I owned a vacation home for a while and I used it a lot at first but soon we were only going there a few times a year. Makes more sense to just rent lodging.
I've had a couple vacation properties. but taxes, maintenance and the feeling of having to go there instead of other places gets to you. I sold one and have another with my parents, but they go there a couple times a month. So this one is worth it. but for the vast majority of people, I'd say its not worth it.
A vacation home is never "paid off". There are lots of ongoing expenses: insurance, security contracts, real estate taxes, HVAC repairs, water damages, window replacements, utilities, HOA fees, dock/accessory building repairs, dead tree removal, landscaping fees, mowing service, etc. If you save some money by doing some maintenance chores yourself, it becomes work instead of vacay.
I’ve had a vacation home since 1986. The first one cost 44k and was summers only. We were skiers, so we sold it 10 years later mid 60k and bought a year round vacation home for 110k in 1997. It’s now worth 500k. We use it all the time, year round. Just like Dave Ramsey rambled on about. I rent it out for $1500/wk in July /August. It makes your family much closer and the memories hanging out in the boat at the sandbar every weekend are worth it.
@@ln5747 What it means is life is about more than how much money is sitting in an account waiting for me to get old. My kids and I used to go out in the boat at night to watch shooting stars, we spent summers putting clams in the paddleboat, catching minnows and swimming in the 5th cleanest lake in the world. We tried fishing, but never caught anything. The memories and the fun was worth more than a million more dollars in the bank. I could have worked summers and had kids in daycare. No thanks!
Yep... now who can afford to buy vacation homes at 500k? hardly anyone man, so loans are mandatory or no vacation home. thats the options available now
@@oshkoshbegone People now are buying regular homes in vacation towns and have a boat kept at a marina. But now the locals can’t find a reasonably priced home because they are outbid by out of staters. No one is selling their vacation home because there is nothing to replace it with, no more selling to upgrade.
I’m not buying a second home because I’m not interested in looking after a property from miles away! It’s just a hassle and expensive liability! Just rent a holiday home! Would put the money into making my life comfortable and easygoing!
Me too. Bought it 22 yrs ago. Now I’m retired, selling my paid off main home of 31 yrs and moving into my paid off summer place before going to my paid off condo in FLA. NO debt is key. Ya, most properties will go up but if your paying interest, the numbers don’t work. I bought into the DR strategy 18 yrs ago and that’s how I can do this. I lived below my means and saved and invested.
... Meant to say caller never got a word in "edgewise" - or had chance to express any comments to what Dave and Dr. D said - guess that's how this show works?!!!
@@jimroscovius Dave contradicts his own argument though. His lake house has appreciated in value. Toys on the other hand do not appreciate - boats, RVs and his comparables are all depreciating assets. In my life I live by the rule that you pay cash for depreciating assets and can borrow reasonably on appreciating assets.
I very much appreciate how need-focused the Ramsey clan is. That discriminating awareness is important no matter what, even as I know I don’t make all the right decisions regarding want and needs.
I paid off my first home and bought a lake house years ago with a mortgage. So many options, you can always sell it rent it out and make a ton of money! Enjoy life you can’t take it all with you.
EXACTLY. You buy a vacation home because you can truly afford it and want a property in that location. Buying it as an “investment” would subject you to being a distant landlord and then just sweating out having it rented out all the time. All it takes is one bad tenant/renter to destroy your property. No thanks - I don’t want any renters occupying a home I plan to live in.
My beach home is my second home. Paid cash and don’t want or need to rent it out. My CPA says it’s still an investment. I still rent in other countries.
My friend’s family has a property in Italy. It’s managed by a housekeeper and one time she saw 20 pairs of shoes by the front door. Nothing happened but it was enough of a scare for them to stop renting it, one house party and your place is wrecked
I think it depends on where and how you can get supplemental income. If you can rent it out because people want to go there and be there then its a win, but if its a vacation home where no one wants to go.. thats tough.
@chrisgooglemaps2108 well I purchased it with my primary and vacation home being under 25% of take home. I was expecting 20% coverage from renting and I am getting 100%+ coverage. So how is this risk on that?
@@Reyma7 what if my purchase with primary home is under 25% of my take home without the rental money. With the rental money my housing cost is under 10%.. If I get $0 rental, still well off. Stop. Boxing your life in
I bought one when I was 26. Rented it out. Fully paid off by when I retired. Pretty simple and I made a shitton off of it during all those years. Debt makes you wealthy if you use it wisely.
I lived with plenty of people who could not afford cheap rent living with me. Being a landlord gets hard when people can't afford to pay!!! Now is different but prior to 2013 or so super low wages make paying bills at full price almost impossible. Your quote: (I bought one when I was 26. Rented it out. Fully paid off by when I retired. Pretty simple and I made a shitton off of it during all those years. Debt makes you wealthy if you use it wisely.)
Once you’ve watched enough Dave Ramsey videos you can simply just predict what he’s going to say. At this point I don’t get much of anything out of the videos anymore beyond a small amount of entertainment. Don’t fall into one frame of mind like I did only watching and listening to Dave’s principles. I’ve learned a lot and am thankful for Dave and the others, but time to move on!
We paid cash for a share of a lake house 21 years ago and we have loved it but I can see in retrospect that a payment would have been a huge mistake. Life happened and it would have been like a millstone around our necks.
This is an excellent video. People in my group of friends and family often talk about having a vacation property. While looking at getting a vacation property, it is far more expensive than renting from somewhere, and it ties you down to that specific property. If you're going to go on vacation, you're probably going to go to that property. If you own the property, you are now responsible for maintaining it and ensuring it stays in good shape. It's a huge commitment. I completely agree with Dave here. A vacation property only makes sense if you can pay for it in cash, and if the cash you're putting towards it is a small amount of your net worth. If it's a large fraction of your net worth, it ties your money into something that may not be a good investment or that ends up being a emotional and financial drain that keeps you from getting further ahead. It was only lightly mentioned here but didn't actually get talked about, but a lot of people justify it by renting it out on AirBnB. Renting out a piece of property on AirBnB or just as a regular rental requires a very different evaluation when looking at it. A lot of people love to say a vacation home is an investment and so their numbers end up skewed. If you're looking for an investment, you need to look in places where you're going to maximize the rent potential vs the cost of the house vs the cost of the upkeep. Renting out a mountain home on a lake (in this example) may be very expensive to maintain (even with hiring out property management) because of its remote location. Furthermore, you do deal with a lot of risks when renting out a property. For example, some people will trash the property. Some people will stay and live there until you can evict them (which in some jurisdictions can take over a year). AirBnB has had a lot of crackdowns, so if you're in certain areas, the zoning laws could prohibit AirBnB, and if you're not able to rent the property out on the regular market or in some other way hold it, you're facing a foreclosure, and you're likely going to sell below market value so that you don't bankrupt yourself or get a foreclosure on your credit. Doing an AirBnB or VRBO investment can be lucrative if done with the correct numbers and safeguards against the risks, but a lot of people jump in because they see it as a way to fund their vacation home only to find out that they're losing money or to have it quickly become a nightmare. For most people, most of the time, the more financially wise choice is to just invest your money, then rent a place when going on vacation. It's far cheaper, and keeps you from getting tied down. Then if you end up with the money to pay cash and the total amount of buying/maintaining/improving the property is small compared to your overall net worth and income, then it can be a great purchase.
