Your Mortgage: Partner up and invest in a vacation home

Mike Miles

By Mike Miles
Ever been to a place on a vacation and thought to yourself that it would be great to live there? I think we all have right? Whether it be in the mountains, at a resort or on a beach … vacations usually allow us to see the best a place has to offer. So, is it really possible to have a second residence in a place you love to vacation? Logic might try to convince you it’s not. Yes, there are obstacles such as affordability, frequency of use and accessibility convenience. Most likely the most significant obstacle deals with affordability.

What if the concern about affordability was greatly reduced?

Think about the idea of partnering up with one or more family members or friends to buy a place and then hiring out a management company to rent it out to others. Hmmmm …

Partner up with a trusted person you are close with and that you like (I’ll explain in a bit). Agree to split all purchase and operating costs equally. Hire a management company to lease it while you are not using it.

Let’s look at an example and use a price of $400,000 as the price of the home.


  • 10 percent down payment with each partner paying ½ is $20,000 each
  • The total payment of financing $360,000 over a 30-year period would be around $2200 per month with each partner paying ½ or $1100 per month
  • Monthly operating costs (utilities and management) estimated at $400 with each partner paying ½ or $200 a month

At this point of the example each partner has $1300 a month in ownership and operating expenses. That’s $15,600 a year which can sound like a lot. However, what if you rented the property to vacationers at a rate of $250 per night? Your individual annual expense could be covered in 63 days. It’s safe to assume the management company would take a percentage of rents received but you still get the idea that in about 60 days you could have 100 percent of these expenses covered.

Depending on how much you used the property (versus leasing it), you could actually earn income in addition to covering your expenses. Additionally, there are tax benefits available and equity appreciation to add to the value of owning a vacation/secondary residence. Lastly, you own it, so you can pick and choose when you want to go on vacation without worrying about seasonal rates and/or vacancy.