Ever dreamed of turning a vacation home into a wealth-building powerhouse for retirement? In this inspiring episode of Next Act Ninjas, host Rachael Van Pelt empowers you to make it happen—even if you think it's too late or the market isn't right.
Ever dreamed of turning a vacation home into a wealth-building powerhouse for retirement? In this inspiring episode of Next Act Ninjas, host Rachael Van Pelt empowers you to make it happen—even if you think it's too late or the market isn't right.
Discover why now is the perfect time to invest, despite higher interest rates and lower inventory. Rachael shares insider tips on selecting the ideal location using her "golden circle" method, maximizing rental income year-round with a savvy management approach, and navigating financing like a pro.
Hear the inspiring story of a couple who transformed their dream mountain cabin into a profitable investment by breaking traditional rules and thinking like entrepreneurs. This isn't just about owning a second home; it's about enhancing your lifestyle, creating lasting family memories, and building a legacy.
Ready to turn your dreams into reality? Don't miss this chance to unlock the blueprint for strategic second home ownership that boosts both your health and wealth longevity.
Tune in now and take the first step toward your best Next Act!
Chapters
00:00 Introduction to Strategic Second Home Ownership
01:51 Is it a Good Time to Buy a Vacation Property?
03:39 Making an Intelligent Vacation Property Investment Decision
05:11 Location Strategy for Vacation Properties
07:35 Using the "Peaks and Valleys" Approach to Evaluate Financial Potential
08:44 Managing your Vacation Property Effectively
10:24 Ensure Your Vacation Property Improves Lifestyle Longevity
11:32 Explore Financing Options for Funding your Vacation Property
12:44 From Dream to Reality: Your 4 Step Action Plan
15:30 Strategic Second Home to Support your Next Act
Hey, hey, welcome back to Next Act Ninjas, the #1 podcast for mastering your health and wealth longevity. I'm your host, Rachael Van Pelt, and today we're diving into strategic second home ownership. Last week, we looked at all three paths you might choose for your Next Act, thriving in place, downsizing, or becoming a sunbird. This week though, I want to go deeper on the sunbird strategy. But we aren't going to talk about finding a place to escape cold winters and hot summers. We're going to focus instead on being strategic when you invest in that second property so that you can maximize your wealthspan.
Let's start with a story that I think just might change your perspective. Last year, I worked with a couple in their late 50s, early 60s, who were worried that they'd waited too long to invest in real estate. They'd always dreamed of owning a mountain cabin, but they thought it was out of reach. Today, that same couple has turned their dream cabin into a wealth-building engine that covers its own costs, provides family getaways, and it is appreciating in one of the hottest markets in our region. But here's what's really interesting. They did it by breaking all of the traditional rules about vacation home ownership. They thought of it like a business first, a luxury home second.
Today I want to show you exactly how they did it and more importantly, how you can do it as well. We're going to cover everything from market selection to financing strategies and I'm going to share some insights that only come from looking through the lens of longevity mindset.
But let me start by addressing the elephant in the room. Is this even a good time to buy a vacation property? With high interest rates and low inventory making headlines, I think that's a fair question. But here's what most people miss. Timing the real estate market perfectly is less important than time in the market, especially when we're talking about properties that serve multiple purposes. That's why today we're going to break down why right now is the perfect time to consider a strategic second home, even if you think it's too late.
First and foremost, we are in a unique position by the time we've built up substantial equity in our primary home. We have established credit histories. We have a clear picture of our financial future. And most importantly, we have the wisdom to take a long-term view of both lifestyle and investment decisions.
Second, the market is shifting. Sure, interest rates are still higher than they were in 2021, but this is actually creating opportunities. We're seeing less competition, we're seeing more negotiating power, and in many vacation markets, motivated sellers. Remember, in real estate, money is made on the buy, not the sell, and the best time to buy is when everyone else is on the sidelines.
Third, and this is crucial, the short-term rental market has fundamentally changed how vacation properties can perform as investments. What used to be a luxury expense can now be a revenue-generating asset. The key is being strategic about what and where you invest.
