Interested in lake property

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cwademba
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Interested in lake property

Post by cwademba »

Hello all, I would like to hear opinions on this from a financial and from a "quality family time" perspective. My wife and I are contemplating buying a lake lot to enjoy with our family and as a possible investment property or for a potential retirement location later in life. We have two boys, ages 4 & 2 and would like to have a place to enjoy the lake and it has always been a goal of ours to buy lake property. As of now, we only plan to buy an empty lot (valued @ appx. 150k with a dock 35k) and put a dock on it. In appx. 3-5 years, we plan to build a 1,500 sq. ft. cabin/cottage/house on it. The lake lots we will plan to look at are anywhere from 30 min to an hour from our primary residence. I would like to hear opinions if this is a wise decision financially and from quality time perspective, as well as should we do a home equity loan or should be borrow the money from the bank on a land loan? Also, should we build a house on the lot sooner and we could do a typical mortgage and put on a 15 year note? I welcome all opinions and thanks for the input. I have posted below our personal financials.

Cost of Lake Lot - 150k
Cost of Dock - 35k
Cost of future Cabin/Cottage - 150k Max
TOTAL - 335k

Age: 37 & 35
Net Worth - +800k
Household Income - +150k
Debt - 50k (Land)
Mortgage - 240k (We have 225k in equity)
401k & other retirement accounts - 350k
IRA Roth's - 100k
Cash - 25k
529's - 10k for both kids

Monthly Budget in present time
Bring Home - 9,200
Expenses & Entertainment - 2,500
Mortgage - 2,000 includes taxes and insurance
Land Debt - 600 month
TOTAL 5,100
Appx 4k left

Monthly Budget with Lake Property
Income - 9200
Expenses & Entertainment - 2500
Mortgage - 2000
Land Debt - 600
Lake Lot - 1500 on 10 year note
lake Lot with house - 2250 on 15 year note
$2,650 left monthly after Just Lake Lot
$1,850 left monthly after house on lake
Last edited by cwademba on Fri May 12, 2017 3:42 pm, edited 1 time in total.
sport
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Re: Interested in lake property

Post by sport »

This is a "want" not a "need". I do not believe in borrowing money to pay for a want. If you want more advice, you should post your family budget with and without the acquisition.
bloom2708
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Re: Interested in lake property

Post by bloom2708 »

Do you need a brand new $35k dock for a lot? How about a $5k used dock and see how much you use it, get settled in.

We don't know anything about the area you are looking. Is it seasonal? Used for 4 months out of the year? Is $150k for a lake lot "a lot" or a starter lot?

The general advice is to pay cash for toys. But then, lots don't take that advice.
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White Coat Investor
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Re: Interested in lake property

Post by White Coat Investor »

What kind of a dock costs $30K? Are you going to live on the doc? :)

Maybe that's reasonable for a boat lift or something, I don't know. Never really priced it.

At any rate, if it's one of your goals and you can afford it, then go for it. In my mind, "afford it" means paying cash when it comes to a second property.
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jebmke
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Re: Interested in lake property

Post by jebmke »

I've had friends go down this road. They get tied financially and psychologically (we can't go to XYZ, we have this lake house/mountain house ...). Then later the kids get a little older and don't want to go (little league, gymnastics, summer swim team .....), then teenagers ...
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cwademba
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Re: Interested in lake property

Post by cwademba »

bloom2708 wrote:Do you need a brand new $35k dock for a lot? How about a $5k used dock and see how much you use it, get settled in.

We don't know anything about the area you are looking. Is it seasonal? Used for 4 months out of the year? Is $150k for a lake lot "a lot" or a starter lot?

The general advice is to pay cash for toys. But then, lots don't take that advice.

The lake lot is appx. 30 min to an hour drive from primary residence. Also, it is located in the deep south, so the lake can be used possibly 10 months out of year. a 150k lot is appx. middle-of-the-road as there is way more expensive, but this price range will give me adequate water and a gently slope to build on one day............. I have not priced a used dock, but will before I make any uninformed decisions
Last edited by cwademba on Fri May 12, 2017 3:56 pm, edited 1 time in total.
runner3081
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Re: Interested in lake property

Post by runner3081 »

jebmke wrote:I've had friends go down this road. They get tied financially and psychologically (we can't go to XYZ, we have this lake house/mountain house ...). Then later the kids get a little older and don't want to go (little league, gymnastics, summer swim team .....), then teenagers ...
That would be my concern. Once you have this cabin, what if you want to go to Hawaii or a different place? Would be hard to justify for me.

