Is Purchasing a Vacation Home a Good Idea? - Dave Ramsey Responds 

My vacation home is a tent. Only used it four times, but at least I paid cash for it.

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.

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.

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.

This guy got shot down hard. But Ramsey is right..a vacation house is more of a status symbol than an actual need.

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.

Guy was dead in the water the second he mentioned Suze Orman haha

Vacation homes are not an investment, the times you can actually rent them is the time you want to use them

I don't think you can make a comparison with a depreciating asset like a car with an appreciating asset like a holiday home.

You know it’s bad when he doesn’t even ask what their household income is. This guy never stood a chance.

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 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.

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.

"It doesn't fit into the Ramsey plan"... Then WHY are you calling Dave Ramsey to ask if you should do it?

Avid Dave listeners knew this was over before Dave spoke.

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.

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?

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.

I like his decription of it as a toy. That was perfect.

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!

Love how Dave tells it like it is and doesn’t care about feelings or bursting peoples bubbles. I respect him for that

I really admire how consistent Dave is in his philosophy. Laser focus No need to change if it works!

This was excellent Dave & John!! Thank you.

Dave: Do you have Cash ? uhm no .. I wouldn't do it, it is a toy.

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.

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 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.

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 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.

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.

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.

Dave: "do you have cash?" Caller: "rice and beans"

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.

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

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.

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.

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

Great advice.

This is why we sold our camper. I do miss it, though!!

It only works when it works. Classic Dave comment - and absolutely correct!!

Good answer!

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

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.

Good point

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.

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 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

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.

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.

Love his description and the flying monkeys!

💯 Agree with Dave. Vacation home should be paid in full. (Cash)

"The best laid plans of mice and men." 👍🏾 Tell it like it is, uncle Dave 🤣

man i keep going back and forth from this too. Thanks for slapping sense into me Dave. Hotels/renting means you can change locations too. I absolutely feel the want though haha

😮😮Why does anyone think they can call Dave and get permission to go into debt???

I agree with Dave 100%. Would never buy vacation home or fancy car like Ferrari and porsche with loan!

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

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 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.

What about buying a retirement home ahead of retirement? Where does that fit in the good/bad idea ?

5:45 ... Dave is that a FLEX? 😂

If it's $14k/lb to get the bass boat, maybe your friend is just REALLY bad at fishing 🤣

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.

He tried to do a “can I afford it?” and Dave denied. Lol Suze likely would’ve also. 😂

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 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.

You can go on A LOT of vacations at REALLY nice resorts all over the country to go skiing for what it costs to buy a vacation home at one location. Now in theory, if the home appreciated greater than the cost of closing costs, it didn't cost you more than the overhead to own it, and you can also rent it out to temporary tenants to offset those overhead costs. Sometimes that's more leg work than most people realize and/or are prepared to do in reality.

Thought about buying my grandfather's home in order to make it an Airbnb. He's moving out to go to a retirement community. Ultimately decided against it after doing research and having student loans to still pay for

Amen Dave! Even for investments, if you can't pay cash you can't afford it!

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.

In my case, I don't like to go to the same place and do the same thing on vacation over and over. I like to go other places and a bed and shower is really all I need wherever I go.

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.

100% correct.

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)

Depends. If you’re buying to rent it then do it but be prepared for the worst if you don’t have people renting it for some reason. I know plenty of people that have multiple lake houses and rent them out without issue.

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.

Vacation homes only make sense if you can pay for it in cash 💰

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.

Poor guy didn't even have a chance! 😂😂

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.

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

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.

Reminds me when we bought an expensive boat Between the insurance, marine mechanic bills, winter storage and 600 dollars fo gas- big mistake!

I had a cabin in the mountains, was glad to sell it. Easier to just rent one now and then, plus I’d prefer to go different places.

This makes more sense than I want it too.

No home is an investment, it's an obligation when you have a payment to make.

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.

Ramsey a world without leverage…..

My house at a ski area can be rented for 400$ a night regularly even in the summer And my house rents for 7,000$ for the week of Christmas I purchased my home for 290,000$ in 2003

Love Dave he really helps me but it's damn near impossible to invest in real estate without taking on debt. If you can buy a property on debt and it cash flows over time you build equity and the tenant pays the mortgage for you. All real estate guys know this

We lost half of our renters during covid it was tough

Bought a vacation home 15 yrs ago for $194k. Sold it 10 yrs later for $280k. Took those proceeds and bought another a year later for $480k. Sold that one the year after that for $815k. Made a ton of $$.

“To purchase it cash?” 😂😂😂

I own a "vacation home" I'm building a cabin with my own hands useing money in my pocket. Taxes are cheap and upkeep is nearly nothing.

I have the cash for a vacation home but until recently I would have financed because money was super cheap. It depends on the times.

We have a partnership, wìth legal agreement.and own a condo on the beach. Spreads risk, lowers cost. Total cost less than beach expenses prior, 20 yrs ago.

Good advice! Would better buy land and plant fruit trees on them than just a vacation home.

Beware of squatters that break into and live in these houses while the owners are away some states have little to no laws against this

We have the perfect way to buy a vacation home, fractional ownership. 😎

I think it depends on your own personal financial situation.