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Why a Second Home is Not an Investment

Do you dream of owning a vacation home? Under ideal circumstances, owning a second home in a desirable location is a dream come true. However, all too frequently, owning a vacation home turns into a nightmare. Unexpected circumstances and high expenses such as mortgage payments, utilities, repairs, taxes, homeowners’ association (HOA) dues, and more have the very real potential to put a vacation homeowner in a difficult financial position.

Before buying a vacation home, consider the following:

#1 – Why do you want a vacation home?

The most common reason to purchase a second home is for vacations. Given the high demands you face as a physician, a place of your own where you can get away may be especially appealing. While a dream home in your ideal setting that is used solely for family fun can be a very worthwhile purchase, be aware that a second home is a long-term financial commitment and make sure you know what you are getting into. From the moment you purchase your vacation property, you are giving it priority over other financial goals, such as paying down medical school loan debt, planning for retirement and achieving financial independence. You automatically commit yourself to the expense and upkeep of a property that, most likely, is located far away from your primary residence.

Determine whether you are considering this purchase because you need a home or because you need an escape. If your true objective is to escape and relax, consider less stressful ways of visiting your ideal location, such as a short-term rental (Airbnb) or a nice hotel. This allows you to visit an oasis without the long-term commitment of owning a home.

#2 – Your investment priorities

If you are not already financial independent, determine how this purchase will impact your ability to get there as quickly as possible. Financial independence is the point in life when you have enough income (from investments, passive businesses, real estate, etc.) to pay for your living expen