I'm going to share some hard-earned wisdom about vacation property investing and trust me, I've seen plenty of eager investors learn these lessons the hard way. The biggest trap? falling head over heels for a property before crunching the numbers. Now I get it. That beachfront property or slope-side condo with stunning views, that could be irresistible. But you've got to approach your purchase with a clear head and preset criteria. You need to know your numbers.
Speaking of numbers, you need to be prepared for the true cost of ownership as well. This is something that often catches people off guard. A good rule of thumb is to set aside about 1.5% of your purchase price annually just for maintenance, not to mention planning for the inevitable upgrades and accounting for times when the property sits vacant. But perhaps the most overlooked aspect is the management piece. Many investors dive in without having proper systems in place. And don't get me started on the importance of due diligence. I've seen too many people skip researching crucial details, like local STR regulations or HOA restrictions or upcoming development plans, all of which could impact their investment. The key here is approaching your vacation property purchase like the serious investment it is, not just a dream getaway.
Let's dive deeper into location strategy because I think this is where most people make their first mistake. The old advice was simple, buy what you love where you love to visit. And while that's not wrong, it's incomplete. You want to be more strategic when it comes to selecting location.
Use what I call the "golden circle" of accessibility. Picture a map with your primary residence at the center. The sweet spot for most successful vacation property owners is within a comfortable two hour drive for quick weekend getaways. Now, if you're planning for long seasonal stays, you can extend that circle out to a day's easy travel. But here's the crucial part. Once you're at your property, you want to be no more than 30 minutes from whatever draws people to the area, whether that's the ski slopes, hiking trails, fishing, or resort amenities.
But don't just focus on the fun stuff. One of the most overlooked aspects of choosing a vacation property location is healthcare accessibility. Having quality medical care within a 30 minute drive isn't just for your peace of mind. It's a factor that will significantly affect both your property value and its rental appeal, especially for our aging demographic.
Let me paint a picture of what intelligent location selection looks like in practice. I recently worked with a couple who were choosing between two mountain communities. The first was an established ski resort town, complete with designer shops and famous restaurants. The second was an emerging four season community that was still building its reputation. While the ski resort town had impressive peak season rental rates, the emerging community had something much more valuable. It had vision. They had just announced plans for a new medical center and they were expanding their year-round recreation facilities to include golf courses and new mountain biking trails.
My clients chose the emerging community and that decision paid off beautifully. Their property has seen substantial appreciation while the established resort town's market has remained relatively flat. Why? Because that year-round appeal often creates more stable value than peak season glory.
To fully appreciate this, I encourage you to take a "peak and valley" approach to evaluating the financial potential of any vacation property you might be looking at. During peak season, your monthly rental income should approach about 1% of the purchase price. But here's the key. Don't get caught in the trap of focusing only on those prime weeks. A truly successful property needs to generate income throughout the valleys as well.
Think about a typical $750,000 mountain home as an example. During ski season, you can easily command about $7,500 or more per month. Summer months, with all the hiking, biking, and festivals, that could bring in about $4,000 to $5,000 monthly. But even during the quiet shoulder season of spring and fall, you should be able to bring in $2,500 to $3,000 per month. That's the kind of return on investment that I'm looking for when I run numbers for my clients.
And don't forget, how you decide to manage that property will have a huge impact on your bottom line. Now you could take the fully hands-on approach, handling everything yourself. This is going to give you complete control and of course, higher profit margins, but it also means you're going to have to be on call for every storm, every guest question. On the flip side, you could opt for professional resort management, which handles everything, but they're going to take a big bite out of your revenue, as much as 35% to 50% of that revenue.
So what I recommend to my clients is a hybrid "local partnership" approach. Instead of choosing between a full DIY or hands-off resort management, build relationships with key local service providers. For example, in a mountain community, you're going to want to find a reliable snow removal service and connect with trustworthy maintenance teams that understand mountain properties. Regardless of location, take advantage of hosting automation. Platforms like Hospitable can help you seamlessly coordinate Airbnb and VRBO bookings, cleaning services, and even smart lock guest codes. You can even preset automated emails to respond to those frequently asked questions so you're not constantly responding to the same guest inquiries over and over. This is the approach my husband and I have used with our own vacation property and it's great. We found that it's never been easier to manage a property remotely and to optimize our rental income. I see this hybrid approach to management as the perfect fit for playing the long game.