Agreed. He’s so clear-headed about how money fits into life. I hope I can get my kids to follow Dave’s philosophies when they’re older. Might save me a lot of sleepless nights.
I bought a cabin in the white mountains of NH 4 years ago. It's worth twice I paid for it. My mortgage payment is less than $1000/month and that includes taxes and insurance. I rent it occasionally on Airbnb for $200/night. It's nice building all of the NET WORTH for peanuts!
I guarantee you this guy wants a home in Summit County because his weekend ski commute is miserable. I have friends who’ve done exactly this and can’t sell their properties that now have insane HOA’s others don’t want, and also realized the time people want to rent the place…is when they want to use it.
Dave's overall plan is great for the vast majority of people, but applying every principle as a blanket to every situation just doesn't make sense. Every person's life is different from the next person's. My wife and I have a second home that we rent out and it's been a fantastic decision. It's only 25 minutes from our primary home so we get to use it a lot when it isn't being rented, it's easy to care for/clean given that it is so close to us, and the rental income has been awesome. It completely pays for itself. It would have been nice to hear more about this property this guy wanted to buy, but Dave shut him down right away. If it's close to ski mountains like he said it is it could be a great source of income for him as well as an appreciating asset to help him build wealth for later on in life. Dave always says your most powerful wealth building tool is your income and a rental property fits right into that philosophy.
a guy I worked with told me he bought a hilton head beach house. I thought it was a bad idea but didn't say anything. Three years later he was selling it at a loss. The real-estate management company ate up all the profit and renters were always damaging something.
I had one in nags head and property management kept increasing percentage. The interest rate was really high so when I got sick I sold. But now it's worth 250k. If I hadn't gotten sick I could sell it now and retire
Bought a 6 BR beach front with cash, had it for 3 years averaged 31 rental weeks per year, sold it 3 years later for 2x what I paid. It’s not difficult buy low sell high. Market condition is EVERYTHING. Many people dabble, I took it seriously like it was my house. 100k in expenses 100k in income. Put a lot back into improvements, it was a well oiled machine. It let me retire in the mountains at 55.
I thank you Dave and what your family went through in order to be a blessing to someone like me. I paid my home off in thirteen years, have a b.a. in underwater basketweaving, but my memory of you started when you were on TV. I will run away with wisdom or good advice regardless of disagreement in other areas. Stay blessed!
Been there done that. Paid cash for a lake house, a 27 ft tri-toon, and 18 ft fishing boat. Sold everything 20 yrs later. Tripled our original money on the house. But when I totaled what we invested in it when calculating for Capital Gains tax, we actually only realized about 30% of the increased value. Waved goodbye to most of what we spent on the boats. In the end, not a good investment if that is what you are expecting. Dave is 100% correct. These are toys, not investments. Did we enjoy it? Everyone in the family did…except me. Shortly after buying it, the company I worked for asked me to take a position with a very high level of international travel, and the pay to go with it. Wound up traveling 70% of time for the 15 years before I retired. But our retirement fund and my pension grew incredibly well. Knowing my family enjoyed the lake house eased some of my guilt for being gone so much. Listen to Dave. If you are ready to buy toys, go ahead. But as he says, only pay cash.
My grandmother had a cabin built on a lake in Montana. Beautiful location and great memories but I grew up thinking vacation = work. Every vacation turned into a project to fix/paint/re-roof/insulate/repair that cabin...and the last day we spent cleaning it for the next family coming up. Personally, I'll take an Airbnb instead.
Why would there be hoopties? When you don't spend all your money on car payments you can save for a nice car. In dave's words If you stop taking all these small trips you can take a pretty big one
A family member with a paid off primary home bought a vacation condo with at the Jersey Shore for $240k and has a $140k mortgage. In 6 years, the condo has more than doubled and the mortgage is now about $135k. He is sitting on two homes worth over $1.1 million, no car payments, zero debt outside of the mortgage.
My vacation home was paid off over 50 years before I was born! My Great grandfather built it and it stayed in the family it wasn't his vacation house it was his house. He built a lot of the houses in the ronkonkoma area of long Island.
A short-term rental that pays for itself when you have a very modest primary residence which you hold seems like a wise example since we’re able to bless others presently with “free” weeks with it. Buy and hold. Yes, there are costs as you go, but the feeling to bless others the whole time is great. Not everyone gets to become a millionaire radio/podcast host after a bankruptcy. I think for the person who’s managing finances responsibly and methodically, long-term managed debt is fine. While also paying mind to liquidity thoughts. Long-term rentals are tougher to justify because renters may not pay up front and govt edicts and pandemics can roil them more easily.
Absolutely spot on. Don't forget a property still has bills/maintenance even when you are not there. It's not worth the stress unless you have bucketloads of cash and can pay someone to look after it for you.
My RV cost me $1700/month every month I owned it. Paid off, just depreciation. Finally told wife we could enjoy expensive hotels instead for less money.
I love how Dave didn’t even give this guy the time of day…just one question, “are you paying cash for this?” Caller: “Well. No…I have a down payment.” Dave: “Well then, No; You have no business buying a second home…you cannot afford it.” Sometimes, you just need someone to call you out on stupid. Ps. I bet the guy still buys the second house.
@@MichaelSamulak I mean he should've known what Dave would've said about going into debt to pay for a second home, but for all we know his income is so high he could've afforded it with ease. Dave made a lot assumptions that this guy would need to cashflow the property to afford it (i.e., discussing renting to others). But Dave didn't really let him even have a chance to speak.
@@OTOWN2STOCKTOWN Your first home is not a toy. It's something you need. Plus interest rates for second homes are often higher. Dave also recommends buying your first home in cash, but that's just a really high hurdle for a lot of people.
I paid cash for my vacation home. I love using it. Yes, a hotel or airbnb might be cheaper. But its nice to stay here during peak season without rent, rental deposits, and without hotel extra charges. Repair costs and service charge are not negligible. Would i buy again..yes, but probably a more expensive one.
I have purchased vacation homes with the ability to do a minor land partition and profited. I have purchased vacation home lots and profited. A vacation home is just a tax category for the smart investor to profit. The best one I purchased was when I climbed a tree and saw the most spectacular ocean view. Put in a culvert, apron, drain field permit and cleared the bench for construction. Sold the lot and house for profit. My vacation is making money.
A second home is not just a toy. Our river home contributes to our wellbeing which is fare more valuable to us than just the financial risks. I purchased a vacation home and it pays for itself by short-term renting in when I anm not using it. In the event, I do not get renters I have the cash reserves to pay for it in full if necessary. I just can justify taking a half a million dollars or more out of my mutual fund invstments that double every 7-8 years to pay cash for a second home. We live in Phooenix and the river Home is in WI. Once we retire the Phoenix home will be our will become our winter home and the WI home will be our summer home.
Thought about this not to long ago. Always wanted a tiny cabin on land in the woods but the costs of everything just kills the idea. Maintenence, mortgage, insurance and other costs, doesn't seem worth it. I have a 9 year old pop up A frame camper that allows for me to go anywhere to get away at camp grounds in the woods. Less strings attached. And a whole lot cheaper to get the feeling or moments I want. Land would be nice and alittle bit cheaper with out a structer on it where my favorite place is. I would just use my camper or get a bigger one and haul it there for the summer. But even land is pricey now.
