We met some fellow Minnesotans down here in Florida yesterday. Unlike us, they jumped into investing in a Florida vacation cottage a couple years ago when they first got the urge. They snapped one up when the Margaritaville Orlando resort was relatively new and said they have already seen a couple hundred thousand dollars of appreciation.

The colorful cottages are bright, nicely designed, and well-furnished. They come with their own Margaritaville margarita blender in the kitchen. The cottages sit behind the impressive Jimmy Buffett resort and a walkable shopping/dining district. As you might expect, the cottages carry a premium price point relative to other nearby neighborhoods that don't have Jimmy's island life endorsement. You can rent them out to other vacationers when you aren't using them yourself.

Financially, it seems like a great set-up, but I do have my doubts. The monthly HOA/resort fees for a cottage are close to $600 a month. Taxes ($500/mo) and insurance ($250/mo) aren't cheap either. If you rent them out, our new acquaintances said the rental company takes close to 40% of the rent and they felt "nickled & dimed' on cleaning, maintenance, and other fees. They stopped renting their new place because they felt the juice wasn't worth the squeeze.

While they were enjoying their tropical cottage, our money stayed in the stock market and grew more than 35% over the last few years. With that kind of return, I certainly don't feel too bad about missing out on the Florida vacation home boom. That said, while we aren't the type that would have taken out a mortgage to buy one of these cottages, low interest rates would have produced an incredible return for people willing to roll the dice.

We'll be looking at some other developments while we are down here, but I don't want real estate to overshadow having fun & chillaxing in the sun. While I respect people who can make a quick decision about investing in a vacation property, I don't think that will be us.

Have you ever jumped into buying a vacation property?

Image Credit: Margaritaville Orlando Resort