What do you guys/gals think?

[Splenda88]

Will it be smart to turn a townhome I own into a vacation home by summer 2023?

I own 2 homes (single family and a townhome) close to where all my family members are. I am in a neighboring state about 5 hrs away from them.

Sigle family home worth 450k and it's almost paid off (only owe 44k). Townhome worth 250k but I owe 120k. Both are rented now.

I have 2 kids that will be teenagers in a few years and I would like them to grow up around their extended family as well. Therefore, I would like them to spend their summers, christmas, thanksgiving etc.. there. In addition, my plan is to spend 1/3 of my time there once I put myself in a good financial footing, which I anticipate might take place in 3 yrs.

Will it be a bad financial decision to pay off that townhome by summer 2023 and use it as a 'vacation' home since my family will be spending a lot of time there? (Interest on the loan is 3% variable ).

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[thesauce]

Not completely sure I understand the question…why do you have to pay it off in order for it to be a vacation home?

 

[Splenda88]

Not completely sure I understand the question…why do you have to pay it off in order for it to be a vacation home?

I dont like to have bills. For some strange reason, I feel like if I have a mortgage on it and use it ONLY 30-35% out of the year, it's a waste of money. I know that does not make sense, but that how my brain works.

 

[Saddleshoes]

Is there any chance your kids would go to college in the area of your town home?

 

[thesauce]

I dont like bills. For some strange reason, I feel like if I have a mortgage on it and use it ONLY 30-35% out of the year, it's a waste of money. I know that does not make sense, but that how my brain works.

So the real question is whether or not you should give up a rental. That’s seldom going to be a good financial move (only if the tenant is a nightmare), but it depends on your overall financial picture and other holdings.

 

[Splenda88]

Is there any chance your kids would go to college in the area of your town home?

Yes there is a chance.

 

[Splenda88]

So the real question is whether or not you should give up a rental. That’s seldom going to be a good financial move (only if the tenant is a nightmare), but it depends on your overall financial picture and other holdings.

Finacial picture is not good since I have a huge student debt looming over my head. But my job is not bad (330k base pay), but I can make an extra 70k without killing myslef.

 

[thesauce]

That’s still not quite enough information to make the decision.

The short answer is that giving up the rental will very likely lose your money. The longer answer is that it may still make sense for you in your situation depending on a number of factors: how much of a headache the renters are, how much savings you have, what your goals are, when you plan to retire, etc

 

[Splenda88]

That’s still not quite enough information to make the decision.

The short answer is that giving up the rental will very likely lose your money. The longer answer is that it may still make sense for you in your situation depending on a number of factors: how much of a headache the renters are, how much savings you have, what your goals are, when you plan to retire, etc

Renters are ok. No saving at all. I am actually saving to buy a home where I am now. My goal is to be FI in 10 yrs. Plan to retire in 15 years.

 

[thesauce]

Then I would slowly raise the rent to get better cashflow and keep it as a rental. You are not in a position to have a vacation home when you haven’t even bought a primary home

 

[The White Coat Investor]

If you're using it 30% of the year it likely makes sense to own it whether you pay it off or not. If you can get a little more income out of it by renting it out when you're not there, so much the better.

 

[Splenda88]

If you're using it 30% of the year it likely makes sense to own it whether you pay it off or not. If you can get a little more income out of it by renting it out when you're not there, so much the better.

I was actually leaning toward that. I think it might not make sense financially but it will make sense for our quality of life.

Now it's a matter of buying an affordable home for <250k where I am next year. Once I am done with that, I will start paying down that place until it's paid off so I can use it as a vacation home.

 

[thesauce]

I was actually leaning toward that. I think it might not make sense financially but it will make sense for our quality of life.

Now it's a matter of buying an affordable home for <250k where I am next year. Once I am done with that, I will start paying down that place until it's paid off so I can use it as a vacation home.

You can use it as a vacation home anyway. If the loan terms are good, I would stretch it out