If you got so much time off you can enjoy vacationing so often just Move to your 'vacation home' and sell or turn your home into a rental property. If you are like the rest of us and you got 2-3 weeks free a year to vacation, probably best to just Rent a place for a week or two..... Upkeep, maintenance, taxes, and such, its gonna be a lot.
We bought a second home on a lake with the plan it would be our retirement home. We were spending a lot of time and money on renovations so we decided to turn it into a short term rental to cover the mortgage and improvements. It has turned into a great financial investment, but now we are not able to enjoy it at all and is actually work.
Why can’t you enjoy it as well. Book out the rime you want to stay there. We did the same thing and love it. We use our lake house two weeks in the summer and two months in the winter and short term visits are every weekend, so more than paying for the property. We are gonna get another!
Unless you have enough money for someone to do repairs on a vacation home then I don't think it would be worth it, you spend your whole vacation fixing the vacation home.
If you wait to pay all cash for a vacation home, you probably won't own one until it is too late to matter and enjoy. I was looking at vacation homes in Montana during Covid. I saw one I liked. It was listed at 1.7 million. On the lake...gorgeous. I looked at the price history and the home sold for $270K just ten years earlier. If you had waited to pay in cash...well, someone else now owns it and has a 1.7 million dollar home on the lake and you have some cash in the bank. If you have a plan, have savings that can carry you a few years in the worst of any economic crisis and you put enough down that your payment is manageable, then you mitigate the risk leveraging some debt. I abhor debt, but I also don't want a life where everything is only in the far distant future.
We bought a vacation home in the mountains about five years ago and we spend 3-4 months every year here with our four kids. My wife and I are both self-employed so that offers us flexibility that most people don’t have. Bottom line, we have already made a lifetime of memories here and It has tripled in price in those five years. No regrets!
I had a vacation home (financed for 10 years). Interest rates were low, I was able to deduct the interest, and I sold it for 60% more than I paid for it. It was the best 10 years of my life.
Paid off my main house in my 40s and bought a vacation home and paid cash. Nothing wrong with that. We use the vacation home every other weekend and two weeks out of the year. A very worthwhile purchase
For me, I would prefer to rent someone else's property. Then, I don't feel obligated to go and maintain a second home. We like variety and like to see new places. The funds tied up in a second home would likely impact our travel. We also have some freeloaders in our family who I'm sure would try to take full advantage.
I don’t want to live where I vacation. Nice places to visit are often unreal, fantastical places where normal people don’t live. Maybe we vacation in different places…
Second home? Many Americans that are living in their vehicles would like a first home! Just don’t over extend yourself financially. Remember sometimes unforeseen things happen.
@@Jimfromearthoo7 Nope. Millions do this in places like Florida. All I did was avoid debt,save,invested,used common sense,and lived within means. Waited for opportunity and when it arrived I bought an island beach home. My home was a ford van in the 80s so been there done that. First home was a one 1bed/1bath apartment.
We have two beach homes, one in Florida and one at the Jersey Shore. Paid cash for both. The Jersey Shore home pays for itself by renting a few weeks each summer and we use it during the free weeks. The Florida home we spend winter at. No debt and both have increased in value nicely.
I have a 2nd property on the lake. Cost me just maintenance upkeep costs, taxes and utilities. It was willed to me from my parents. I could never afford to pay for this place in cash. Glad it was a gift !
He has a point. If you are paying a mortgage on one home and have a down payment on for the vacation home but would still have to make payments , life happens and what happens if you can’t make that mortgage on two homes ? Like a pandemic or what if you got really sick and couldn’t work for months etc. I have been dreaming of getting a cheaper beachfront condo unit at Myrtle beach. I seen some affordable ones but I don’t think I can make two mortgages. I am currently trying to pay my one mortgage off early as I’m making double payments when I can on the principal. I think the smartest thing for me to do is pay my mortgage off while putting away as much as I can monthly and when mortgage is paid off I see how much I can pay toward rhat Myrtle beach property. Thank you for this harsh realization !
I have a $500 car its reliable has no air con and one of the doors don't lock. Doesn't brake down I just gota remember not to leave valuables in there lol
Mr. Dave, we didn't quite have a million dollars but we bought a new car with cash ( that cost almost as much as our first house. Alarming! LOL but the repairs on the old one were costing nearly a car payment every few months, and there are warranties on new ones...we drive em 20+ years ( until the wheels fall off ) so depreciation doesn't apply to us! We are not going to sell it any time soon. The free repairs for ten years makes it so worth it. That old car stranded us out of town more times than I can count. Incidentally after paying cash for that we still had enough from "beans'n ric'n it" to pay our house off 14 years early! Yay. That was a very good couple of weeks we had last year. Yippeee. Saving up now to buy the second one for when my husbands 22 year old truck bites the dirt. Hi Dr. John! Bless.
We have a vacation home. We use it two weeks in June, July, and August, and Seotember. Rent it out the rest of the time. Rental money in cash only. That way I get to keep ALL of it.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
I love how his advice is always "if you can't pay cash don't do it" but there's no solid realistic advice to saving up that cash. That's what these callers are trying to do by making these investments
My sports car, boat, vacation homes were all financed. I invested the cash I could have used to purchase them outright and make the payments with the profits from my investments. The underlying assets from my investments have also increased in value. If you wait until you have the money to buy your toys in full you’ll most likely never get them. If you do pay cash for your toys, I recommend sharing those purchases with a small group of trusted friends and family.
My vacation homes have been exclusively beach front. Our family has owned at least one for more than 45 years. All have appreciated far more than any other Realestate we have invested in. One has doubled in 5 years.
Dave’s advice is absolutely correct. That being said, if Americans practiced financial discipline, the nation’s economy would probably be half its current size.
Vacation homes are the most fun when you are young and active with young kids, but that's when people don't have enough to buy with cash. Then, when you can afford it, you are less active, a vacation home becomes a chore to maintain, and kids are too busy with their adult lives to visit. (According to my neighbor with a lake house they are now trying to sell)
I feel the opposite tbh,since when kids are young they have lots of activities to go to. So it would be hard to consistently get down to the house. This is why my dad waited till I was 19,I'm done with baseball and everything and we can go down on a consistent basis and use it
I purchased one in 2019. Down money with a low interest HELOC. It was booked out for three years and paid for itself and a little bit more. Sold it last year and netted 300k. Not too shabby. Gotta be careful now with interest rates. Hard to make it work now but it was great when there was low interest rates
We love our lake house upstate NY and it is closed to ski resorts, paid for it CASH. I invite family and friends all the time. It didn’t harm our financial situation and it is a lifestyle choice.
Most Billionaires would disagree with this. Dave doesn't understand the power of leverage. If you want a vacation home: 1)Form an incorporated entity 2)Get others to invest in it (reduces your risk) 3)Have the company take the debt (leverage) 4)Stay there personally when vacant 5)Rinse and repeat 6)If it doesn't work out, do corporate bankrupcty which allows you to restart essentially.