Which is really what we're after, isn't it? We want to improve our lifestyle, not diminish it. The real magic of vacation property ownership happens when you weave it seamlessly into your lifestyle. So think of your property as a testing ground for your future. Spend time there in every season. Experience the local healthcare system firsthand and build connections in the community. Make it a gathering place for your family. Christmas ski weeks or summer hiking adventures. Those are the kinds of things that are going to create priceless memories while your investment is appreciating.
And speaking of appreciating, let's talk about protecting your investment. Whether that property is mountainside or beachfront, each is going to come with its own unique set of challenges. Budget 1.5% of your purchase price for annual maintenance and build relationships with contractors who understand the unique demands of the area. Don't forget to implement a simple winterizing protocol, a summer maintenance schedule, maybe a shoulder season deep cleaning.
When it comes to financing that property, keep in mind that it's a little bit different from securing a home mortgage on your primary residence. But there are a lot of effective strategies you can use. One common approach is a traditional second home mortgage. Now they usually require a higher down payment, at least 20%, and they're going to come with a higher interest rate than your primary home mortgage. But you can do lots of different things to finance. Another smart option is leveraging the equity from your primary residence. Home equity lines of credit are especially useful for funding down payments or renovations. If you're buying in a resort area, you might want to look into resort-specific partnership models. They offer unique opportunities like fractional ownership, resort-backed financing, and LLC structures that are specifically tailored for resort properties. In many situations, you can even combine multiple sources of financing to fund that vacation property. A good mortgage broker can help you explore the many diverse strategies, find the best one for your situation.
It's exciting to dream about, isn't it? Do you think that you might be ready to turn that dream into a reality? If so, I want to give you my four step action plan to get the ball rolling.
The first step, get crystal clear on what you want and what you can afford. Now I know this may seem obvious, but you'd be surprised by how many people get caught up in window shopping without having any clear objective. Getting clear on your budget and must haves is going to help you create your investment compass. It's going to keep you pointed in the right direction. While you're defining your key criteria, talk to lenders to understand your buying power. Then identify two to three promising markets that have properties in your price range and meet your criteria.
The second step is when things get exciting. That's when you get to hit the road to explore your short-listed locations firsthand. That's when you get to narrow down your search to one ideal location. It's also the time to research your property management options. Are you going to pay top dollar for totally hands-off property management or are you willing to take the reins on some of it? Maybe take a hybrid approach to management.
Step three is when you're going to dig into the numbers. You'll want to analyze the data for your specific properties, the ones that catch your eye. That means diving into real rental data, not just the optimistic projections. Create detailed financial forecasts that account for everything from peak and valley season rates to maintenance costs. If you need help with this due diligence step, I highly recommend finding a savvy realtor, someone who regularly works with investors. This is the kind of thing I help my clients with all the time. And in my opinion, it's non-negotiable when it comes to investing in a vacation property. Even if you don't think you need the rental income right away, you may want that cashflow in the future, so don't ignore the financials.
Step four is about fine-tuning your strategy and assembling your dream team so that when the right property pops up, you're going to be ready to move fast and with confidence. Your dream team should include a lender and a realtor who are local to the area that you're buying in and who know the vacation rental market inside and out. This dream team should be experienced in working with investors and they should be up to date on local STR regulations and restrictions. You'll want them to help you crunch the numbers or at the very least review your own numbers so that you know what to expect when it comes to your short-term cash flow and long-term investment potential.
Remember, a strategic second home isn't just about finding a fun place to vacation. It's about creating a foundation for your Next Act that supports both your health and wealth longevity goals. When done right, it can improve your retirement lifestyle, create new family memories, generate cashflow, provide tax advantages, appreciate in value, and build your family legacy.
If you're interested in exploring strategic second home opportunities, I invite you to book a consult call with me. I can help you crunch the numbers. I can help you decide whether remote management is for you and even refer you to savvy lenders and realtors just about anywhere in the country. If a mountain property here in the gorgeous state of Colorado is a part of the plan, even better. Let me show you some properties. You're going to find a link in the show notes to schedule a call. Let's get you one step closer to creating your best Next Act. Until next time, live well, love more, age less, my friends.