I have read numerous posts on the pros and cons of buying a second, vacation home and decided to write my own. My parents bought a chalet on the Italian Alps before I was born and it is probably the place in the world where I instantly feel the most happy and at peace; I am also quite sure I will never buy a second home, despite having had a great experience myself.
My (parents) second home
My parents bought a piece of land that came with a cow stable in a small village on the Italian Alps when they were 30 something (and married). The ‘cow stable’ part of the story adds only a bit of charm, I honestly do not why they built a two level stable that was long and narrow but anyway, do not try to picture it in your mind because this info is more deceiving that anything else. My mom, an architect, re-converted the stable into a nice house.
The village is small, so small that outside the holiday season it counts 0 permanent residents and has basically 2 roads. For a random reason it was the perfect size to have a community small enough that everyone almost knew everyone else but big enough that no one could get bored by the repeated social interaction (at least for someone in the 0 to 16 age range). There are multiple hiking trails for summer and a decent skiable are for winter. Being such a small place, my parents let me and my brother go around alone and free basically since we were able to walk. We had a group of friends to have adventure with in the summer and go skiing in winter; it was a type of freedom that none of my schoolmates back in the city ever had.
The village is two hours driving from my home town (if my parents are driving, I typically do it in one and half, one and a quarter depending how bored I am / how much I am willing to risk with the local police). The proximity meant that we could easily spend a month there in summer and have my father visit during weekends or later on in life…me having the Friday evening out with my hometown friends and then drive up there in the middle of the night to hit the slopes on Saturday morning.
For the first 18 years of my life, me and my family devoted all the winter holidays and the whole month of August in this house, while spending my father summer holidays in July either by a place on the sea or travelling. My mom stopped working when my brother was born, so when I say my family it was my mom full time, my father during weekends and my grandmother in summer.
Winter sports
Before COVID hit us, I never spent a winter without skiing (3 to 14) or snowboarding (15 to 42). For another very random reason, this small village had snow every single winter. Even in those years when half of the Alps were completely dry; and I am talking about real, natural snow, not the artificial one. I love skiing/snowboarding and if you never tried, you are really missing something in life. Before knowing me, some girlfriends and my wife did not know how to snowboard. Years later, some of these gals hates me (hopefully not my wife) but 100% of them are still addicted to the powder. It is without a doubt that my great memories and feelings about this holiday home are intertwined with my passion for winter sports.
When I moved to Luxembourg the majority of winter weekends had the following schedule. Leave the office on Friday at 4.30pm and drive an hour and half, usually under an awful weather and quite the time pressure, to the Frankfurt or Brussel airports. Take a flight to Bergamo Italy with Ryanair, which means no rest because they have to keep you awake to upsell you lottery tickets and other none-sense. Jump in my parents / girlfriend car and drive two hours (again, awful weather but this time an higher probability of having to do a late night snow rally) to arrive to the mountains. Snowboard all Saturday and Sunday until 3pm. Then back to the race: close the house, rush down the mountains to the airport, same way but backwards so that I could be in my bed in Luxembourg by 1am-ish…and good luck to sleep after all the adrenalin you pumped to not fall asleep while driving. Easy to say that Monday morning in the office I did not feel exactly rested and ready to jump into another week of working.
A holiday home is great, subject to some requirements
My family holiday home has been such a big, ingrained part of my life that is hard for me to write down a clear description of what it represents to me.
But this premise is necessary to understand the context based on which I would consider a good idea buying a second house. The main question you should ask yourself is: can I reach my second home easily enough to spend multiple weekends there?
I have friends that bought a place in Ibiza on the base that “it is less than a two hours trip by plane”. This logic has plenty of faults. First of all current rules make the most lengthy part of a plane trip the one you spend outside the plane: driving to the airport in the rush hour, airport controls, the airport fu**ing dimensions (once I timed myself, from the gate at Brussel airport to the car parking it took me 20 minutes RUNNING…and there was no document control involved). Same for the costs: the actual plane ticket is the less expensive part of a plane trip, the system is built to overcharge whatever you do (car park, food, train ticket). And then you are subject to flight delays and cancellations.
You want to spend a lot of time in your second home not only because you like it but also because you have to be part of the community. Especially the locals. People that live in holiday destinations are like overcharged Brexiters: they hate outsiders. They see you as the cancer that is destroying their natural beauty, brings traffic and pollution and crowd their favourite spots. To have a peaceful and pleasant sojourn you have to become a part of their community; which is also useful to protect your property from theft or acts of pointless vandalism.
A second home is great when you have a family. Suddenly instead of having to pack your primary home when you go for holidays (long or short), you can be more agile because you can leave all the important stuff already there. Travelling to snowboard is a pain because you have to bring a lot of shit that takes a huge amount of space (no, if you are serious enough you know that renting on the spot is never an option), imaging doing that with your kids stuff as well. Travelling by car is great because it gives you lot of flexibility: sometimes delaying your departure by half an hour to let your daughter eat / sleep / go to the bathroom will turn the next three hours from hell to just mildly annoying.
It might generate a profit but you should not see it as an investment
Since you are going to spend a lot of time in your second home, it should give you and your family access to activities you like. This is the reason why you should not see it like another property investment. Let’s say you like golfing and buy a house in the countryside close to a great golf course. After twenty years, the value of your house will depends on how the interest about golf grew or not in your area. If the new generation, the one that is going to buy your property, thinks that there are better ways to have beers with their friends than driving a stick against a small ball, there goes your value. Your specific circumstances, where you work and what you like, have a low probability of matching future drivers of values: there is no assurance that what makes that specific property a great deal for YOU will match future demand.
