Time to buy a vacation home or rent?

    In good economies and bad, the decision to buy a vacation home is rarely a case of mathematics but rather of convenience and emotion.  If the decision was only about a few weeks stay per year, $300,000 for a nice condo or patio home would pay for 30 nice annual vacations any place in the world you desire.  You would not be stuck having to spend your summer weeks in the same place (unless you spent your money on a timeshare, which is a story for another day).
    Strictly speaking as a financial venture, owning a vacation home makes no sense.  But the decision to purchase a vacation home is more complicated than just dollars and sense.  It involves the heart as much as the head and can turn on whether your goals are to leave something to the kids, take advantage of a beaten down market, have a warm weather place you can flee to, even at the last minute, during a cold spell or even impress your neighbors back home with one symbol of your success (for some, that's a motivator).
    Renting year-to-year is of course a viable alternative and provides a measure of flexibility.  If you don't like the neighbors, the traffic or the increase in flood insurance, for example, you can simply book a different vacation spot the following year.  But somewhere between renting and buying is a demarcation point where it makes one option a better financial play than the other.  According to one analysis, at the web site InvestmentNews.com, that point is at six months; that is, if you rent for less than half the year, you will probably make out better than it you buy.  If you rent for more than half a year, owning a home (based on a few conservative assumptions) is probably a better deal.  The calculations were made using the example of a $300,000 home and rentals of comparable homes for $3,000 per month (although that rental figure seems unrealistically high).  
    One of many "real life" examples is a condo in Pawleys Island, SC, adjacent to the well-regarded True Blue Plantation golf course -- a three-bedroom, two-bath unit currently on the market for $239,900.  Nearly identical condos in the same complex are available for rent beginning at around $1,000 per month.  In that ratio or rent to list price, renting seems like a pretty good deal. 
    In the end, each individual or couple will put some additional value on the intangibles of home ownership versus renting.  And although the advice here is always to rent for a few months, if possible, in a community in which you are seriously considering a purchase, you will almost always make out better financially by owning a year round home than by renting it for 12 months at a time.
    You can read the InvestmentNews.com article by clicking here.