10 reasons to buy a vacation home + pros and cons

headshot of writer Tony Huynh
Tony Huynh
September 24, 2024
An image of a luxury kitchen with tall ceilings and an autumn scene outdoors.
Searching for a place to unwind, reconnect with loved ones and create lasting memories? Buying a vacation home could be your answer. But there are also many strategic reasons to buy a vacation home. Here are 10 reasons why a second home might be the perfect purchase for you.
A graphic lists the 10 reasons to buy a vacation home.

1. Enjoy your own personal retreat

An image of a luxurious courtyard setting amidst a lush forest background.
Owning a vacation home provides a haven away from the daily grind, a sanctuary when you need a break. Imagine having a place designed entirely for relaxation, a zen space that melts away your stress. Unlike hotels or rentals, you can customize your second home to your taste, unpack your favorite books and board games, and have everything set up exactly how you like it.

2. Have flexibility for your vacations

A person rests comfortably on a bed near an open suitcase.
With a vacation home, you no longer need to fight for reservations during peak season or scramble to find last-minute vacation accommodations. A second home ensures a readily available place, allowing you to be spontaneous and take advantage of unexpected getaway opportunities. Do you need a quick weekend escape to clear your head? Or a romantic fall getaway? Whether you're looking for a short recharge or an extended period of relaxation and exploration, your vacation home will be waiting for you.

3. Build a lifetime of memories

A family embraces while enjoying a day at the beach.
A vacation home transcends bricks and mortar — it becomes a cornerstone for creating cherished memories with the people you love. Host unforgettable holidays and family gatherings to create lifelong memories. Imagine cozy nights by the fireplace at your mountain getaway after a day on the slopes or around the pool on your next trip to Florida. Families will love having plenty of space for everyone to gather and celebrate birthdays, anniversaries and graduations at your dream destination.

4. Relish familiar settings

Friends enjoy a dinner party under a canopy of lights at a luxury vacation home.
Owning a vacation homes has the benefit of being your home-away-from-home. Equip your space with luxury amenities, like a heated pool, home gym and dedicated workspace. Being in a familiar place can significantly relieve your stress.  Plus, your second home allows you to truly relax the moment you arrive.

5. Embrace a new community

Two people decide what gifts to purchase while enjoying a luxury vacation.
Purchasing a vacation home can open doors to a new community. Strike up conversations with friendly neighbors who share a love for the area. Explore local shops and restaurants, gaining a deeper understanding of the region's culture and hidden gems. This sense of belonging can enrich your vacation experiences and grow your sense of community at your second home.

6. Cultivate a sense of adventure

Two people go on a hike while enjoying a luxury vacation.
A vacation home can serve as a springboard for exploration. Since you have a convenient home base, you can delve deeper into the surrounding area. Explore nearby towns, hike or bike scenic trails or discover hidden beaches — the possibilities are only limited by your vacation home location. Proximity to these activities allows you to embrace a more adventurous spirit and enjoy experiences beyond the typical tourist’s itinerary.

7. Create a healthier lifestyle

Two people kayak while enjoying a luxury vacation.
A vacation home can be a catalyst for embracing a healthier way of living. Many vacation destinations offer opportunities for outdoor hobbies like hiking, biking, swimming and other water sports. Being surrounded by nature and engaging in physical activity can significantly improve your overall well-being. Inside you vacation home, consider creating a dedicated zen room to relax and de-stress. It can improve your sleep patterns and general state of mind.

8. Pass down an asset to your children

A family sits on the deck of their l	luxury vacation home.
A vacation home can become a cherished part of your family's legacy. It can be a gathering place for future generations to reconnect with loved ones and create lasting memories. Eventually, you can pass vacation homes down as an inheritance. A valuable asset like this can give your children and grandchildren a special connection to their family history.

9. Choose a location close to activities you love

Finding a second home in a place that supports  your interests and hobbies can significantly enhance your lifestyle. Imagine living by a lake and spending your weekends fishing, or owning beach house with nearby easy access to kayaking or paddleboarding. For those who crave the thrill of winter sports or the serenity of mountain hikes, a cozy cabin could be the perfect fit.

10. Take advantage of unique financing options

Two people use their computers in their luxury vacation homes.
When buying a vacation home, you can access second home financing options. Remember that you may need a higher credit score and a larger down payment. Also, you can expect higher interest rates than on a loan for a primary residence.Additionally, your vacation home expenses don’t end with the down payment and mortgage — you’ll also need to budget for utilities, insurance, property taxes, maintenance and possible HOA fees.

