If you’re in the market for a vacation property you will likely have to decide between purchasing a single-family home or a condo. However, what if you have enough money to buy a single-family mansion for $10+ million versus a condo at a luxury resort for $500,000+? I used to think a single-family mansion for sure, but now I’m not so sure.
For the record, I think buying a vacation property is a suboptimal financial decision. Most people won’t use the property enough to justify its purchase price and ongoing costs. While your vacation property could help you generate additional passive income, however, it does require extra work and time.
Do you really want to give yourself more work for a property that’s supposed to help you relax? I don’t.
If you insist on buying a vacation property, buy one for lifestyle reasons first and economic opportunity a distant second. This way, you’ll buy more responsibly. You’ll also have more reasonable expectations about your vacation property’s place as part of your net worth.
Our Vacation Property Condo
We have a vacation property at The Resort At Palisades Tahoe in Lake Tahoe, California. It is a wonderful place to bring the family. However, I probably would have saved over $200,000 over the past 15 years had I just rented hotel rooms or private residences instead of buying.
Alas, there’s no turning back time. I can only share my experience with those of you itching to decide whether to buy a vacation property or not.
On our latest trip to Lake Tahoe, where my car got bashed under valet’s care, I came to a surprising realization. Owning a much cheaper condo at a luxury resort may be better than owning a mega-mansion vacation property!
The Vacation Property Network
One of the reasons why we enjoy living in San Francisco is due to the network of friends we’ve created since 2001. During this time period, our friends have gotten older and wealthier. Hopefully, yours have as well. Like us, most of my friends have ended up purchasing vacation homes.
Since we can only live in one place at a time, some of us have offered the use of our vacation properties to others. This way, we keep our vacations more interesting. Further, if a vacation property is often underutilized, it’s nice to be able to offer up your place to friends and feel like we’ve not wasted too much money.
Over the past 21 years, one friend has built more wealth and lived it up way more than the rest of us. Let’s call him Hiro. Hiro ended up buying a slice of heaven in Napa Valley, only 1.3 hours away from San Francisco. The property is most likely worth between $16 – $18 million.
My family is always welcome to go to Hiro’s Napa Valley vacation property whenever it’s available, which is about 85% of the year. However, we only go once every year or two so as to not come across as moochers.
We would happily let Hiro and his family stay at our vacation property at The Resort at Palisades Tahoe. But the problem with that is that Hiro’s property is worth at least 30X more and is 7X larger! He has the single-family mansion for a vacation property.
As a result, Hiro and his family wouldn’t stay at our vacation property even during the most prime of times. They want to maintain or increase their standard of living while on vacation, not decrase.
There’s no amount of money or hookups I could offer to Hiro to make our trade equal. So I stopped trying years ago. Instead, I’ve just continued to be a good friend.
The Single-Family Mansion Vacation Property
The mansion vacation property is spread across 20 acres. The property is completely private and requires you to pass through a gate to get inside.
There’s a pool, a hot tub, tennis court, fruit trees, and nice views of the valley. There’s even a writer’s hut for me to write the next great novel, if I have another one in me.
The great thing about large houses on big grounds is that it provides plenty of entertainment for the children. They can run around freely and burn off their endless energy. Further, we can have so much fun playing hide and seek!
For food, we bring our own and cook, which is much easier when there’s a large kitchen. To mix things up, I’ll drive down the hill to pick up some takeout. When we get bored, we’ll take a 30-minute drive to train town in Sonoma City. Then we’ll go for a picnic lunch at a nearby playground after.
The mansion vacation property is incredible. If we were to move to Honolulu, we would no longer have such access. But hopefully we’d make new friends with oceanfront properties!
The Resort Condo Vacation Property
The Resort At Palisades Tahoe is a “AAA four-diamond resort.” It has three pools, three hot tubs, a water slide, four restaurants, a big gym, a spa, fly fishing, golf, ski-in/ski-out and lots of places to hike. Once you get to the resort, you don’t have to go anywhere else if you don’t want to.
For a family with two young children, staying at a self-contained resort makes life easy. We can eat at the pool if we’re feeling lazy or call for room service if we’re feeling really unmotivated. The Six Peaks Grill has world-class food, which has never disappointed us in the past 21 years.
There are plenty of activities so the kids never feel bored. Instead, they are perpetually excited as we were when we first start coming here in 2001.
