a real estate agent we also told her about what we wanted and asked her to send anything that came her way that fit the bill.
We relied so heavily on Zillow’s maps of listings because we didn’t have a specific location in mind for our vacation property. We looked everywhere, and were open to anything in New England.
Slowly, we narrowed in on more defined ranges (based on “don’t want to experience any MORE winter than we already get” and “don’t want to be 5 or more hours from Boston,” both of which eliminated quite a bit of Maine).
Many people have asked what we knew about the area we eventually landed in, and the answer is “not much.” In fact, we hadn’t spent any time in the particular town we ended up buying in.
In this regard, we got very very lucky. We do love where we ended up — but we also absolutely gambled on that aspect of it.
I think what gave us more freedom to explore and not worry about location was that:
- There was no pressure to make this a primary residence; we still had our rental in Boston with no plans to drop our lease.
- We wanted to be proximate to things like hiking, skiing, and outdoorsy things but we weren’t worried about schools or accessibility to grocery stores or the kinds of factors that would be more important to a young family living full-time in one location.
- Our leading idea was to buy a vacation home that could serve as the destination itself; if we went out to the property and we only hung out at the house, that had to be okay. We didn’t want to rely on a town or area to be the appeal.
But again, we did get lucky in that there are many many little villages and towns within a 30-minute radius of us in all directions. (And in the country, anything within 30 minutes is “close.”)
These local spots have everything we need and then some. The basics are covered with multiple grocery stores with big selections, a few concentrated areas of big-box stores, local pharmacies and post offices and trash collection stations, and so on.
And, the villages and towns around us also have plenty of stores, restaurants, museums, and downtown strips that are enjoyable and fun to visit. We’ve found more cafes, farm stands, restaurants, and little shops than we’ve been able to stop into and check out… and this is in spring and summer of 2020, while things are still semi-shut down because of the pandemic.
It feels like there’s more conservation land in this county that’s open to the public than there is privately held property; we’re close to a handful of different ski areas; we sit among multiple mountain ranges and virtually endless trails; there’s no shortage of local farms that you can buy directly from.
So all and all, my wife and I are both thrilled with the town and county we ended up in… but our initial qualification for location was just “mountains” or “lake.” Nothing more specific than that in terms of general location. We really were looking for a specific type of property rather than a specific location.
Our Biggest Lessons Learned (So Far) from the Experience
It’s been a few months since we decided to buy our vacation home and actually got to close on it and begin enjoying it… and it’s even better than either of us imagined.
The views are spectacular. We love our private lot on our little mountain. We have a long list of things and places we want to check out next in our local area. And there is plenty of room here at the house for family and friends to enjoy it all with us.
It’s as close to perfect as a giant, stressful, expensive decision can get, but there were some big lessons in buying a house — vacation home or just any property — that we will learn from if we do this again.
The biggest thing that we will carry forward from this experience is the knowledge that we need to be much more critical of everyone involved in this process, especially our realtor and the home inspector.
We both felt as if none of the professionals involved with the process were really looking out for our best interest (I cannot tell you how many times I lamented the fact that realtors aren’t required to be fiduciaries the way fee-only CFPs are!).
The people we worked with often made us feel like we were being difficult, and even lied to us about what the other parties involved claimed to have said.
At one point, there was a huge he-said, she-said mess — all instigated by someone among the attorneys and realtors we had to deal with (we still don’t know exactly who said what, but have emails from various parties all pointing the finger at each other).
Other issues cropped up that at the time, we weren’t sure were issues at all, but in hindsight felt like reasons to fire the people that we had hired to guide us through this process. (Our realtor, for example, never showed up for our home inspection.)
At the end of the day, we felt like the people we paid did very little to look our for our best interests or to fight for us at the negotiating table — and that’s a best-case scenario. Worst case, there were issues of negligence that should have been addressed.
For the future, we’ll know to do the following when it comes to hiring attorneys and realtors:
- Do more legwork to verify the professionals we choose and interview more candidates.
- Seek out teams of professionals who work together; a lot of issues came down to poor communication between everyone involved, and this could have been avoided by leveraging realtors and attorneys who have a proven track record of successfully handling real estate transactions together.
- Not being afraid of seeming demanding or difficult; it’s our money at stake, so we should be!
- Firing people who are not working in our best interest.
Undoubtedly, we’ll continue to learn and understand more. We’re first-time homeowners, after all, and have a lot of confidence around the financial planning side — but still have plenty to learn in other areas.
Overall, we’re thrilled with the implementation of this part of our financial plan, and we love having a literal home base from which to reach out from when we want — and come back to when we need.
Want more financial advice you can actually use? Check out Beyond Your Hammock, a fee-only financial planning firm that specializes in helping 30- and 40-somethings get clarity and start building wealth.