The coolness factor will also wear off when having to do upkeep, repairs, cleaning etc on the property.

Once day you may look up and realize you bought a vacation house... FOR YOUR FAMILY to stay at for free :)
Carefreeap
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Re: Interested in lake property

Post by Carefreeap »

As an earlier poster pointed out, vacation homes are generally "toys" not investments. Some times they can work out but generally speaking they are located in areas that aren't high paying job centers. The only industry is recreation and therefore when the economy goes through its inevitable cycle, those areas get hit hard as vacations and second homes are the first thing people give up when hard times hit.

We have a cabin we inherited in the So. CA mountains. From a purely investment point of view we would have been much better off selling it and investing that money and using it to pay for vacations in other areas. But we had great memories visiting and decided to keep it. We have it in vacation rental service but visit several times a year. We do invest about 2 weeks per year with maintenance; fire abatement, deck refinishing, painting, and other repairs.

We've owned it for nearly 16 years and still enjoy it. But we don't call it an investment.

Good luck with whatever decision you make.
Every day I can hike is a good day.
renue74
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Re: Interested in lake property

Post by renue74 »

jebmke wrote:I've had friends go down this road. They get tied financially and psychologically (we can't go to XYZ, we have this lake house/mountain house ...). Then later the kids get a little older and don't want to go (little league, gymnastics, summer swim team .....), then teenagers ...
This is true. My inlaws have a nice 2 bedroom lake house about 70 minutes from our house. When our kids were younger, we visited a lot....and even considered buying a lot and later building. The lake is smallish and the cost would had been about $150K.

We reviewed the numbers and decided that our lives might change and it's not worth it. Kids got older and we take vacations instead of going to the lake.

I'm happy we chose not to build. I see it on the lake all the time....folks buy property...use it for 3-5 years and then sell because they can't get their kids or grand kids to visit.
Carefreeap
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Re: Interested in lake property

Post by Carefreeap »

renue74 wrote:
jebmke wrote:I've had friends go down this road. They get tied financially and psychologically (we can't go to XYZ, we have this lake house/mountain house ...). Then later the kids get a little older and don't want to go (little league, gymnastics, summer swim team .....), then teenagers ...
This is true. My inlaws have a nice 2 bedroom lake house about 70 minutes from our house. When our kids were younger, we visited a lot....and even considered buying a lot and later building. The lake is smallish and the cost would had been about $150K.

We reviewed the numbers and decided that our lives might change and it's not worth it. Kids got older and we take vacations instead of going to the lake.

I'm happy we chose not to build. I see it on the lake all the time....folks buy property...use it for 3-5 years and then sell because they can't get their kids or grand kids to visit.
My FIL made the same observation. First two years people would use the cabin a lot. Third year a couple of holidays. Fourth year once. Fifth year it's put up for sale. :wink:

He lived there full time for about 5 years. He worked a part time job about 45 minutes away. Then he got married again, they remodeled putting close to $100k into it. Then he got sick, they bought a second place down in the desert closer to the medical facilities. He died about 5 years later. Total ownership was 11 years and it was worth about what they put into it. Probably would have lost money if he had to sell and pay the usual seller closing costs.
Every day I can hike is a good day.
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Pajamas
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Re: Interested in lake property

Post by Pajamas »

Doesn't make any sense to me to buy a lot and put a dock on it and pay taxes on it if you are just going to go for the day or maybe camp overnight. Why not just go to a state park with a lake and campground instead? Then when you can afford a lake house, you can build or buy one, if you still want one.
Not Law
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Re: Interested in lake property

Post by Not Law »

I moved funds last year from a Roth to buy out siblings for a lake house that I (and they) helped build in 1971 - my parent's retirement dream. The house was on the market for 6 years. When a low ball offer was acceptable to the siblings, it was not to me, so I bought them out. I can always sell it for the low ball offer amount down the road. In the mean time we have recreational nirvana. And, our asset allocation is somewhat more diversified. The Roth funds were in the Vanguard REIT fund, now in the Notlaw lake house fund! :D
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blueblock
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Re: Interested in lake property

Post by blueblock »

I'll leave the financing part to others but want to weigh in with few thoughts on buying lake property:

- Be sure to check for the most recent water quality report available. If you're planning to be there for many years, you want to make sure the lake is self-sustaining (e.g. spring fed). The small lake next to ours used to be pristine, 30 years ago, but now it's choked with vegetation and is more like a swamp.

