Buying a Lake of the Ozarks home or condo

I thought this was a very well written article on the subject of buying a Lake home or Condo. 

By Jeff Opdyke
From The Wall Street Journal Online

Over the summer, my wife and I began living part of our retirement dream: We bought a small house on a lake about an hour from where we live.

In doing so, we threw down a meaningful chunk of our liquid retirement savings for the down payment on this property.

We’re not looking to retire anytime soon, mind you; I’ll be 41 in January, and Amy, my wife, is only 39. But we also know that buying the property means we’re trading what would likely be faster growth in the stock market over the next 25 years for slower growth in real estate. And that means that when the time does come to retire, we’ll have a smaller bundle of cash to live on — cash we could have used at that point to buy a lake house, and more.

 So why did we do it? Sometimes, when you examine what you want

From as long ago as I can remember and up through high school, my grandfather and two of his brothers owned a small, rustic cabin at the same lake where Amy and I now have our getaway. I spent a great deal of time there learning to fish, swimming with my friends, exploring the wilderness and attending family gatherings. That lake is such a part of who I am that for years I’ve had recurring dreams about the place; if I hear the distinctive trill of a red-winged blackbird today, I am instantly 10 years old, sitting in a small fishing boat with my grandfather, watching the sun rise over the lake.

Amy knows the pull this lake has on me. I’ve talked about it often, and when we were dating in college I’d drive her there on occasion to show her a piece of my history and to reminisce about what I view as the happiest part of my childhood. For my 40th birthday this past January, she surprised me with a weekend at the small bed-and-breakfast directly across the lake from the cabin where I spent so much time as a kid.

Driving around the lake that weekend, we noticed "for sale" signs on a few empty lots and houses. That got us talking. Wouldn’t it be nice to have a place there for the weekends? Somewhere to spend time with our kids. Teach them how to fish and water-ski. Where we can enjoy holidays with friends and family. I told her that this particular lake is where I could see myself spending a great deal of time in retirement.

A real-estate agent we contacted to check on prices in the area ultimately showed us the perfect property — a two-bedroom house with a great deck and a long path leading down a leafy hill to a small boathouse on the water.

We bought it.

Of course, the process wasn’t nearly that simple or quick. We spent months debating, sometimes agonizing, over whether our vision of "wouldn’t it be nice…" was worth the cost.

To a certain degree, the decision to buy the lake house was debated on financial grounds. Real estate has value and will generally increase alongside the rate of inflation over time. So it’s not like we’re cracking our nest egg to spring for something ultimately worthless like a sports car or a tony vacation. Our retirement stash will continue to work for us, so that if we ever needed to raise money to live on, we have an asset that’s worth something.

The financial downside: It’s likely that the lake house will appreciate more slowly than other investments we could have made. So we’ll either have to save more for our retirement, or resign ourselves to having less at retirement than we might have had otherwise.

But as I said, there’s a family variable that, for us, overshadowed the finances.

Every day I watch my son and daughter grow, and it’s like watching another grain in the hourglass fall. I see this lake house as a means for building memories with our children…and for our children. Sure, Amy and I could have waited until we actually reached retirement to buy our retirement home, and at that point we might have a decade, maybe longer, to enjoy the place. But it would be a decade largely alone, with the kids visiting on major holidays, but other than that having no real ties to that house or the lake.

Or, we could buy the house now, when we’ll get three or four decades of use from it — and, most important, it will become part of the fabric of our kids’ lives. They will look back on their years at the lake with Mom and Dad as fondly as I recall those moments with my grandfather. My ultimate hope: that we never have to sell this house because our kids love it so much, and they’ll want to keep it when we’re either too old to use it or gone.

And then there’s this: In the event that either of us dies young, I don’t want our retirement-savings effort to have gone for naught. This way, we’re living part of our retirement dream together, now.

To be clear, Amy and I aren’t made of money. Neither of us is tapping into a family trust, and we didn’t win the lottery. To make this purchase work, we had to dig deeply into our retirement money.

That money exists because through our years together we’ve been aggressively saving — sometimes excessively, Amy says. We have done it by living in affordable houses, replacing our cars infrequently and not taking blowout vacations. In short, we’ve made trade-offs our entire career with an eye toward our future.

Still, buying the lake house required even more trade-offs that we spent long hours discussing.

Longtime readers of this column might recall that a few yeas ago I wrote about an exercise Amy and I went through, where we separately wrote a list of our individual dreams for retirement. We compared our lists to determine how close we are in our visions and where we need to try to build a path toward one another. One patch of common ground: We both wanted a small apartment in Vancouver, British Columbia, a city we’ve come to adore over the years and where we’d like to spend extended time in retirement.

That dream remains on the list, but it has lost its former prominence. We realized we’d be happier with a house that we can drive to at any moment rather than one requiring advanced planning and a day’s air travel to reach.

We’ve also scaled back some annual vacation expectations, willing to spend those days, instead, with the family playing at the lake.

Buying your retirement home 25 years before you ever reach retirement may not be the way many savers want to invest their nest egg, and I understand that. But the way Amy and I calculate the numbers, there can be no finer return on investment than to see the value of this house grow…in our kids’ hearts.

The only downside to me in the article is the way the writer resigns himself to accepting that this investment will certainly be worse than his other investments in the performance category.  This was in a finacial journal – so I should have expected nothing less because they aren’t going to sell many magazines if more people invest in real estate!  He at least states that it would keep up with inflation.  The funny part is a vacation home bought in the right place that will likely have demand is going to do a little better than just "keeping up with inflation", all the while giving you a tax break and an investment you can enjoy in person.

As always, you can contact us at 573-302-2320 or e-mail with any questions. 

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