I say this very same thing about RVs. We have a very affordable travel trailer that we paid cash for and can really enjoy. Every time we go to a campground, we see these giant 5th wheels and motorhomes that folks are paying giant payments on to use half a dozen times a year. Ours has truly paid for itself too by not getting hotels and having to eat out every meal when we go on a trip. We have a place to stay at the cost of a campsite with a full kitchen and still get to enjoy "camping" because it's not a penthouse on wheels. It's all relative, no matter the income level. Just buy what you can afford!
When you factor in taxes, insurance, repairs/maintenance, etc....it almost never pays to own a vacation home and it's much better to rent. Unless of course your family's beach home bought in the 1970's was passed down to you and dropped in your lap with $0 cost basis
I think he didn't let the caller finish his question. What if it's a vacation rental that makes money primarily when you aren't using it? It's only a "toy" if it depreciates and you rarely use it.
Situations are different though. We live in the north and bought a second home in Florida 10 years ago with nearly half down payment at 4 percent and now it’s paid off and worth more than double.
While Dave is right here, it stings knowing the inflated cost of homes/real estate in todays market makes it difficult to fulfill this dream of a vacation home for the vast majority of Americans. Is it possible? Yes. But hell of a lot more difficult for younger generations. Real problem and shows that the wealth gap is getting worse.
Agreed, my thoughts were, when you add up annual taxes, insurance, HOA, maintenance, and mortgage plus interest, (travel airfare too in some cases) you can rent a air b&b for a fraction of the costs, no headaches. On the other hand, if you have the cash to buy and costs are a no brainer, then you should buy..
I’m always surprised how little they listen to the caller before passing judgement. I have nothing against it .. I just think there’s nuance to things and Dave only has a sledgehammer .. lol
I had a lake house for 9 years. Bought it for $395k, sold it for $1.1m when the kids kept saying they were bored (teenagers by then). Had a beautiful $72k boat. Sad to see it go but no regrets. We now rent a waterfront place for 2 weeks a year, including a boat. Hell of a lot cheaper, less hassle and zero maintenance. The biggest plus is we can do it anywhere in the world now, not at the same location constantly. It was a nice investment but honestly we are glad we got it out of our system. No need to own anymore although the ROÍ on the investment was very nice. We are multimillionaires now and don’t feel a need to have a stationary second home. Been there, done that.
For most of us either we buy a house or we rent a house!!!! Some stuff is optional but housing is an absolute necessity. Your quote: (No home is an investment, it's an obligation when you have a payment to make.)
@@donaldlyons17 Very true. We all need a place to stay, but having a place to stay where you don't have monthly payments is a great place to hopefully end up.
My vacation home is a tent. Only used it four times, but at least I paid cash for it.
Mine too!
I’m looking to upgrade to a large historical canvas tent for $800-$1000
FUN!!! ⛺️
👍👍👍 that's great!
Mine is a cardboard box. When its fine on Saturdays I set it up in the back yard and go camp in it.
NICE!
@@unnamedchannel1237 Even if you're joking that sounds like fun.
I owned a vacation home for a while and I used it a lot at first but soon we were only going there a few times a year. Makes more sense to just rent lodging.
Mark, You are right, I get bored going to the same place and now with these crazy shut down, might not get out of the country.
Tenants do not often pay. Then they ruin it. Add to this taxes and cost of eviction
Vacation home vs. being retired and having a 2nd home.
I've had a couple vacation properties. but taxes, maintenance and the feeling of having to go there instead of other places gets to you. I sold one and have another with my parents, but they go there a couple times a month. So this one is worth it. but for the vast majority of people, I'd say its not worth it.
Tenants do pay on a vacation property because you rent it weekly or monthly with payment in advance. But you have to pay management and cleaning fees.
A vacation home is never "paid off". There are lots of ongoing expenses: insurance, security contracts, real estate taxes, HVAC repairs, water damages, window replacements, utilities, HOA fees, dock/accessory building repairs, dead tree removal, landscaping fees, mowing service, etc. If you save some money by doing some maintenance chores yourself, it becomes work instead of vacay.
Agree 100 percent 😊
Excellent points!
I'm waiting to hear the idiots disagree with this.
I’ve had a vacation home since 1986. The first one cost 44k and was summers only. We were skiers, so we sold it 10 years later mid 60k and bought a year round vacation home for 110k in 1997. It’s now worth 500k. We use it all the time, year round. Just like Dave Ramsey rambled on about. I rent it out for $1500/wk in July /August. It makes your family much closer and the memories hanging out in the boat at the sandbar every weekend are worth it.
Doesn't mean you wouldn't be worth more if you had invested that money in pure investments.
@@ln5747 What it means is life is about more than how much money is sitting in an account waiting for me to get old. My kids and I used to go out in the boat at night to watch shooting stars, we spent summers putting clams in the paddleboat, catching minnows and swimming in the 5th cleanest lake in the world. We tried fishing, but never caught anything. The memories and the fun was worth more than a million more dollars in the bank. I could have worked summers and had kids in daycare. No thanks!
Yep... now who can afford to buy vacation homes at 500k? hardly anyone man, so loans are mandatory or no vacation home. thats the options available now
@@oshkoshbegone People now are buying regular homes in vacation towns and have a boat kept at a marina. But now the locals can’t find a reasonably priced home because they are outbid by out of staters. No one is selling their vacation home because there is nothing to replace it with, no more selling to upgrade.
Like he said...it only works when it works. You made an educated decision that just so happened to work. Great for you...but it was still a gamble.
This guy got shot down hard. But Ramsey is right..a vacation house is more of a status symbol than an actual need.
@@saulgoodman2018 Again, you are wrong, Saul.
@@saulgoodman2018 your right, he doesn’t know how much he makes, but he does know that he can’t pay cash. That’s what matters
It’s vacation home not vacation louse.
@@saulgoodman2018 It's the only smart way.
Saul the Troll made his appearance 🤣🤣
I’m not buying a second home because I’m not interested in looking after a property from miles away! It’s just a hassle and expensive liability! Just rent a holiday home! Would put the money into making my life comfortable and easygoing!
✅ I hear that.
Plus you can go anywhere you want every year and not be tied to one place
@@gabemondry and you won’t get bored with having same holiday again and again
Yeah, don't invest in income producing assets! Put your money in a mutual fund instead!
Just because you’re lazy doesn’t mean it’s a bad idea for other people.
Guy was dead in the water the second he mentioned Suze Orman haha
I bet Suze would at least run the numbers for him.
I bought a vacation home with the intention of moving into it when I retired.
Went into it eyes wide open.
Worked out just fine.
Perfect!
Me too. Bought it 22 yrs ago. Now I’m retired, selling my paid off main home of 31 yrs and moving into my paid off summer place before going to my paid off condo in FLA. NO debt is key. Ya, most properties will go up but if your paying interest, the numbers don’t work. I bought into the DR strategy 18 yrs ago and that’s how I can do this. I lived below my means and saved and invested.
That's my dream too. Did you get it through a loan or cash while working?
"It doesn't fit into the Ramsey plan"... Then WHY are you calling Dave Ramsey to ask if you should do it?
@The Ramsêy Sh0w Hîghlíghts• Sounds legit.
You know it’s bad when he doesn’t even ask what their household income is. This guy never stood a chance.
He can't pay cash so his income doesn't matter. He can't afford it. We paid cash for our cars, our Spyder, and our remodeling project.
