• Peter Newman, CFA

Rent, Don’t Own, Your Vacation Home

Many of you know that I’m a real estate investor at heart. At a very young age, whenever we traveled with my family on vacation, I would always grab a copy of the local real estate books and pour over the properties. Often, they seemed out of reach financially. But, I tried to remind myself that we were only there for a week and it was better to enjoy the trip instead of obsessing over how to find, locate, and purchase a well priced property.


Several of my clients have indicated that they might want to own a vacation home. Further, they believe it may turn out to be a good secondary source of income.


The purpose of this article is to compare my experience of owning a vacation rental near Winter Park, Colorado, with renting a condo for a month in Key West, Florida.

Couple enjoying dockside view of seaside and palm trees at vacation resort.
Truly Relax on Your Vacation

Due to Covid-19, my partner -- who works in pharmaceuticals -- had the flexibility to work remotely in late 2020. We decided to look somewhere warm in the U.S. where we could get some work done with reliable internet but also go to the beach and do some snorkeling when the workday ended.


We plunked down $6,000 for a month-long rental in December 2020 in the Florida Keys. Our condo had two bathrooms, two bedrooms (for whomever is snoring), plus a pool and hot tub right outside our door. There was never anyone at the pool, so it felt like our own private oasis. Further, we could easily bike to snorkeling spots in Key West and hike to Fort Zachary to hang out. I remember thinking that $6,000 was a lot of money to plunk down on rent, but while at the unit, I had some interesting feelings about renting this condo. I noticed that despite its good condition, the condo had a number of small items that needed to be fixed: the wood front door needed refinishing, knob came loose on the laundry door, the kitchen cabinets were beginning to show their age, and there was a bit of rust on the Sub-zero refrigerator from the salt air. Having remodeled a number of homes, I notice the little things. And, I accidentally broke a dish in the kitchen. For a second, I paused to make a list of items that would need attention. And, I started imagining how much they might cost. To get high dollar rental amounts, you or your property manager have to constantly reinvest in keeping your unit pristine.


An Epiphany

Then, I remembered, this beautiful Key West condo isn’t my property. I don’t have to worry about these nagging little details.


When Jerome and I leave, we simply turn in the key and have fond memories of sitting by the pool after work, reading on the couch, sipping bourbon and walking to Louie’s Backyard for dinner. Contrast this to when I visit our home in Colorado, I keep a running list of items we need to improve, fix or replace. I said to Jerome the other day that we should probably have someone refinish the bathtubs to make them look new. And, we are constantly checking with our cleaning person to make sure the water is shut off so it doesn’t freeze. Yes, we have plenty of insurance, but a burst pipe would probably mean that we couldn’t use or rent our home for a year given the scarcity of reliable contractors in our small mountain town.


Rent three years in a row in the same location before you commit to a purchase.

Try It Out First

If you are thinking about buying a vacation home to rent out, my strong suggestion would be to rent at that location for at least three years in a row and rent for at least a full month each year. That way, you get to meet the locals, see what you will really do when you are not in vacation mode, and determine what the traffic, restaurant, shopping, and activity scene is all about.


Whether you do yoga, fish, ski, volunteer, work from home, hike, bike, golf, or have other hobbies, you will want to make sure you are not bored or too isolated from what you enjoy doing. Remember a few days vacation is very much different than being at a place for months at a time.


Vacasa, a popular vacation home rental property lists the top 25 markets for vacation homes to purchase. Consider test driving one of these communities for several years in a row before you commit to ownership.


Final thought.

Do you have interest in real estate investing? Reach out to me to discuss your real estate ideas and how they fit into your wealth management goals.


Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have more than $1 million saved and need help from a wealth manager, I can assist. Schedule a call to learn more today.



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About the Author

Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.


Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance and estate planning advice, Peak Wealth Planning is a fee only financial advisor based in Champaign, Illinois.



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