- These days, at least in these parts, aquatic vegetation is more of a problem than it used to be. You'll want to consider environmentally safe and effective removal options. In our state, what can be sprayed is regulated. (We cut our weeds, using a tool designed for the purpose, which takes several hours annually.)

- Is there a lake association that organizes and pays for spraying? Do they have sufficient funds for this?

I'm with others as to wondering about the cost you've given for a dock. Have you looked into sectional docks?

Personally, I love lake living. We don't actually spend that much time on the water, but we do appreciate the view and the wildlife. Every window facing the lake has a pair of binoculars nearby. It's deeply pleasing to me to watch the ducks, mergansers, swans and herons as the seasons progress, never mind the wide variety of birds, as well as rabbits, muskrats, turtles and the occasional raccoon.

In our case, we're not saddled with debt, and O'Hare is only 45 minutes away, so we're not "stuck" here by any means.
IMO
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Re: Interested in lake property

Post by IMO »

I think you forgot to put the actual boat into the budget?

Not making any financial judgment the property/our budget, butI thought I can add relates to your young kids.

Do you think you're kids will get into sports activities in the future that will significantly conflict with your ability to utilize the property? An example being things like travel soccer, gymnastics, etc that may mean you'll be traveling most weekends and not utilize the lake property? It isn't that uncommon for kids sports to take a significant part of many parents weekends.

But on the other hand, if they end up with strong desire/skills in things like wakeboarding, the property could get used a lot. If you as parents are into lake sports then it's more likely you're kids will get involved with that particular activity. But then again, sometimes they don't....
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Watty
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Re: Interested in lake property

Post by Watty »

You mentioned a dock.

If that means that motorboats are allowed on the lake then you need to be sure that you know what you are getting into. Some lakes that allow motorboats are sort of party environment where people may be speeding by in the loud boats all day long while drinking. That might not peaceful lake environment you were planning on. Every lake has a different feel to it.

If you will be buying a boat be sure to also budget enough to pay for that, and a vehicle that is large enough to tow a boat.

cwademba wrote:As of now, we only plan to buy an empty lot (valued @ appx. 150k with a dock 35k) and put a dock on it. In appx. 3-5 years, we plan to build a 1,500 sq. ft. cabin/cottage/house on it.
If you decide that you want a lake home then it would be a good idea to wait until you are ready to build and do it all at once.

There are a couple of problems with buying an empty lot like that.

1) If your plans change undeveloped land can be very difficult to sell. Many real estate agents really do not want to handle undeveloped land and if they will even list it they may charge a much higher commission.

2) There is no guarantee that you will ever be able to build on the land, especially around a lake where there may be special wetland and setback restrictions that can change. You would need to be very careful of you will need to use a septic system since putting a septic system in near a lake will be tricky at best.

Typically when someone buys land they want to build a house the contract to purchase the land will be written to be contingent on them being able to get all the needed building permits. This is sort of like when you have a contingency in buying a house for a home inspection. Even if you could get the permits and build a house today that does not mean that you will be able to build in a few years.

Things can happen like there being a moratorium on new water or sewer hookups because the system is at capacity.

One case I heard of someone owned about 4.8 acres in the woods that they planned on building on some day. About ten years later when they were ready to build there was a new five acre lot minimum so they could not build on that lot. They were not able to buy a sliver of land from adjacent landowners to get five acres and they could not get a variance. Not only could they not build but the land was not really salable since very little could be done with the land.
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Peter Foley
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Re: Interested in lake property

Post by Peter Foley »

Okay I confess, I own one and a half lake cabins (Minnesota).

Some thoughts. Our closest cabin is 2 hours away, that would be about the limit that you might want for regular weekend and holiday use. The half interest is in a family cabin I inherited on the edge of Voyagers National Park. It is 5 hours away and I get there once a year for a week. The closer cabin was used almost every weekend from mid April until mid October until both our daughters went off to college. It has been used about 10 times per year since then. If daughters and grandchildren do not want to come to the cabin with some frequency, we are planning to sell. We could rent a cabin at a resort for a few weeks for less money than we pay in taxes, insurance and upkeep. (And I do almost all my own maintenance.)