The caller only spoke briefly in the beginning but they rambled on after his initial words and the caller get a word in even at the end.
... Meant to say caller never got a word in "edgewise" - or had chance to express any comments to what Dave and Dr. D said - guess that's how this show works?!!!
@@donnafontaine2799 There was no reason to ask about income. If he can't pay cash for a toy, then he can't afford it. No reason to ask more.
@@jimroscovius Dave contradicts his own argument though. His lake house has appreciated in value. Toys on the other hand do not appreciate - boats, RVs and his comparables are all depreciating assets. In my life I live by the rule that you pay cash for depreciating assets and can borrow reasonably on appreciating assets.
I very much appreciate how need-focused the Ramsey clan is. That discriminating awareness is important no matter what, even as I know I don’t make all the right decisions regarding want and needs.
I paid off my first home and bought a lake house years ago with a mortgage. So many options, you can always sell it rent it out and make a ton of money! Enjoy life you can’t take it all with you.
Vacation homes are not an investment, the times you can actually rent them is the time you want to use them
EXACTLY. You buy a vacation home because you can truly afford it and want a property in that location. Buying it as an “investment” would subject you to being a distant landlord and then just sweating out having it rented out all the time. All it takes is one bad tenant/renter to destroy your property. No thanks - I don’t want any renters occupying a home I plan to live in.
My beach home is my second home. Paid cash and don’t want or need to rent it out.
My CPA says it’s still an investment.
I still rent in other countries.
My friend’s family has a property in Italy. It’s managed by a housekeeper and one time she saw 20 pairs of shoes by the front door. Nothing happened but it was enough of a scare for them to stop renting it, one house party and your place is wrecked
If they're in the right location they certainly are investments
You don't have to use it all the time. Problem comes when the rental season is too short
I got a vacation home, bought on debt. It cash flows on Airbnb and my family uses it months out of the year. Best decision I ever made.
I think it depends on where and how you can get supplemental income. If you can rent it out because people want to go there and be there then its a win, but if its a vacation home where no one wants to go.. thats tough.
There are also people that bought winning lottery tickets. I'm sure they would say the same thing.
@chrisgooglemaps2108 well I purchased it with my primary and vacation home being under 25% of take home. I was expecting 20% coverage from renting and I am getting 100%+ coverage.
So how is this risk on that?
Dumbest * decision
@@Reyma7 what if my purchase with primary home is under 25% of my take home without the rental money. With the rental money my housing cost is under 10%.. If I get $0 rental, still well off. Stop. Boxing your life in
I bought one when I was 26. Rented it out. Fully paid off by when I retired. Pretty simple and I made a shitton off of it during all those years. Debt makes you wealthy if you use it wisely.
We are not in 1960 anymore the house doesn't cost 12k
@@musicpro7278 no I totally agree. You legit need to go into a lot of debt in most cases. Nobody has 700k to pay a house off in full right away
I lived with plenty of people who could not afford cheap rent living with me. Being a landlord gets hard when people can't afford to pay!!! Now is different but prior to 2013 or so super low wages make paying bills at full price almost impossible. Your quote: (I bought one when I was 26. Rented it out. Fully paid off by when I retired. Pretty simple and I made a shitton off of it during all those years. Debt makes you wealthy if you use it wisely.)
@@musicpro7278 $25K in 2010 in PHX, AZ
@@donaldlyons17 yeah that’s why you vet the tenants well to make sure they have solid income first
Once you’ve watched enough Dave Ramsey videos you can simply just predict what he’s going to say. At this point I don’t get much of anything out of the videos anymore beyond a small amount of entertainment. Don’t fall into one frame of mind like I did only watching and listening to Dave’s principles. I’ve learned a lot and am thankful for Dave and the others, but time to move on!
I feel the same way. Who is another good one to listen to?
Themoneyguys and jazz wealth
@@erikrohr4396 minority mindset
@@erikrohr4396 the money guys
@@JERRRY26 they are great, with a lot more nuance too
I really admire how consistent Dave is in his philosophy.
Laser focus
No need to change if it works!
Avid Dave listeners knew this was over before Dave spoke.
💯💯
We paid cash for a share of a lake house 21 years ago and we have loved it but I can see in retrospect that a payment would have been a huge mistake. Life happened and it would have been like a millstone around our necks.
This is an excellent video. People in my group of friends and family often talk about having a vacation property. While looking at getting a vacation property, it is far more expensive than renting from somewhere, and it ties you down to that specific property. If you're going to go on vacation, you're probably going to go to that property. If you own the property, you are now responsible for maintaining it and ensuring it stays in good shape. It's a huge commitment. I completely agree with Dave here. A vacation property only makes sense if you can pay for it in cash, and if the cash you're putting towards it is a small amount of your net worth. If it's a large fraction of your net worth, it ties your money into something that may not be a good investment or that ends up being a emotional and financial drain that keeps you from getting further ahead.
It was only lightly mentioned here but didn't actually get talked about, but a lot of people justify it by renting it out on AirBnB. Renting out a piece of property on AirBnB or just as a regular rental requires a very different evaluation when looking at it. A lot of people love to say a vacation home is an investment and so their numbers end up skewed. If you're looking for an investment, you need to look in places where you're going to maximize the rent potential vs the cost of the house vs the cost of the upkeep. Renting out a mountain home on a lake (in this example) may be very expensive to maintain (even with hiring out property management) because of its remote location. Furthermore, you do deal with a lot of risks when renting out a property. For example, some people will trash the property. Some people will stay and live there until you can evict them (which in some jurisdictions can take over a year). AirBnB has had a lot of crackdowns, so if you're in certain areas, the zoning laws could prohibit AirBnB, and if you're not able to rent the property out on the regular market or in some other way hold it, you're facing a foreclosure, and you're likely going to sell below market value so that you don't bankrupt yourself or get a foreclosure on your credit.
Doing an AirBnB or VRBO investment can be lucrative if done with the correct numbers and safeguards against the risks, but a lot of people jump in because they see it as a way to fund their vacation home only to find out that they're losing money or to have it quickly become a nightmare. For most people, most of the time, the more financially wise choice is to just invest your money, then rent a place when going on vacation. It's far cheaper, and keeps you from getting tied down. Then if you end up with the money to pay cash and the total amount of buying/maintaining/improving the property is small compared to your overall net worth and income, then it can be a great purchase.
Wow great advice 🙏
Say what you want about Dave he’s on point about this one life happens & most of the time things don’t go as plan.
I love the way Dave thinks, so laser focused, clear cut, understanding and really helps in decreasing stress, he has really helped out my life
Agreed. He’s so clear-headed about how money fits into life. I hope I can get my kids to follow Dave’s philosophies when they’re older. Might save me a lot of sleepless nights.
This is why I love this channel and show. Thank you for the amazing insight. Something I was thinking about 10 years down the road.
Mortgage payment, property tax, maintenance, home insurance-> why bury yourself more in debt?
Pay cash.
@@blackworldtraveler3711 idiots pay cash for rental homes, leverage is the only way to be rich
Still got the property tax, maintenance, etc.
I bought a cabin in the white mountains of NH 4 years ago. It's worth twice I paid for it. My mortgage payment is less than $1000/month and that includes taxes and insurance. I rent it occasionally on Airbnb for $200/night. It's nice building all of the NET WORTH for peanuts!