Then there are external factors. Climate change is destroying a lot of winter spots because to find snow you have to go higher and higher. The sea level increase is eating away beaches, changing the map of nice summer spots. New buildings can change the peacefulness of the countryside (not to mention a new highway or train rails). I am not saying you cannot find a place that meets all your personal requirements and has low exogenous risks, it might be a very very complex search.
A property on the mountains or by the sea requires more maintenance: sea water is corrosive, ice breaks water pipes, high or low temperatures put additional strains to building materials. First time real estate investors do not consider these costs for their primary home, here the gap between perceived and real costs can be even wider.
Even if we had our place on the mountains, I was lucky enough to have my parents bring the family to other holiday spots as well. We were spending at least two weeks every summer by the sea. And then there were the oversea trips. If you think that your holiday budget will be covered by your second home…just think again. Once the initial excitement about your new investment will be over, as everything else in life boredom will kick in and you will be drove toward different experiences. This means you should consider an holiday house as a complementary to your holiday budget than the final solution.
Sometimes your wish comes true…and you are still partially screwed. A colleague in Geneva inherited from his father a chalet in Verbier, which is now worth millions. Along with property prices, every other possible cost went up there: skipass, restaurants, bars, handymen. The thing that did not keep that pace of growth was my colleague salary. He cannot send his kids to ski school because it is too expensive! It is a nice problem to have, there is definitely no shortage of less expensive alternatives in the area if he wants to trade down, but yet the market basically took a decision for him: say goodbye to your memories.
I am writing this also to acknowledge that yes, these things happens, someone found the Shiba Inu of holiday homes. But they are rarer than the fact that you heard the story once would make you think. A lot of similar investments end quite badly (therefore the many alternatives in the adjacent valleys), people just tend to brag less at social events (or on social networks) about their failures.
The Airbnb effect
The advent of Airbnb&friends changed a bit the economics of everything I wrote above but it has also further implications on how you have to approach your second home.
I had another colleague in Geneva who pioneered this exploit even before Airbnb became mainstream. An avid skier, every year he was renting a place in Chamonix for the whole season; then he was subletting the place for 3 or 4 weeks, NYE Easter and school holidays, to English bankers covering the whole place cost in the process. As you can see, the strategy has some glaring trade offs: he had a chalet for 5 months for free but he could not use it when he was supposed to need it the most. It worked for him because:
- he had a wife but no kids. School holidays are great to exploit when you are not a slave to them
- he knew the people he was subletting to, it was a mix of friendship and business relationship. If something went missing / broke, he was pretty confident to not have to suck the financial loss
- moving in and out his stuff was not a burden because, again, no kids
The basic issue of using “part time Airbnb” is that you have to design the space as “full time Airbnb”. It would be great for me to rent my London apartment when I travel with my family; the problem is that I would have to move all our stuff in a storage or in our bedroom, which will require a good amount of work (with ‘stuff’ I mean a 2m x 1m painting for example, not just a couple of pair of shoes). Still would I buy an expensive couch or tv knowing other people might ruin them? I understand that it might not be an issue for the frugals out there, they would have bought IKEA stuff anyway, but we are not all built the same.
Similar logic applies to an holiday home. You buy it for the convenience of having all your things there; if you have to lock them every time you leave and compromise on the interior design, is still worth it? Airbnb is a great financial help but does not come consequences-free.
My situation
My family life is different from the one my parents choose. The difference is not all related to the fact that we are from distinct generations, my brother still live close and made way more similar choices to them and we were born just two years apart. We are more ‘nomadic’, we do not know yet where are going to live next but we are pretty sure Brexit-England is not the place for us. It is difficult to think about a second home when you do not even know where your first one is.
Remote working is a reality now, at least for some of us. My plan is to make my first home my second one…or vice versa…anyway, to live by the sea or on a mountain eventually. Even if I am so attached to my parents chalet, if they will leave it to me I would probably have to sell it. It would be too big of a cost for something that I can use just few days a year, plus I cannot imagine what would have happened during COVID if it was just me. By experience, you cannot leave a mountain house abandoned to itself for more than a year, the risk of a flood or a hole in the roof is too big. It is a very sad thought because I would love to give my kid(s) the same memories I had.
The conclusion is that, like many things in life, you cannot have it all (unless you are filthy rich obv…). Like building a financial portfolio, some considerations are objective while other are subjective. I know people that arrive to the airport late ON PURPOSE, so they can rush through controls and their gate like the McCallisters.
A holiday place is great (and not because you can file it as an investment) but it further limits your options, it gives you some freedoms while removing others. If you like where you are, geographically speaking, then doubling down can make sense. If you want to do it for you / your family, do it. If you want to make an investment, do it. Just remember the two are very different categories, do not mix them otherwise sooner or later you will be sorry.
BONUS SECTION: Do rich people read personal finance blogs?
My daughter is 2 and a half, so soon enough I will have to participate to another great British game: find her a school that will provide her a decent education at a spitting distance from my balcony. I landed on a great post by a London banker/FIRE guru on the real costs about private schools in London. I then scrolled in the comment section to find a huge, for me, number of people writing that they sent their kids to private.
So I went to check. I am in the top decile of London salaries: not UK, London. Even controlling by age, I am in the top 10%, which puts me in an even smaller club when you consider that the top 10% earners, younger and older than me, earn less. Yet private is not an option for us.
Therefore my question: who are all these guys that are doing pretty well and yet browse the internet to find an even better deal? Probably I spend too much time on Insta and have a distorted perception of reality. Make sense that kinda-wealthy people are the one who pays more attention to this stuff, they probably got there also because of their scrutiny! I am dumb…
What I am reading now:
Follow me on Twitter @nprotasoni
If you liked this post, please consider subscribing to the mailing list. If you did not like this post, but you are a good soul, please leave a comment: it is all about learning for me!