The Vacation Home Dream
The beach condo justified as "an investment plus free holidays." See the true cost of every night you actually sleep in it, and how many nights a year it takes to beat simply renting your holidays.
All figures are in today's money: every rate on this page is real, i.e. above inflation. Why?
The Property
Mortgage
Your bank's rate minus inflation, e.g. 3.5% at 2% inflation is 1.5%
Usage & Letting
Returns & Horizon
| Metric | P10 | P50 | P90 |
|---|---|---|---|
| Buy Net Worth after 20 yrs | €397,775 | €397,775 | €397,775 |
| Rent Net Worth after 20 yrs | €548,602 | €1,018,222 | €2,056,223 |
| True Cost Per Night vs €180 to rent (3.6×) | – | €657 | – |
| Break-Even Nights/Yr you plan 30 | – | 128 | – |
| Locked Capital, Day One Hotel budget: 139 nights/yr | – | €136,000 | – |
| Net Worth Advantage | -€1,638,735 | -€620,447 | -€158,797 |
What each choice actually pays
Where your net worth after 20 yrs lands under each decision: buying in the upper panel, renting the nights in the lower one. Both panels use exactly the same buckets, x axis and y axis, so a bar compares directly with the bar below it. Read the shapes, not the overlap: both paths ride the same market in any one scenario, so the distance between these two peaks is not the odds of one beating the other. The Net Worth Advantage row above settles that.
- Upper panel (Buying): The share of scenarios in which buying finishes in each range.
- Lower panel (Renting): The share of the same scenarios in which renting finishes in each range. Both panels use exactly the same buckets, x axis and y axis, so a bar here compares directly with the bar above it.
- point at the chart: Hovering or tapping anywhere on the chart names the bucket under the pointer and, for each side, the share of scenarios that finish inside it, below it and above it (the three add to 100%). Dragging across the chart with the mouse zooms to what you selected.
- clipped tail: The ‹ and › percentages at the ends of the axis are the scenarios finishing outside the drawn range, each after a ■ in its side's colour. Up to 1.0% of one side's scenarios sit outside it; they are counted in every number on this page, just not drawn here.
Net Worth Over Time
- Buy P10–P90 · 80% of scenarios: The middle 80% of simulated futures: 1 run in 10 ends above this ribbon and 1 in 10 below it.
- Buy P25–P75 · middle half: The middle half of simulated futures: a quarter end above it, a quarter below.
- Rent P10–P90 · 80% of scenarios: The middle 80% of simulated futures: 1 run in 10 ends above this ribbon and 1 in 10 below it.
- Rent P25–P75 · middle half: The middle half of simulated futures: a quarter end above it, a quarter below.
- Rent median (P50): The median (P50): half of all simulated futures end above this line, half below. It coincides with the solid line.
- solid = median (P50) path: The solid line is the median (P50) path. Because returns compound, the arithmetic mean sits ABOVE the median: a few very good runs pull the average up.
Both pots are market-driven, so each carries its own modelled P10–P90 fan at volatility σ = 15% (set in the header). Home value and mortgage stay fixed.
Net-worth advantage over time (Rent − Buy)
The solid line is the deterministic gap between renting-and-investing and buying; the emerald fan is its modelled P10–P90 range at volatility σ = 15% (set in the header). Above the break-even line renting is ahead; below it buying is ahead. Only the invested pots are randomised; the home value and mortgage stay fixed.
- Rent − Buy P10–P90 · 80% of scenarios: The middle 80% of simulated futures: 1 run in 10 ends above this ribbon and 1 in 10 below it.
- Rent − Buy P25–P75 · middle half: The middle half of simulated futures: a quarter end above it, a quarter below.
- Rent − Buy median (P50): The median (P50): half of all simulated futures end above this line, half below. It coincides with the solid line.
- break-even: Reference line: break-even.
- solid = median (P50) path: The solid line is the median (P50) path. Because returns compound, the arithmetic mean sits ABOVE the median: a few very good runs pull the average up.
Annual Cost vs Nights Used
- Own: Flat annual economic cost of owning, regardless of nights used.
- Rent: Cost of renting, growing linearly with nights used.
At 30 nights a year, each night you sleep in the home truly costs €657, including the return forgone on the €136,000 locked up on day one. Renting the same night costs €180. You would need to use it 128 nights a year for buying and renting to end at the same net worth after 20 years.