I guarantee you this guy wants a home in Summit County because his weekend ski commute is miserable. I have friends who’ve done exactly this and can’t sell their properties that now have insane HOA’s others don’t want, and also realized the time people want to rent the place…is when they want to use it.
Flying monkey-HOA doesn’t t want rentals!
Summit County is incredible. I’d move their tomorrow if prices were somewhat affordable.
Agreed you are right. Lay least he gets to avoid I-70 coming from the springs :)
I like his decription of it as a toy. That was perfect.
Dave's overall plan is great for the vast majority of people, but applying every principle as a blanket to every situation just doesn't make sense. Every person's life is different from the next person's. My wife and I have a second home that we rent out and it's been a fantastic decision. It's only 25 minutes from our primary home so we get to use it a lot when it isn't being rented, it's easy to care for/clean given that it is so close to us, and the rental income has been awesome. It completely pays for itself. It would have been nice to hear more about this property this guy wanted to buy, but Dave shut him down right away. If it's close to ski mountains like he said it is it could be a great source of income for him as well as an appreciating asset to help him build wealth for later on in life. Dave always says your most powerful wealth building tool is your income and a rental property fits right into that philosophy.
You’re missing the point. We’re not talking about outliers. We’re talking about statistics.
Congrats on the success of your “Toy” though.
🇺🇸
Money is money, and math is math.
a guy I worked with told me he bought a hilton head beach house. I thought it was a bad idea but didn't say anything. Three years later he was selling it at a loss. The real-estate management company ate up all the profit and renters were always damaging something.
I had one in nags head and property management kept increasing percentage. The interest rate was really high so when I got sick I sold. But now it's worth 250k. If I hadn't gotten sick I could sell it now and retire
Bought a 6 BR beach front with cash, had it for 3 years averaged 31 rental weeks per year, sold it 3 years later for 2x what I paid. It’s not difficult buy low sell high. Market condition is EVERYTHING. Many people dabble, I took it seriously like it was my house. 100k in expenses 100k in income. Put a lot back into improvements, it was a well oiled machine. It let me retire in the mountains at 55.
I don’t think I will ever buy a vacation home. Just the thought of having to take care of another home far away sounds too stressful
That's why a wanted a condo and paid cash.
@@blackworldtraveler3711 that’s a good idea.
I agree! I spend most of my days fixing something and caring for my home. When I travel, I want to stay somewhere I don’t have to fix a thing!!
I barely want to take care of my primary home!
@@britneeg ain’t that the truth.
I thank you Dave and what your family went through in order to be a blessing to someone like me. I paid my home off in thirteen years, have a b.a. in underwater basketweaving, but my memory of you started when you were on TV. I will run away with wisdom or good advice regardless of disagreement in other areas. Stay blessed!
looool
Dave: Do you have Cash ? uhm no .. I wouldn't do it, it is a toy.
Been there done that. Paid cash for a lake house, a 27 ft tri-toon, and 18 ft fishing boat. Sold everything 20 yrs later. Tripled our original money on the house. But when I totaled what we invested in it when calculating for Capital Gains tax, we actually only realized about 30% of the increased value. Waved goodbye to most of what we spent on the boats. In the end, not a good investment if that is what you are expecting. Dave is 100% correct. These are toys, not investments. Did we enjoy it? Everyone in the family did…except me. Shortly after buying it, the company I worked for asked me to take a position with a very high level of international travel, and the pay to go with it. Wound up traveling 70% of time for the 15 years before I retired. But our retirement fund and my pension grew incredibly well. Knowing my family enjoyed the lake house eased some of my guilt for being gone so much. Listen to Dave. If you are ready to buy toys, go ahead. But as he says, only pay cash.
My grandmother had a cabin built on a lake in Montana. Beautiful location and great memories but I grew up thinking vacation = work. Every vacation turned into a project to fix/paint/re-roof/insulate/repair that cabin...and the last day we spent cleaning it for the next family coming up. Personally, I'll take an Airbnb instead.
It took me 10 years with 3 jobs, but I saved enough to pay cash for my small beach condo in South Carolina and absolutely love it! 😊
I’d like to see a picture of the parking lot at Ramsey Solutions to see how many hoopties are parked there. Or is it full of new cars like most lots.
Why would there be hoopties? When you don't spend all your money on car payments you can save for a nice car. In dave's words If you stop taking all these small trips you can take a pretty big one
A family member with a paid off primary home bought a vacation condo with at the Jersey Shore for $240k and has a $140k mortgage. In 6 years, the condo has more than doubled and the mortgage is now about $135k. He is sitting on two homes worth over $1.1 million, no car payments, zero debt outside of the mortgage.
My vacation home was paid off over 50 years before I was born! My Great grandfather built it and it stayed in the family it wasn't his vacation house it was his house. He built a lot of the houses in the ronkonkoma area of long Island.
A short-term rental that pays for itself when you have a very modest primary residence which you hold seems like a wise example since we’re able to bless others presently with “free” weeks with it. Buy and hold. Yes, there are costs as you go, but the feeling to bless others the whole time is great. Not everyone gets to become a millionaire radio/podcast host after a bankruptcy. I think for the person who’s managing finances responsibly and methodically, long-term managed debt is fine. While also paying mind to liquidity thoughts. Long-term rentals are tougher to justify because renters may not pay up front and govt edicts and pandemics can roil them more easily.
Absolutely spot on. Don't forget a property still has bills/maintenance even when you are not there. It's not worth the stress unless you have bucketloads of cash and can pay someone to look after it for you.
My RV cost me $1700/month every month I owned it. Paid off, just depreciation. Finally told wife we could enjoy expensive hotels instead for less money.
staying in expensive hotels and going on a rv trip is a totally different experience.
I would rather be in my RV. I hate hotels.
@@InChristalone737 You aren't trying to drive a big RV with my wife in the passenger seat... Believe me. Hotels are better.
I love how Dave didn’t even give this guy the time of day…just one question, “are you paying cash for this?” Caller: “Well. No…I have a down payment.”
Dave: “Well then, No; You have no business buying a second home…you cannot afford it.” Sometimes, you just need someone to call you out on stupid. Ps. I bet the guy still buys the second house.
Just because Dave disagrees doesn't mean that the caller was being stupid.
@@gimmemoney98 - true. But buying a second home that you can’t afford - is being stupid.
@@MichaelSamulak I mean he should've known what Dave would've said about going into debt to pay for a second home, but for all we know his income is so high he could've afforded it with ease. Dave made a lot assumptions that this guy would need to cashflow the property to afford it (i.e., discussing renting to others). But Dave didn't really let him even have a chance to speak.
I do not understand how DR could everr think a downpayment on a first house is any diff than a second home or vacation home, same debt?
@@OTOWN2STOCKTOWN Your first home is not a toy. It's something you need. Plus interest rates for second homes are often higher. Dave also recommends buying your first home in cash, but that's just a really high hurdle for a lot of people.
I paid cash for my vacation home. I love using it. Yes, a hotel or airbnb might be cheaper. But its nice to stay here during peak season without rent, rental deposits, and without hotel extra charges. Repair costs and service charge are not negligible. Would i buy again..yes, but probably a more expensive one.
