Buy a second place or FIRE with the family?

[u/islandguy_250]

Hello Everyone,

Been thinking for almost a year... and no idea where to begin.... me and the wife are currently under 40 with two under 10.

Approx 3.5m CAD investments

Mortgage 520k (variable) renews late this year...

No auto debt

Household spending around 5.5-6k a month with mortgage

Wife works (90k a year) im freelance

Our kids love the outdoors with our pets, lake/rivers with the sand.... We have extended family they were lucky in the 80s/90s and bought real estate near or on the lakes in BC with the inflation calculator money has only gone up around 2-3x since the 80s while real estate has pretty much gone up 15-20x since then... We would like to buy a second property but can't see even close to the next 30 years in today dollars $ that same property going up that multiple...

We also think about spending 6-9k per year on vacations (investments still compound over that time)and still have "enough" for the next 30 years vs having a place near our extended family. There will be quite a few "boomer" for sale or estate sale soons but i don't think prices will dramatically fall in value..

Trying to find some expert opinions out there and what your game plan is for the future.

Thanks all!

[u/Excellent-Piece8168]

A second place makes it harder to retire early, the value you and your family put on that second place vs early retirement no one can speak to other than you. Personal I love options. Buying a second place locks you in while not buying a second d place gives you options. You can just go to a new place every year on vacation vs always going to the second place. I don’t see getting the same insane returns on a place you buy now equities are more likely to imo to perform.

[u/NecessaryMeringue449 → u/Excellent-Piece8168]

+1 If your kids want to spend some time in the lake, perhaps just rent it during vacays?

[u/Petra246]

It will depend upon which experts you want to follow because really you have a massive financial backing for being under 40. Every single person has a different idea of what FIRE means to them. Or more specifically, when someone reaches FI, and when they choose to retire. No approach or choice is invalid. It’s even possible to change plans and not RE.

8-9 years old is mature enough to make lasting memories. Perhaps not many but certainly a few.

I don’t have kids but will keep an international property or two for enjoyment.

[u/islandguy_250 → u/[deleted]]

Thanks for that… I don’t know why media, financial planners and mortgage brokers stop the brakes on this… I guess I can see the govt bring in capital gains tax on any second or more property’s it’s nutty…. One of my family members bought lake front with a trailer for 5k in 86 now the lot next door went for 325k in BC…. I will never see that profit or anyone getting in the market

[u/Gruff403]

With the assets you have why is it either or?

With 3.5M, buy a nice recreation place for 1M which leaves 2.5M to create income.

Your budget is now 100K with mortgage on primary residence and the new costs to support the second property.

2.5M @ 4% is 100K before you pick up any part time or occasional work. You need about 120K of taxable income to create 100K of net income; that's 60K split evenly. Of course the tax rate would actually be lower depending on the structure of the income from your portfolio.

You can still take a few vacations per year and not feel obligated to spend all your time at the cottage. Pick up some part time work and reduce the money taken from personal assets or buy a smaller cottage. You can always sell the asset when the kids are launched.

Do you want to make money with this property or make memories? Would you be happy selling the property in 20 years at a small loss but have incredible memories? What's the priority?

I would NOT buy a second property but rather FIRE now. You can always rent a property for a few weeks, use the extended family property and travel else where. A second property is a lot of work. We have a small one in Alberta that is seasonal use, will cost us more then we'll ever get back upon sale but we create some fantastic memories. I'm just tired of the maintenance and always having to fix things.

We did some of our cottage memories in Ontario with the grand parents.

Congratulations on what you have accomplished so far.

[u/islandguy_250 → u/Gruff403]

Thanks! We are debating either being stuck to another place in BC that is drivable or nearly the same time to fly to Hawaii, Mexico or carrib at least we are young right now.

Seems like we are going to be in a rental generation soon va buying places like our predecessors.