Although my friend’s mansion is much larger than our 1,050 square foot two-bedroom, two-bathroom condo, the Resort has over 40,000 square feet of common indoor space. Then there are the 650 acres of outdoor space at The Resort to explore. As a result, the kids have much more space to roam around.
It’s certainly nice to live in a bigger home. However, our relatively small two-bedroom for the four of us encourages us to go outside and enjoy the amenities more often.
Biggest Downside To Owning A Resort Condo
The biggest downside to owning a vacation condo at a resort is sharing public spaces with strangers. We purposefully went from Monday through Friday in August to avoid crowds and earn maximum rental income over the weekend. It wasn’t too busy.
However, the pools got packed Friday afternoon and Saturday morning when we stayed one more night due to my car incident. Hence, unless you’ve got a flexible schedule, you’ll likely always go during peak time periods where there are the most people.
Another downside includes living in a condo building, which is louder. You’ll sometimes hear kids screaming down the halls, usually with glee. Other times, TVs are turned too loud or there is some other type of commotion that may wake you up at odd hours. When you’re used to living in a single-family home, living in a condo can feel like a downgrade.
The final downside is paying monthly HOA fees, whether you use the property or not. However, these fees should be baked into your budget beforehand. They are not surprises.
Biggest Downside To Owning A Mansion
The biggest downside to owning a mansion vacation property is the cost. The more land you have, the more you have to maintain. My friend has a gardener come twice a week to gather up the leaves, trim the hedges and trees, and pull the weeds. The gardening bill is at least $2,000 a month.
A large house requires more upkeep, which means more headaches. Then there is the higher property tax bill and other fees.
However, if you can comfortably afford a mansion vacation property, then cost is not the issue. What’s challenging is how to fill the house with enough friends and family when you want company.
The bigger the vacation property, the lonelier it can feel. Hence, most friends with large vacation properties are always inviting friends over. They have guest houses specifically so they can share their mansion with friends.
Although sometimes, it can feel nice to just getaway from it all.
Of Course The Mansion Vacation Property Is Better
If I had the opportunity to trade my condo vacation property for my friend’s mansion vacation property, of course I’d trade in a heartbeat. My net worth would instantly increase by at least $14.5 million!
I also love how my friend’s vacation property is only 1.3 hours away versus 3.5 hours away for our property. 1 – 1.5 hours is the perfect driving distance for midday naps for my kids. The distance also makes weekend getaways easy.
However, once we finally get to our vacation property, we have a lot of fun. It’s just the trek up there that takes more energy to overcome. With the fear of COVID diminishing, there is also less anxiety being around more people.
But what really makes me think a vacation condo at a nice resort is better than a single-family home vacation property is what my kids think. I asked them which one is better and they said the Lake Tahoe condo vacation property.
Then I asked them several days later just to double check, and they reconfirmed. Maybe they have a recency bias, however, it sure seems like they had a lot of fun on our last trip.
Young Kids Are Less Biased By Money
Young kids tend to speak the unfiltered truth. We adults, on the other hand, are often swayed by money.
If we pay $500 for a dinner at The French Laundry, of course we are going to say the food was amazing, otherwise, we might feel silly. But sometimes, an $8 cheeseburger with a $5 milkshake tastes even better than an 8-course meal that takes three hours to consume.
But with little kids, they have little concept of money. They don’t know how impossible it is for most people to accumulate enough wealth to pay for a $15 million mansion versus a $500,000 condo. Therefore, they simply decide on the type of property that brings them the most joy.
Hence, a good test to see which type of vacation property is better to try both, if possible, and ask your children. Then go ahead and ask your little ones about anything else that needs an unfiltered opinion. Some questions that come to mind include: Who is the nicest teacher you’ve met so far? Who is the meanest kid in your class? Does my dress or shirt make me look fat? What else can I do to be a better parent? And so forth.
The older I get, the more I like to pay for convenience. Paying a monthly HOA fee to maintain everything so we don’t have to feels like a better bargain each year that goes by. If you own a vacation property, the last thing you want is for it to feel like a burden.
Thanks to my children’s opinions, I feel great about owning a much cheaper vacation condo. There’s always a little bit of real estate FOMO to battle. Further, I didn’t know exactly how life would turn out 15 years after purchase. All I knew was that I wanted an affordable place to bring my family and make memories.
Reader Questions And Action Items
Readers, what are your thoughts about owning a vacation property at a resort or a standalone single-family house? Isn’t it funny how our kids can speak their truths without needing to factor money into the equation?
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