I have purchased vacation homes with the ability to do a minor land partition and profited. I have purchased vacation home lots and profited. A vacation home is just a tax category for the smart investor to profit. The best one I purchased was when I climbed a tree and saw the most spectacular ocean view. Put in a culvert, apron, drain field permit and cleared the bench for construction. Sold the lot and house for profit. My vacation is making money.
A second home is not just a toy. Our river home contributes to our wellbeing which is fare more valuable to us than just the financial risks. I purchased a vacation home and it pays for itself by short-term renting in when I anm not using it. In the event, I do not get renters I have the cash reserves to pay for it in full if necessary. I just can justify taking a half a million dollars or more out of my mutual fund invstments that double every 7-8 years to pay cash for a second home. We live in Phooenix and the river Home is in WI. Once we retire the Phoenix home will be our will become our winter home and the WI home will be our summer home.
Thought about this not to long ago. Always wanted a tiny cabin on land in the woods but the costs of everything just kills the idea. Maintenence, mortgage, insurance and other costs, doesn't seem worth it. I have a 9 year old pop up A frame camper that allows for me to go anywhere to get away at camp grounds in the woods. Less strings attached. And a whole lot cheaper to get the feeling or moments I want. Land would be nice and alittle bit cheaper with out a structer on it where my favorite place is. I would just use my camper or get a bigger one and haul it there for the summer. But even land is pricey now.
If you got so much time off you can enjoy vacationing so often just Move to your 'vacation home' and sell or turn your home into a rental property.
If you are like the rest of us and you got 2-3 weeks free a year to vacation, probably best to just Rent a place for a week or two..... Upkeep, maintenance, taxes, and such, its gonna be a lot.
I have a vacation home in Big Bear California and its paid for. I love it and wouldn't tarde it for anything. Its the bomb
Of course. That is because you are living life and life to you is not just dollars and cents.
Saying that a vaction home is a toy isn't really accurate. Toys depreciate over time. Real estate usually appreciates.
This is why we sold our camper. I do miss it, though!!
What about buying a retirement home ahead of retirement? Where does that fit in the good/bad idea ?
I'm 38 my house is paid for I'm thinking about cash flowing a condo on the beach in Dominican republic....what's a wise decision??
We bought a second home on a lake with the plan it would be our retirement home. We were spending a lot of time and money on renovations so we decided to turn it into a short term rental to cover the mortgage and improvements. It has turned into a great financial investment, but now we are not able to enjoy it at all and is actually work.
Why can’t you enjoy it as well. Book out the rime you want to stay there. We did the same thing and love it. We use our lake house two weeks in the summer and two months in the winter and short term visits are every weekend, so more than paying for the property. We are gonna get another!
Laurie B what kind of occupancy rate are you getting?
what type of occupancy rate are you getting on your vacation rental property?
@@tammyhensley3575 what is your occupancy rate on your rental property? my wife and i and thinking about buying one
@@jodybruce5097 we have not had an open weekend at all and some in week bookings too. It has been an amazing investment
😮😮Why does anyone think they can call Dave and get permission to go into debt???
Unless you have enough money for someone to do repairs on a vacation home then I don't think it would be worth it, you spend your whole vacation fixing the vacation home.
Dave: "do you have cash?"
Caller: "rice and beans"
LOL
If you wait to pay all cash for a vacation home, you probably won't own one until it is too late to matter and enjoy. I was looking at vacation homes in Montana during Covid. I saw one I liked. It was listed at 1.7 million. On the lake...gorgeous. I looked at the price history and the home sold for $270K just ten years earlier. If you had waited to pay in cash...well, someone else now owns it and has a 1.7 million dollar home on the lake and you have some cash in the bank.
If you have a plan, have savings that can carry you a few years in the worst of any economic crisis and you put enough down that your payment is manageable, then you mitigate the risk leveraging some debt. I abhor debt, but I also don't want a life where everything is only in the far distant future.
The problem with most people today. Cannot distinguish needs from wants with the FACT that if you can't pay cash for it, you cannot afford it.
We bought a vacation home in the mountains about five years ago and we spend 3-4 months every year here with our four kids. My wife and I are both self-employed so that offers us flexibility that most people don’t have. Bottom line, we have already made a lifetime of memories here and It has tripled in price in those five years. No regrets!
I had a vacation home (financed for 10 years). Interest rates were low, I was able to deduct the interest, and I sold it for 60% more than I paid for it. It was the best 10 years of my life.
Paid off my main house in my 40s and bought a vacation home and paid cash. Nothing wrong with that. We use the vacation home every other weekend and two weeks out of the year. A very worthwhile purchase
Vacation homes only make sense if you can pay for it in cash 💰
@@saulgoodman2018 Again, you are on the wrong channel, go troll on Meet Kevin's channel.
For me, I would prefer to rent someone else's property. Then, I don't feel obligated to go and maintain a second home. We like variety and like to see new places. The funds tied up in a second home would likely impact our travel. We also have some freeloaders in our family who I'm sure would try to take full advantage.
I'd probably rather just live in places where I want to vacation
I don’t want to live where I vacation.
Nice places to visit are often unreal, fantastical places where normal people don’t live.
Maybe we vacation in different places…
@@olabashanda People who work in the tourism industry aren't "normal"? Do you hear yourself?
It only works when it works. Classic Dave comment - and absolutely correct!!
This was excellent Dave & John!! Thank you.
We have the perfect way to buy a vacation home, fractional ownership. 😎
Second home? Many Americans that are living
in their vehicles would like a first home!
Just don’t over extend yourself financially.
Remember sometimes unforeseen things happen.
I have a paid off second home.
One of the reasons why I have a $320k emergency fund.
@@blackworldtraveler3711 I think you are the exception
rather than the rule. No?
@@Jimfromearthoo7 Exception? How so?
@@Jimfromearthoo7
Nope. Millions do this in places like Florida.
All I did was avoid debt,save,invested,used common sense,and lived within means.
Waited for opportunity and when it arrived I bought an island beach home.
My home was a ford van in the 80s so been there done that.
First home was a one 1bed/1bath apartment.
@@blackworldtraveler3711 well good for you👍🏻 Florida has a better
Governor than Cali I guess?
We have two beach homes, one in Florida and one at the Jersey Shore. Paid cash for both. The Jersey Shore home pays for itself by renting a few weeks each summer and we use it during the free weeks. The Florida home we spend winter at. No debt and both have increased in value nicely.
I have a 2nd property on the lake. Cost me just maintenance upkeep costs, taxes and utilities. It was willed to me from my parents. I could never afford to pay for this place in cash. Glad it was a gift !
He has a point. If you are paying a mortgage on one home and have a down payment on for the vacation home but would still have to make payments , life happens and what happens if you can’t make that mortgage on two homes ? Like a pandemic or what if you got really sick and couldn’t work for months etc. I have been dreaming of getting a cheaper beachfront condo unit at Myrtle beach. I seen some affordable ones but I don’t think I can make two mortgages. I am currently trying to pay my one mortgage off early as I’m making double payments when I can on the principal. I think the smartest thing for me to do is pay my mortgage off while putting away as much as I can monthly and when mortgage is paid off I see how much I can pay toward rhat Myrtle beach property. Thank you for this harsh realization !