When we looked for a cabin closer to home we first thought about buying a lot and building. I still remember the wise words of one realtor. "The best cabins sites were purchased and developed first." On a developed lake, few, if any, vacant lots are prime lots. The aforementioned well and septic issues can be deal breakers.

We have a roll in dock (you can't leave a dock in the water in Minnesota through the winter or the ice will take it out in the spring). We paid about $2000 for the dock 20 years ago. Go for a dock that is at least 5' wide and has a wider square /rectangular platform on the deep end.

Motorboats are not as big an issue as jet skis. Lots of activity and noise and a fair amount of irresponsible behavior.

On a personal note, I grew up in a family that had a lake cabin and it was a good family experience. It was also a very good experience for my daughters when they were growing up. I don't regret the expense, but I also cannot justify the current expense if it doesn't get more use.
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Re: Interested in lake property

Post by Vanguard Fan 1367 »

White Coat Investor wrote:What kind of a dock costs $30K? Are you going to live on the doc? :)

Maybe that's reasonable for a boat lift or something, I don't know. Never really priced it.

At any rate, if it's one of your goals and you can afford it, then go for it. In my mind, "afford it" means paying cash when it comes to a second property.

I enjoy a dock on a small 70 acre lake that cost in the 30k range. It has 2 electric boat lifts, one for a 20 foot pontoon and the other has room for 2 jet skis. The pontoon is under cover, there is a nice swing, a fish cleaning table and some other things. I think that for 35k that it is reasonably priced for Central Florida. I get a lot of enjoyment from the dock and can see why you might want to build one for yourself.
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Tamarind
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Re: Interested in lake property

Post by Tamarind »

In contrast to most respondants, I've seen this go very well. Here's the catch: the family that happily did this purchased their land and then waited until they were ready to retire to build. They financed the lake house primarily with proceeds from selling their primary residence. They knew what their financial situation was for retirement and where they could afford to splurge. They also know they will use the pontoon boat etc because they are there enjoying the lake full time. Their adult kids love visiting them.

If you want to visit a lake with your kids to play in the water, go camping or visit a lakeside lodge. It won't make a difference to them if you own a dock.
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Re: Interested in lake property

Post by mw1739 »

My wife's family has a lake house about an hour away and my kids are the same age as yours. We make it to the lake maybe half a dozen times a year. We would like our own lake property, but we don't have enough time on the weekends to enjoy it. It's a major time commitment even with a house only an hour away. Then there's the costs: utilities on two houses, boat maintenance and registration, landscaping etc.
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kingsnake
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Re: Interested in lake property

Post by kingsnake »

Living in Wisconsin, and I question buying a lake property as well.

Maybe buying an existing cabin would be less than a lot plus building? Or consider buying a "tear down"? :confused
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Pajamas
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Re: Interested in lake property

Post by Pajamas »

I do know a family in a northern state that has a "lake lot" that functions as a family gathering place. The grandparents and all of the adult children and the grandchildren live within five or ten minutes of the lot except for one family that lives right next door to the lake lot and one that lives about thirty minutes away. The lot has a small storage building with electricity and water, a porta-potty because they haven't connected to the sewage system or put in a septic tank, a couple of picnic tables, a boat house, and a dock they put out every year before Memorial Day weekend and take back in a a couple of weeks after Labor Day.

They use that lot almost every weekend and many times during the week during the summer. Sometimes a few of the children even bring RVs and camp for a couple of days, but it against some zoning code or ordinance so they can only do that for a short period of time or one of the neighbors complains.

It is easy for them to stop by for lunch if there is a cookout as part of a normal workday or spend an hour there before or after work, so it is not necessarily an all-day commitment "let's plan to go to the lake" type of thing. If it were even an hour away, they would definitely not use it nearly so often. Thirty minutes might even be pushing it.
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gunn_show
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Re: Interested in lake property

Post by gunn_show »

Watty wrote:If you decide that you want a lake home then it would be a good idea to wait until you are ready to build and do it all at once.

There are a couple of problems with buying an empty lot like that.

