How to Evaluate Buying vs. Renting Your Vacation Home

It happens every summer. 

You’re sitting on the deck of your rental home in a beach community, coffee in hand, watching the sun come up over the water. Or maybe it’s the last Saturday of your two weeks in a lake house, and you’re already dreading the drive back home. Or perhaps it’s February, and you’re texting from a borrowed condo in Siesta Key, FL while your neighbors back home are digging out from another nor’easter. 

And the thought creeps in: Why are we paying all this rent? We should just buy something. 

I know this feeling well. My wife and I rented in Chatham, MA for 15 summers before we finally bought our first home there in 2011. I’ve had this conversation with dozens of clients over the years who were somewhere between “we should do this” and “but wait, let’s think this through.” 

Here’s what I’ve learned: the decision itself is rarely the problem. The problem is making it emotionally rather than rationally, and for people in their 50s and early 60s approaching or living in retirement, the financial stakes are high enough that getting this wrong can have real consequences for your Retirement Blueprint. 

Here is the framework I use with clients when this conversation comes up. 

Start Here: Five Questions That Cut Through the Emotion 

Before you look at a single listing on Zillow, sit down with your spouse and answer these five questions honestly: 

1. How many days per year will you realistically use it? Not the optimistic version. The real version. If the honest answer is two weeks, renting may be more appropriate, as it can be less expensive and less complicated.
2. Will family and friends use it when you’re not there? A second home that gets used by your children, grandchildren, and close friends all summer long is a very different calculation than one that sits empty nine months of the year.
3. How many years can you see yourself making this trip regularly? Five years? Ten? Twenty? The longer your time horizon, the stronger the case for ownership.
4. Who manages the property when you’re not there? A condo complex with on-site management is very different from a standalone home that needs a caretaker, a plow service, and someone to check for burst pipes in January.
5. Are you planning to rent it out when you’re not using it? This sounds appealing until you realize that peak rental season on Cape Cod or any desirable community is exactly when you want to be there. And, there aren’t many takers to rent your home in a beach community in February.

Your answers to these five questions can provide helpful context alongside a financial analysis. 

If You’re Leaning Toward Buying: Advantages and Cautions 

The case for ownership is compelling when: 

• You expect to use it a minimum of four months per year combined between you, family, and friends 

• You want it to feel like home, not a hotel, your furniture, your car in the driveway, your neighbors who know your name 

• You’ve already rented in the same area for at least one extended stretch and know you love living there, not just “vacationing” there 

• You want the freedom to come and go without worrying about availability or booking windows 

• You’re considering a state with no income tax (Florida being the obvious example) and spending enough time there to establish residency, which may offer tax benefits 

• You’re buying in a market with factors you believe may support long-term appreciation 

But go in with eyes open on the costs: 

• Real estate taxes on a non-primary residence, and your town can reassess your property value with no warning 

• Condo association fees, which the association controls, not you 

• Insurance, utilities, and maintenance year-round, whether you’re there or not 

• The cost and stress of managing a property from a distance – ask anyone who owns a Florida home during hurricane season what that’s like 

• Liquidity risk: real estate is not a liquid asset. If your circumstances change and you need to sell, you’ll be at the mercy of the market at that moment 

If You’re Leaning Toward Renting: Advantages and Cautions 

The case for renting is compelling when: 

• You love variety – a different town, a different lake, a different coast every year 

• You’re not yet sure which location you’d want to commit to for the next 20 years 

• You want zero responsibilities beyond paying the rent and enjoying yourself 

• Your usage is fewer than four months per year — at that level, ownership may be less financially efficient 

• Your life circumstances – health, family obligations, work – make a long-term commitment feel premature right now 

But renting has its own vulnerabilities: 

• No control over future rent increases – you can get priced out of a place you love 

• No control over whether the owner decides to sell 

• No equity building, and potential opportunity costs if property values rise 

• Living by someone else’s rules – no pets, no modifications, no sense of permanence 

Thinking This Through 

As you can see, there are strong advantages and disadvantages to each.  Much of it comes down to your answers to the initial questions I posed in the beginning.  

For instance, if you plan to be in your vacation spot four months or more per year, you’ve been to this location before and you know you like it, you have family who will also utilize it, and you have friends who live in the same community, ownership may be more appropriate. 

However, we find that renting can work for many of our clients too. 

Several of them rent for two weeks to as many as four months and find benefit and value from doing it. It suits their unique situation. 

The all-important initial step is to de-emotionalize yourself from the situation so that you can calmly and accurately make a decision that is based on fact, not emotion and opinion. (i.e. try not to make a decision “if” you want to own property when you’re sitting in the middle of a real estate sales presentation at the newest condominium complex in a town you’ve been to once in your life!)  

Your emotions are too high at that point. You want to treat this just like all of your other financial decisions, as part of a carefully thought-out plan, not an isolated decision in a vacuum. 

Visualize the next 20 years of your life.  Can you vividly see yourself living a good portion of your life in this location? That can be an important consideration. 

If you’re seriously thinking about buying, my recommendation is to consider renting initially for an extended period of time (minimum of four weeks), so that you can get the feeling for what it is like to actually “live” in this location as opposed to “vacation” in this location. 

Then you can make a rational decision that you can be comfortable with for many years to come. 

This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.