I have a $500 car its reliable has no air con and one of the doors don't lock. Doesn't brake down I just gota remember not to leave valuables in there lol
Mr. Dave, we didn't quite have a million dollars but we bought a new car with cash ( that cost almost as much as our first house. Alarming! LOL but the repairs on the old one were costing nearly a car payment every few months, and there are warranties on new ones...we drive em 20+ years ( until the wheels fall off ) so depreciation doesn't apply to us! We are not going to sell it any time soon. The free repairs for ten years makes it so worth it. That old car stranded us out of town more times than I can count. Incidentally after paying cash for that we still had enough from "beans'n ric'n it" to pay our house off 14 years early! Yay. That was a very good couple of weeks we had last year. Yippeee. Saving up now to buy the second one for when my husbands 22 year old truck bites the dirt. Hi Dr. John! Bless.
We have a vacation home. We use it two weeks in June, July, and August, and Seotember. Rent it out the rest of the time. Rental money in cash only. That way I get to keep ALL of it.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@Bestjudy001 Oh please I’d love that. Thanks!
@@Lourd-Bab Clementina Abate Russo is her name
Lookup with her name on the webpage.
💯 Agree with Dave. Vacation home should be paid in full. (Cash)
I love how his advice is always "if you can't pay cash don't do it" but there's no solid realistic advice to saving up that cash. That's what these callers are trying to do by making these investments
Literally save money. It's amazing. Way better than carrying debt and risk.
If you make X, spend less than X. The difference is called “savings”.
My sports car, boat, vacation homes were all financed. I invested the cash I could have used to purchase them outright and make the payments with the profits from my investments. The underlying assets from my investments have also increased in value. If you wait until you have the money to buy your toys in full you’ll most likely never get them. If you do pay cash for your toys, I recommend sharing those purchases with a small group of trusted friends and family.
He tried to do a “can I afford it?” and Dave denied. Lol Suze likely would’ve also. 😂
Sure am glad they let the caller speak...
My vacation homes have been exclusively beach front. Our family has owned at least one for more than 45 years. All have appreciated far more than any other Realestate we have invested in. One has doubled in 5 years.
I don't think you can make a comparison with a depreciating asset like a car with an appreciating asset like a holiday home.
Who did you con this week?
@@noheader ????
My Wife's car has depreciated 60%+ in the last 7 years, our holiday home has increased by 90% in the same timespan.
Not for nothing anybody that has to call in a show and cannot make decisions for themselves should not be buying anything.
LOL. There’s a lot of truth to your statement!
Just getting a second opinion?.. I'll take your opinion for nothing.
Wrong. LOL people look at DR as their financial advisor...you don’t go to professionals for advice? Shut up
Dave’s advice is absolutely correct. That being said, if Americans practiced financial discipline, the nation’s economy would probably be half its current size.
Vacation homes are the most fun when you are young and active with young kids, but that's when people don't have enough to buy with cash. Then, when you can afford it, you are less active, a vacation home becomes a chore to maintain, and kids are too busy with their adult lives to visit. (According to my neighbor with a lake house they are now trying to sell)
I feel the opposite tbh,since when kids are young they have lots of activities to go to. So it would be hard to consistently get down to the house. This is why my dad waited till I was 19,I'm done with baseball and everything and we can go down on a consistent basis and use it
I purchased one in 2019. Down money with a low interest HELOC. It was booked out for three years and paid for itself and a little bit more. Sold it last year and netted 300k. Not too shabby. Gotta be careful now with interest rates. Hard to make it work now but it was great when there was low interest rates
We love our lake house upstate NY and it is closed to ski resorts, paid for it CASH. I invite family and friends all the time. It didn’t harm our financial situation and it is a lifestyle choice.
That's great news enjoying your place sounds like fun and I love NY myself esp. Lake George ....! From Boston area
Most Billionaires would disagree with this. Dave doesn't understand the power of leverage.
If you want a vacation home:
1)Form an incorporated entity
2)Get others to invest in it (reduces your risk)
3)Have the company take the debt (leverage)
4)Stay there personally when vacant
5)Rinse and repeat
6)If it doesn't work out, do corporate bankrupcty which allows you to restart essentially.
I say this very same thing about RVs. We have a very affordable travel trailer that we paid cash for and can really enjoy. Every time we go to a campground, we see these giant 5th wheels and motorhomes that folks are paying giant payments on to use half a dozen times a year. Ours has truly paid for itself too by not getting hotels and having to eat out every meal when we go on a trip. We have a place to stay at the cost of a campsite with a full kitchen and still get to enjoy "camping" because it's not a penthouse on wheels. It's all relative, no matter the income level. Just buy what you can afford!
When you factor in taxes, insurance, repairs/maintenance, etc....it almost never pays to own a vacation home and it's much better to rent. Unless of course your family's beach home bought in the 1970's was passed down to you and dropped in your lap with $0 cost basis
I think he didn't let the caller finish his question. What if it's a vacation rental that makes money primarily when you aren't using it? It's only a "toy" if it depreciates and you rarely use it.
The second he said he lived in Colorado Springs, I said “He’s going to ask about buying a condo in Breckenridge”
Situations are different though. We live in the north and bought a second home in Florida 10 years ago with nearly half down payment at 4 percent and now it’s paid off and worth more than double.
While Dave is right here, it stings knowing the inflated cost of homes/real estate in todays market makes it difficult to fulfill this dream of a vacation home for the vast majority of Americans. Is it possible? Yes. But hell of a lot more difficult for younger generations. Real problem and shows that the wealth gap is getting worse.
Agreed, my thoughts were, when you add up annual taxes, insurance, HOA, maintenance, and mortgage plus interest, (travel airfare too in some cases) you can rent a air b&b for a fraction of the costs, no headaches. On the other hand, if you have the cash to buy and costs are a no brainer, then you should buy..
I’m always surprised how little they listen to the caller before passing judgement. I have nothing against it .. I just think there’s nuance to things and Dave only has a sledgehammer .. lol
I had a lake house for 9 years. Bought it for $395k, sold it for $1.1m when the kids kept saying they were bored (teenagers by then). Had a beautiful $72k boat. Sad to see it go but no regrets. We now rent a waterfront place for 2 weeks a year, including a boat. Hell of a lot cheaper, less hassle and zero maintenance. The biggest plus is we can do it anywhere in the world now, not at the same location constantly. It was a nice investment but honestly we are glad we got it out of our system. No need to own anymore although the ROÍ on the investment was very nice. We are multimillionaires now and don’t feel a need to have a stationary second home. Been there, done that.
I agree with Dave 100%. Would never buy vacation home or fancy car like Ferrari and porsche with loan!
No home is an investment, it's an obligation when you have a payment to make.
Not true.
For most of us either we buy a house or we rent a house!!!! Some stuff is optional but housing is an absolute necessity. Your quote: (No home is an investment, it's an obligation when you have a payment to make.)
@@aaronsandell4830 If you stop paying rent or if you stop paying a mortgage (outside of pandemic protections) the result of eviction is inevitable.
@@donaldlyons17 Very true. We all need a place to stay, but having a place to stay where you don't have monthly payments is a great place to hopefully end up.
Have a blessed day everyone and remember to make smart decisions. When in doubt call the Dave Ramsey show.