Advantages of vacation homes

Although owning a second home has some down sides, the advantages can greatly outweigh the trouble of finding and financing a vacation home.
A graphic shares the pros and cons of vacation home ownership.
The pros of owning a second home or vacation investment property include potential passive income, property appreciation and unique tax benefits.

Personal use

When you own your vacation accommodations, you always have a great place to stay (even if it’s a busy holiday weekend). You can keep all the comforts and necessities — clothes, toiletries, outdoor gear and more — at your vacation home so you can get away from it all at a moment’s notice.Unlike relying on reviews to choose a hotel room or short-term rental, you always know exactly what to expect when you arrive at your vacation home. Buying a second home in a destination you love allows you to experience the place in a whole new way and truly become a community member.Your vacation home could become your primary residence once you retire, but you can start enjoying it and building equity long before it’s time to turn in your employee badge. In the meantime, it’s a special place to bring family together for vacations and special events. You can also pass down your vacation home to your heirs.

Passive income potential

Although some owners prefer to keep their vacation home exclusively for personal use, listing your second home as a short-term rental may also be possible. If you don’t want your vacation home to sit vacant when you’re not using it, you may be able to rent it out to others and use the money toward the mortgage and maintenance expenses.Investing in vacation rentals requires considering things like the home’s proximity to local attractions, rental competition, local housing rules and the possible cost of  property management. Your short-term rental may serve as an Airbnb alternative for vacationers in the area, allowing you to generate rental income. 

Potential property appreciation

Whether you plan to keep your vacation home for personal use or earn passive income, your property may increase in value. A secondary residence can increase equity and value appreciation like a primary residence. In this way, buying a vacation home can be an investment. Of course, housing markets fluctuate, so value appreciation depends on market trends where you buy. Adding real estate to your portfolio is a great way to diversify your portfolio and hedge against the ebb and flow of different markets. It’s always smart to consult a financial planner before making such an investment. 

Tax benefits

You can deduct any mortgage interest paid on up to $750,000 of principal mortgage debt, including your vacation home. Other second home tax benefits may include deducting property taxes and interest paid on home equity loans.If your vacation home doubles as a short-term or long-term rental, you may also be able to claim certain costs as business expenses for your vacation rental business. Consult with a tax professional to determine which  tax deductions you’ll be eligible for.

Challenges of vacation homes

Vacation home ownership also includes several challenging cons.

Property maintenance and management

Your second home likely won’t be close enough to your primary residence for you to stop by frequently. Home repairs and regular maintenance (lawn mowing, snow removal, etc.) can become a hassle. And if you’re renting out your second home, you must deal with reservations, clean up and more. A potential solution is to hire a property manager to maintain your vacation property and manage potential tenants. The expense can potentially give you peace of mind, knowing that the business side of your vacation property is taken care of.

Income volatility

If you plan to rent out your vacation property, you’ll need to be aware of the high and low tourist seasons in your home’s locale. Plan for income fluctuations and charge appropriate nightly rates to curb potential low-season vacancies. To keep attracting bookings, you may need to pay for marketing and advertising your property to help decrease income volatility.

Local vacation rental laws

Many towns are passing ordinances prohibiting short-term rentals or requiring homeowners to pay hefty fees to list a home as a rental. Check local laws before banking on your ability to rent out your vacation home. Remember that other vacation rental competitors will be subject to the same laws and consider how this could affect your ability to compete or earn a profit at this destination.

Limited location

Once you invest in a vacation home, you’ll probably want to use it as much as possible. That means you’ll likely spend more time in one second home vacation spot and be less likely to frequent other destinatons. Just like an unused gym membership or a new dress in the back of the closet, a distant vacation home can easily turn from a dream come true into a money pit if you’re not committed to using it regularly.

Co-own a vacation home with Pacaso

While there are nearly a dozen reasons to buy a vacation home, the initial cost and ongoing maintenance can be daunting. Pacaso offers a unique co-ownership model that allows you to enjoy the perks of vacation home ownership without the full financial and logistical burden. With Pacaso, you can co-own a fully managed luxury vacation home ready for you to enjoy as soon as you arrive.

Reasons to buy a vacation home FAQ

01: Is a vacation home a good retirement option?

02: Should I buy a vacation home to rent it out?

03: Is it hard to finance a vacation home?

04: What is the difference between a second home and a vacation home?

DISCLAIMER: This content is published solely for informational purposes and isn’t intended to be investment advice. You should consult an appropriate professional for specific advice tailored to your situation.

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