1) If your plans change undeveloped land can be very difficult to sell. Many real estate agents really do not want to handle undeveloped land and if they will even list it they may charge a much higher commission.
Many good and pointless comments thus far, and you have to remember the average user on this board wants you to buy 15 year old Toyo Corolla's for the rest of your life while brown bagging it to work and never buying a latte at Starbys on the way to work.

But Watty probably hit on the main thesis statement for me - this last winter I bought (with brother, mom, using inherited funds) a ski condo that is 6-7 hours away. So same "boat" you are in but even worse, in terms of proximity and usability.

But my family could start using the condo the day after we acquired it, and we did. We will shut it down here pretty soon to remodel as it's a gut job in a great location, but it is usable, and is currently on a rental program (similar to Carefreeap, except her property is the little SoCal sister to this large ski resort :-D ). I don't see how or why you would buy this now if you are maybe 5 years away from building? Did you forget to include additional pertinent information - such as you still plan to drive there every month to camp and launch the boat and whatever else? Or will it really sit there for 5 years? To me, something is missing here. Too much pointless risk (see Watty's notes above) to buy now and sit on it. In 5 years the price may go up, yes, but you will also have saved 5 years more income rather than spent 5 years worth of payments on something with no house on it. An no risk of having to sell it if you need, as empty land.

I LIKE the idea, as a guy that recently did the same thing, there is intrinsic value in owning your own vacation property, taking kid(s) to it year after year, and remodeling it as you see fit, maybe spending many weeks or months there later in life, maybe retiring there, whatever. Nothing wrong there. But the timing seems odd on this one. 5 years x 12 months x $1500 lake lot payment = $90000 out the door before you even build a house and really start to enjoy it. Why now?
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Nearly A Moose
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Re: Interested in lake property

Post by Nearly A Moose »

I'm not a vacation home guy, so take my thoughts with that in mind. But 30 minutes away is shorter than many peoples' commutes, and about how long it takes me to drive to the closest Target. It's about how long I think it was to drive to the little league park when I was a kid. If you're that close to the lake, do you actually need a lake house to enjoy it the way you're planning? Could you just rent dock space somewhere instead, or use a boat ramp? Seems like you could easily throw gear in the truck in the morning, head to the lake, spend several hours on it, and picnic somewhere nearby for lunch pretty easily. Just a thought. But obviously plenty of people have and love vacation property. I just feel I'd get bored.

I know a guy who pays to keep his boat in a full service dry dock. It's about 30 minutes from his house. It takes them about 30 minutes to get the thing in the water and ready. Whenever he wants to go boating, he calls them up while he's leaving home, and a clean fully fueled boat is waiting in the water when he gets there.
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Cosmo
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Re: Interested in lake property

Post by Cosmo »

Save your money and rent a vacation place or cabin instead. You will still come out way ahead even it you rent it 10 times per year. The honeymoon will be over in a few years when the home requires maintenance and you end up spending portion of your weekend time working on your second home keeping it maintained.
Lindrobe
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Re: Interested in lake property

Post by Lindrobe »

If you are looking at lakes that are 30 minutes from where you currently live, could you just build a year round lake home?

My husband and I looked at weekend lake homes all last summer on a lake about 45 minutes from where we currently live. I was very worried about the time and money we would spend on upkeep for two homes. We finally ended up buying a lakefront lot in April, but will build and live on the lake year round. The husband travels 80% of the week for work and works out of our home office when he is not on the road. I was planning to look for a new job anyway, so we plan to live at the lake year round after house is built. YOLO.
J295
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Re: Interested in lake property

Post by J295 »

My wife always wanted a lake home, as she had wonderful memories going to Minnesota in her youth with friends that had a lake home ..... we decided not to pursue a lake home ..... (we have friends with multiple homes, lake and otherwise, and they can easily afford them and seem to enjoy them especially when it is cold here at our home state; it's just not something that interests us) ...... here's some things from a non-financial perspective to consider ......

When our kids were growing up I honestly don't know when we would have gone to the lake. I was very busy with my profession, and we had tons of activities with our kids being involved in a wide variety of activities that consumed almost every weekend. We also traveled to over 40 states and a few foreign countries with our kids, and so traveling just to one place wasn't our cup of tea.

Now that our kids are grown, they fly in to see us for a weekend, or we travel to see them, or all meet somewhere fun. Getting to a lake wouldn't be as easy, especially now that there is a grandchild on the way. The "kids" (young adults) have their own lives, and they have places they want to explore with their friends and that doesn't necessarily mean going to a lake.