Over 20 years renting your holidays and investing the difference comes out ahead by €620,447. The renter keeps the €136,000 locked capital compounding at 5% and dodges the round-trip transaction cost.
The cost-per-night snapshot and the net-worth curves are two views of the same opportunity cost, so the forgone return is never double-counted.
How the scenarios work: the single deterministic curves assume the invested pots grow at a steady 5%/yr. Real markets don't. The fans and histograms model both the buy-side and rent-side portfolios as compounding at the SAME lognormal monthly return with median 5%/yr and volatility σ = 15% (set in the header), so both strategies see the same market. The home value, mortgage and cash flows stay fixed; only the invested capital is randomised. The median of the distribution equals the deterministic line, so the fan hugs it and widens with the horizon. The solid line is the median (P50) path: half the modelled outcomes finish above it and half below.
Down payment, loan principal & locked capital
down = 400,000 × 30/100 loan₀ = 400,000 − down locked = down + 0.5 × 8/100 × 400,000
- P: home price
- d: down payment, %
- t: round-trip transaction cost, %
Mortgage payment (amortisation)
- r: monthly mortgage rate = mortgage rate/100/12
- n: mortgage term, months
Monthly buy outlay
buyOutlay(m) = pmt + 10,000/12 − L(m) − 0 × 30 × g(m)/12
- C: carrying cost, per year
- L(m): net letting income in month m = (annual net letting income/12) × benefit growth(m)
- S: daily food savings when cooking
- n: nights used per year
- g(m): cumulative benefit-growth factor at month m
Monthly rent bill
rentBill(m) = 30 × 180 × g(m) / 12
- n: nights used per year
- R: comparable nightly rate
- g(m): cumulative benefit-growth factor at month m
Shared budget & invested pots
- i: monthly market return = (1 + Market Return/100)^(1/12) − 1
True cost per night
costPerNight = (I₁ + 10,000 + r×locked − A₁ − Let₁ − 0×30) / 30
- I₁: first-year mortgage interest
- C: carrying cost, per year
- r: global Market Return, set in the header
- locked: locked capital, day one
- A₁: first-year home appreciation
- Let₁: first-year net letting income
- S: daily food savings when cooking
- n: nights used per year
Round-trip transaction cost (8%) is split half at purchase, half marked against the resale value each year. Carrying cost is held FLAT in real terms for the whole horizon, while the nightly rate, letting income and daily food savings grow at the cost-growth rate you set above. This is a known simplification, not a hidden one: real upkeep (tax, insurance, HOA, maintenance) tends to drift up with property values and consumer prices over a long horizon, so holding it flat understates the owner's true cost and flatters buying, especially at longer horizons. The break-even nights figure comes from re-running the full wealth simulation. Food savings credit the owner only (the renter is assumed to eat out), mirroring how net letting income is credited. Non-financial value such as spontaneity, personalisation, tradition or forced savings is not priced. Second-home tax treatment (letting income, deductibility, capital-gains) varies by country and is left neutral: enter letting income net of tax.
Every figure here is real (inflation-adjusted): the global Market Return is defined as a real return, so both net-worth paths compound in today's purchasing power, and the cost-growth rate above is the growth above general inflation, so there is no separate inflation input to double-count.
Assumptions behind every figure: how this site models the market →
Every model leaves things out. Here is what this one does not see:
- Home value compounds deterministically at the entered appreciation rate with no volatility or crash risk, while the rent-side's invested capital carries a full P10-P90 fan. Buying's biggest single asset is modeled as risk-free when real property values can fall and stay illiquid for years, so buying looks safer here than it would with matched risk on both sides.
- Net letting income is treated as guaranteed, smooth and market-independent: no vacancy, no seasonal clash with the weeks the owner actually wants the home, no platform or agency fees, no damage claims eating into it. The buy side's income is likely more optimistic than a real letting operation would deliver.
- Only a flat annual carrying cost is modelled, with no allowance for lumpy capital expenditure such as a roof, HVAC or structural repair hitting in one real year rather than smoothly every year. A bad-repair year's true cost is understated versus what's shown.
- No currency or destination-country risk. A vacation home is often bought in a different country and currency than the buyer's income and portfolio, and no FX movement between the two is modelled. The real economic comparison could tilt either way depending on how the home currency moves against the buyer's own.