This is excerpted from the revised edition of Make The World Your Second Home.
APPENDIX II:Cost Comparison: Renting vs. Owning
Another way to examine the cost advantages of renting a “second home” each year rather than owning is to compare my experience of renting to a person who might have bought a property and kept it for ten years. I have ten consecutive years of summer rental experience. (See chapter six, Our Love Nests.) My average per daily rental cost for one-hundred days each summer has been $7,500 or $75 a day.
I have estimated the market value for each of the ten properties to arrive at an average second home market value of $750,000. For comparison I assume purchase of a similarly priced second home and keeping it for ten years.
Other purchase favoring assumptions are a ten-percent down payment, five-percent mortgage interest, and a three percent compounded increase in the value of the property every year for ten years.
BOTTOM LINE: OVER THE TEN YEARS, EVEN WITH FAVORABLE ASSUMPTIONS FOR OWNING, IT COST MORE THAN TWICE AS MUCH TO OWN A SECOND HOME THAN RENT FOR 100 DAYS EACH YEAR.
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