If we do want to experience a lake home, we can easily find one on VRBO, AirBNB, etc. You can rent a lot of time and quality homes for the annual carrying costs of owning a vacation home.

Passing a home down to children can be problematic. I've had many friends who have had quite the family squabbles over vacation spots that are now owned by siblings who have challenges co-owing property.

The property may appreciate ... it may not .....

I assume you know the line about the two best days of owning a boat .... the day you buy it and the day you sell it!

Having said all of this, the buy side may be ok for you, but I thought I'd share why it didn't fit us.
btenny
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Re: Interested in lake property

Post by btenny »

I think you can afford it. I think second homes or vacation homes are great for family time and fun. If they are close to your main home that makes them even better and more useful. But I think you might want to buy a complete condo or home. Taking the time and effort to build a second home will tax you and your family a lot. I built a cabin with/for my brother and it was tough. It was livable but never got completely finished which caused lots of issues. And do not worry about only going to your vacation home. Yes you will use it a more because it is cheaper. But you will still go elsewhere for fun and different activities.

I bought my first ski condo when I was 28. I purchased it when the price were very low to make it affordable. Mine was at a ski area 7+ hour drive from my primary home. My family and most of my extended family has been to our vacation condo/home for lots of holidays and vacation weeks. Most of our key family pictures are at our second home. When I worked I vacation rented it to offset some of the costs. I used our condo a lot when my kids were little until they were in college when I sold it. Now that I have retired I have full time second home in Tahoe instead of the Colorado ski condo.

Good Luck.
JGoneRiding
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Re: Interested in lake property

Post by JGoneRiding »

400k buys a LOT of vacation time. And your income isn't that high. If you could get the whole tHong for 100k it might make some sense but for just the lot that seems crazy. It will suck the life out of weekends
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cwademba
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Re: Interested in lake property

Post by cwademba »

My wife and I will look closer before we move forward with our purchase, but I think we have decided to wait on the lake lot due to reevaluating the situation. One question was asked why don't we just move to the lake, and the answer to that is we would love to, but my wife has a job that demands a living on system agreement with her employer to be management so this makes it impossible. I respect everyone's opinions and listening to individuals that have more experience with owning lake property. We feel like purchasing a used pontoon since we have the storage capability at our primary residence would be wiser and cheaper that the present time and we will reevaluate buying property in the next 3-5 years and have more cash to pay down and have a better understanding if we really want to tie that kind of money into a property to only be utilized a dozen times a year. And for some reason, I feel like we should wait until we have a net worth of 1 million before acting on this purchase and I really don't know why I feel that way except maybe psychologically? Thanks to everyone for their input and I will probably ask again in 3-5 years to discuss the topic.
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Re: Interested in lake property

Post by Carefreeap »

gunn_show wrote:
Watty wrote:If you decide that you want a lake home then it would be a good idea to wait until you are ready to build and do it all at once.

There are a couple of problems with buying an empty lot like that.

1) If your plans change undeveloped land can be very difficult to sell. Many real estate agents really do not want to handle undeveloped land and if they will even list it they may charge a much higher commission.
Many good and pointless comments thus far, and you have to remember the average user on this board wants you to buy 15 year old Toyo Corolla's for the rest of your life while brown bagging it to work and never buying a latte at Starbys on the way to work.

But Watty probably hit on the main thesis statement for me - this last winter I bought (with brother, mom, using inherited funds) a ski condo that is 6-7 hours away. So same "boat" you are in but even worse, in terms of proximity and usability.

But my family could start using the condo the day after we acquired it, and we did. We will shut it down here pretty soon to remodel as it's a gut job in a great location, but it is usable, and is currently on a rental program (similar to Carefreeap, except her property is the little SoCal sister to this large ski resort :-D ). I don't see how or why you would buy this now if you are maybe 5 years away from building? Did you forget to include additional pertinent information - such as you still plan to drive there every month to camp and launch the boat and whatever else? Or will it really sit there for 5 years? To me, something is missing here. Too much pointless risk (see Watty's notes above) to buy now and sit on it. In 5 years the price may go up, yes, but you will also have saved 5 years more income rather than spent 5 years worth of payments on something with no house on it. An no risk of having to sell it if you need, as empty land.

