5 Surprising Costs of a Vacation Home — Is It Worth It?
Written by
Dawn Allcot
Edited by
Jenna Klaverweiden
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It sounds like a dream: A private property in a tropical climate or perhaps in a rural countryside where you and your family can relax for a few weeks (or more) out of the year.
A vacation home provides tremendous benefits, including a source of semi-passive income as a potential vacation rental. But there are also some surprising costs that come with owning a vacation home that could cost you extra money.
Read on for the value and surprising costs of a vacation home and whether or not it’s worth it.
The Value and Hidden Costs of Vacation Rentals
Vrbo’s revenue grew to more than $3.8 billion in 2024, more than double its 2017 numbers, according to data published by the Business of Apps. As vacation rental supply growth slows in 2025, according to AirDNA, hosts have more opportunities to attract their ideal clients and command more money for in-demand properties.
But before you invest, it’s wise to consider the costs involved. Running a vacation rental, or even maintaining a vacation home, isn’t the same as the costs involved with your primary residence.
“For anyone considering a vacation home, it’s easy to underestimate the true carrying costs,” said Kevin Reed, chief revenue officer at Aquilance, a personal financial management firm for UHNW families and family offices. When he provides his ultra-high-net-worth clients a “really detailed breakout per [vacation] home” to see how much they spend, they are almost always surprised at the cost.
“You start to look at how often you’re using the home compared to the total cost to maintain the home,” he said. And while you can offset some of these costs by renting the property when you’re not using it, it may not be worth the costs.
Here are five expenses to be aware of before you put a down payment on that dream getaway.
Insurance Specific to That Property
As homeowners struggle with rising insurance costs across the board, insurance on vacation homes often exceeds budget expectations — especially on waterfront properties in high-risk regions.
“The high risk of damage from storms, flooding or even just the effects of saltwater can lead to higher premiums,” Reed said. “Vacancy or using it as a short-term rental are other factors that can drive a higher risk rating from insurers.”
To save on insurance, choose your second home carefully — ideally, away from places with a high risk of fires, floods or tornadoes.
Taxes
Just as you should evaluate home insurance rates before choosing your vacation property, consider the property taxes in the area. “Some homes are in high-cost-of-living areas,” Reed said, “but many are in rural settings.”
If your goal is to get away from it all, you may find lower property taxes in a region known more for babbling brooks than A-list parties.
Home Repair and Improvement Costs
In spite of lower overall costs for the home and property taxes, rural areas have financial drawbacks too.
“We bought a vacation home in the middle of a national forest and turned it into a short-term vacation rental. Due to the rural location and lack of providers, the cost for a plumber to unclog a toilet at this property is twice as high as we would pay at our home in the suburbs of Chicago,” Reed said, speaking from experience.
Maintaining a vacation home anywhere requires forging connections with a set of service providers outside of your home region, Reed explained.
Lawn and Garden Maintenance
Likewise, a vacation home needs year-round landscaping, whether that means lawn maintenance or leaf and snow removal.
Vacation homes often require “specialized landscaping for larger or more unique properties,” Reed said. These costs add up.
Utilities
Finally, Reed noted that the “cumulative effect of smaller, recurring expenses that don’t feel significant individually but add up over time” often surprises clients who own second homes.
These costs can include electricity, heat and internet connectivity, which can cost more in rural areas.
Is a Vacation Home the Right Choice for You?
A study from Talker Research, commissioned by IHG Hotels & Resorts, revealed that 59% of retirees plan to travel more during retirement. Gen Z isn’t far behind boomers in their travel aspirations. Gen Z spent an average of $11,000 on travel in 2024, according to Berkshire Hathaway Travel Protection’s 2025 State of Travel Insurance Report. This earned the cohort the designation of travel’s “fastest-growing consumer segment” according to Travel Age West.
A vacation home can help make travel more affordable — especially if you use vacation rental revenue to fund other trips or negotiate home swaps with other travelers. But depending on your travel plans and your wealth-building goals, a vacation home may not be the best investment.
“The rate of appreciation might be lower than other potential investments, especially when factoring in the carrying costs, effectively reducing the net return. The illiquidity of real estate is another factor; it’s not as easily converted to cash as public market investments,” Reed said.
If your vacation home ties up a significant portion of your wealth, at the expense of investing in exchange-traded funds (ETFs), bonds, gold or other assets, it may not be the best choice either. A diversified portfolio is best at any stage of life.
“Weigh the purely financial aspects against the emotional value the home provides,” Reed said. “It’s a very personal decision, but having a clear financial understanding empowers [you] to make an informed choice.”
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