Just today, two clients contacted me about pursuing the purchase of vacation homes. One was targeting the Myrtle Beach area and the other Reynolds Lake Oconee. It could be confidence in the economy or simply the bubble of baby boomers coming into retirement age, but vacation homes appear to be on many couples’ radars these days.
I have owned a vacation home south of Myrtle Beach for nearly 17 years, and it has been a wonderful experience in all regards except, perhaps, the financial ones. During a career and the raising of children, with all the activities that anchor you to your primary home location, you will not get full use out of a vacation home. As a strictly financial investment, it is not a great deal. In our case, because of a special incentive offered by the developer who sold us our condo, we joined the golf club at Pawleys Plantation; that has had its compensations, but I would have been much better off paying green fees for each round rather than regular dues (see below).
If you are contemplating the purchase of a golf vacation home, here are a few key things to consider on the one hand, and on the other:
The Good
Owning a vacation home is good for the ego. If you have been successful in your career, enough so that you can afford to purchase a condo or patio home in a warm weather location, you’ll feel even better about yourself and your accomplishments. Vacations add to family bonding and if, as was the case in our family, husband and one child love golf and wife and one child love the beach, you can target the vacation home to check both boxes and make everyone happy.
The freedom to decide on a Wednesday to fly or drive down to your vacation home for a long weekend is almost priceless...especially if you don’t rent out your home to other vacationers. My wife and I made the decision not to rent out our condo, opting to furnish it to our own tastes and to protect it from short-stay vacationers who might not treat it as their own. But based on annual rental records in Pawleys Plantation, and our condo’s location at the 15th tee and a short walk to the clubhouse, we probably could have generated $15,000 in revenue annually to offset the club dues and homeowner association fees. This is a decision that should be weighed carefully by any couple considering a vacation home: Freedom to travel to your home whenever you decide and to furnish it for yourselves compared against the extra income rentals can generate. (One word of caution: Research carefully the particular rules on renting and the management fees to market and maintain your home in your absence. Of particular interest should be whether guests in your home have club privileges through your membership.)
Although signing up for a full-time membership connected to a part-time home rarely works out financially, being treated like a member whenever you are in residence has its compensations. Although Pawleys Plantation generates many outside rounds of golf, I love being greeted by name at the bag drop, of getting prompt and serious service when I call the pro shop and the discounts on golf balls and other equipment aren’t bad either. Plus membership conveys some reciprocal arrangements at other clubs, some of them more private than my own (just have your pro make a call).
The Bad
A vacation home, as a financial exercise, is almost always a loser. If you have a mortgage on the home, there is that expense. There are the property taxes which, admittedly, in much of the South are extremely low compared with what many of us are used to up North. And if you join the adjacent golf club, there are the initiation fees and monthly dues. In most years, over the course of our ownership and golf membership at Pawleys Plantation, I probably averaged nearly $200 per round; the public paid an average under $100 per round. But because the developer in 2000 paid half our initiation fee, and because I fully -– and foolishly -– expected to play a couple dozen rounds of golf each year, I joined. Think carefully before you accept such a deal. I would the second time around.
The Bottom Line
Some folks will argue that a vacation home compels you to use it as frequently as possible and denies you, somewhat, the pleasures of seeing the rest of the world. It is true that if you desire to wring every last dollar of investment out of your vacation home, assuming you don't offer it on a rental program, you may very well feel guilty about traveling elsewhere. Don’t. Give the keys to your vacation home to friends and family when you aren’t using it and it will be a priceless source of relaxation, whether you are there or elsewhere, content in the knowledge that at least someone else is getting their moneys worth.
There is one other way to get the most value from your vacation home, and that is by joining a "home exchange" program that essentially facilitates a swap of your vacation home for another couple's home for a week or two. I will be writing in the next few weeks about an organization that manages such exchanges, Homelink International. We used our Pawleys Island condo in exchange for a cottage in the seaside golf village of Crail, Scotland, and it was a wonderful and cost-free experience.
If you would like to discuss your own pursuit of a golf vacation home, I’d be happy to talk with you. Contact me and we will get the ball rolling.