I LIKE the idea, as a guy that recently did the same thing, there is intrinsic value in owning your own vacation property, taking kid(s) to it year after year, and remodeling it as you see fit, maybe spending many weeks or months there later in life, maybe retiring there, whatever. Nothing wrong there. But the timing seems odd on this one. 5 years x 12 months x $1500 lake lot payment = $90000 out the door before you even build a house and really start to enjoy it. Why now?
Lol, our cabin is south of 10. We don't need no stinkin' skiers! :wink:
Every day I can hike is a good day.
chmcnm
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Re: Interested in lake property

Post by chmcnm »

Add the cost and upkeep of a boat. Not cheap. Also, it's funny how kids have their own ideas of what's fun and it might not jive with a lake house. We have two teenage boys. My wife and I came to the realization years ago that "our dream xyz (house, vacation, car) is going to have to wait until they're out of the house. We have fun and our boys don't run the show but it's very difficult to enjoy something you want to whenever the kids have different interests or other activities. If when your sons are older and they enjoy lake life, swimming, boating, etc then maybe it might be worth buying.
llessac15
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Re: Interested in lake property

Post by llessac15 »

We bought a lot on an 1800 acre lake last year that is only 20 minutes from our primary residence. It already has a boat house and a pier on it. It doesn't have a cabin yet. I bought a pontoon boat since I have very young kids and no need for a ski boat. We enjoy it and am happy with it thus far. I plan to put a 900 sq ft cabin on it sometime in the next 2-3 years. It definitely didn't make financial sense to do it but I'll let you know in about 10 years if it was worth it for the memories. The sunsets alone (with a few cold ones) are worth the $60,000 I've invested in the lot/boat! We will camp there 2-3 times per year for now. I'm on call every 3-4 weekends and we would stay there if we had a small cabin since we can't leave town during those weekends for vacation trips.

I say do it. As an Oncologist, I see too many people's life end much sooner than they want and am reminded that you only get one shot at making the most of this life. If you think a lake cabin will give you and your family some joy, then go for it. If it turns out to be a bad idea, just sell it and take your losses. At least you made a good effort to make 'life memories' with your family.
kaudrey
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Re: Interested in lake property

Post by kaudrey »

Two different stories in my family:

1) When I was growing up, we vacationed every year on a lake in NH, renting a cottage. My parents planned to eventually retire there, and at some point when we were kids, they bought 5 acres of land on the other side of the lake. The plan was that they would eventually build a house and retire to the lake. Well....they did EXACTLY that! They have been living VERY happily there now for over 20 years, and are approaching 80.

2) My DH and I bought a cabin in the mountains about 2 hours from our house 7 years ago, and just sold it two weeks ago. We used it a lot on weekends, and I still loved it there, but life got busier and we couldn't get out there as much, and also, we definitely scaled back some other things because of the thinking that we should use it since we were paying for it. It was never going to be our retirement location, but I originally thought we'd keep it until we retire (about 9 years from now). I don't regret it - it was relaxing and totally enjoyable and I have amazing memories; but we didn't make any money on the sale (the small town markets don't move much....), but it didn't work out as we planned.

YMMV.
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HomerJ
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Re: Interested in lake property

Post by HomerJ »

We bought a lake condo about 4 years ago.

We still love it. We go for two weeks in the summer (two separate 1-week vacations), and multiple 3-day weekends from May to October. We have a dock with a pontoon boat and a jetski.

Being a condo, maintenance of the grounds and roof and pools and parking lot and swimming docks and boat docks is all covered by our HOA fees. This is key for us. I don't have to spend any time when I am there on maintenance. Well, very little time. We do waste our FIRST spring weekend doing a full spring cleaning, maybe painting a wall or two, doing some boat and jetski maintenance. But after that, every weekend is just fun.

I definitely wouldn't want to own a single-family home. Much easier to leave a condo for the entire winter, and great to have someone else taking care of maintenance.

We love being able to store our stuff at the condo. We barely need to pack for a weekend. We already have toiletries, bathing suits, some shorts and T-shirts already stored at the place. We have all the kitchen stuff we like.

We bought the place with cash, so no mortgage. HOA fees are about $300 a month, property taxes and insurance about $2000 a year. Utilities (cable, electric, internet, etc.) run us another $2000 a year, so about $7500 a year carrying costs.

But we do rent it out 4-5 weekends a year which makes us about $4500, so it only costs us about $3000 a year.

But renting can indeed be a pain. We have to plan our trips around renters. We have a locked closet that we store all our stuff in when we rent. We have different comforters and sheets for the renters, so we have to change all the beds, and of course, it has to be perfectly clean (my wife's definition of perfectly clean is very different from mine). The last day at the lake is very different if we have renters coming the next weekend. Much more relaxed on the last day when we know we will be coming again before anyone else.

My wife does all the work of pre-screening potential renters, and that's real work. You really don't want to rent to someone turning 25 or someone having a bachelorette party. Now a grandma coming with her daughter and 3-year old granddaughter who want to go shopping at the outlet malls, and sit by the pool, sign them up!

Having a boat in a lift right there at the dock (maintained by someone else) is the real key for me. I would not want to deal with towing a boat, or putting a boat in at a boat ramp, and all that jazz. We just walk down to the dock, hit a button to lower the lift and off we go. We it there in place (on the lift out of the water) for the winter.

Before we bought this place, we rented at different lakes once a year for a week. When renting, we usually would pick a couple of days to rent a boat (rather expensive to rent it all week), and just do nothing but boat stuff those 2-3 days to get our money's worth.

Owning a boat allows us to take it out for a couple of hours in the late morning or early evening and avoid the traffic on a weekend afternoon. Use it whenever we want. We bought new, so no problems at all yet (4 years in).

Our place is 2.5 hours away. It's almost too far. It works for us, we can still leave on Friday at 4:00, and come back Sunday late afternoon, but I prefer 3-day weekends. 30 minutes away sounds like a dream (Why not just move there and make it your main house? I would!) 1-2 hours is fine. 3 hours is pushing it. Anything past that and it's going to be harder and harder to use just for a weekend.

My son loves our place. He doesn't do sports in the summer, so no problems with us leaving town often. We have a ton of fun. All day is family time. 100% happy with the place. Building great memories. This summer he will be able to ride the jetski by himself.

I hope to retire there, at least for the summers (we will have to find another place far south for the winters). I'd like to stop renting, but $4500 is $4500, and the work is fairly minimal for the money.
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Crimsontide
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Re: Interested in lake property

Post by Crimsontide »

Cosmo wrote:Save your money and rent a vacation place or cabin instead. You will still come out way ahead even it you rent it 10 times per year. The honeymoon will be over in a few years when the home requires maintenance and you end up spending portion of your weekend time working on your second home keeping it maintained.
Agree with all of this. I couldn't imagine working full time and having to maintain two properties year 'round.
dave_k
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Re: Interested in lake property

Post by dave_k »

My wife and I live on a lake, and we love it! We do lots of boating in the summer. We also bought a house on the beach that we plan to retire to, which is a vacation rental until then (we're there a few weeks a year - it's not nearby). So I'd be a hypocrite to discourage you.

However, there are some things to consider, which others have already pointed out. You'll probably end up either spending most of your vacation/free time there or feel like you're not getting enough use out of it. You'll also end up doing a lot of maintenance when you're there, unless you pay someone else to do it or you're there quite a lot. Make sure you get building permits before rules are changed that could prevent it. Also, water based activities and toys can be a significant expense (boat, PWC, fuel, maintenance, etc.).

It may not be great as an investment, especially if it's not rented when you're not using it, but if you're serious about retiring to it in the not too distant future that may not be a big deal. Is there a possibility of renting it out once you build? How much of your expenses might you be able to cover?

I'll join the others in saying that $35k is excessive for a dock, unless it's quite a large/fancy one with a roof, includes a lift, etc., and do you really need that?

I'll also second Lindrobe's idea of moving there if it's close enough to commute. Living on the water is better than just visiting!

Edit - I see that you replied above and addressed this, but I'll leave my reply for reference.
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HomerJ
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Re: Interested in lake property

Post by HomerJ »

Crimsontide wrote:
Cosmo wrote:Save your money and rent a vacation place or cabin instead. You will still come out way ahead even it you rent it 10 times per year. The honeymoon will be over in a few years when the home requires maintenance and you end up spending portion of your weekend time working on your second home keeping it maintained.
Agree with all of this. I couldn't imagine working full time and having to maintain two properties year 'round.
Condo is one answer to this. Let someone else maintain the second property for you.
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