4 Things to consider before you buy that vacation home

4 Things to consider before you buy that vacation home

Dreaming about spending your summers at your very own cottage up north? Or perhaps you’re looking for a place down south to escape the frigid Canadian winters? Whatever type of vacation home you’re dreaming about owning, you’ll want to consider several factors before you pull the trigger!

How familiar are you with the area? Who among us hasn’t taken a trip that was so amazing that you wanted to make that special place a little more permanent? It’s easy to get swept away with the emotion that comes from a fun and fulfilling getaway. However, if you’re thinking of investing in an area, you should make sure that you first visit several times and, preferably, during different seasons to make sure that the honeymoon effect doesn’t quickly wear off! Renting a vacation home during subsequent visits, versus staying in a hotel, will help you get a better sense of what life is like in the area. Consider it a good sign if you’re still in love with the place during its worst season!

How often will you be able to use it? A second home is a huge investment, so “getting your money’s worth” is key. This will largely depend on the phase of your life that you’re in. If you’re working full time, raising kids and spending winter weekends at hockey tournaments, your considerations for a second home will be very different from the retiree with a lot of time on her hands, looking to warm up during the winter.  A property that’s a two or three-hour drive away ensures that quick weekend getaways can happen often, even with a busy family life. If you have the freedom to be gone for weeks, or even months, at a time, you’ll be able to expand your search considerably. Bottom line: be realistic about how likely you are to use the property given your current lifestyle and commitments.

What are the carrying costs? Even if  you’re planning on paying cash for your second home, all properties incur ongoing expenses that you’ll need to be sure you can afford to cover. Property taxes can sometimes be a surprise, as some jurisdictions levy higher taxes when the property owner is not a full-time resident. Repairs, insurance and general maintenance will likely add another several thousand a year. Be sure that you’ve calculated all your annual costs, and even compared those to what you’d likely spend on vacations in a year to be sure that owning a second home is your best option. 

Does it have rental potential? You may or may not be interested in renting out your vacation house, but knowing that you could rent it out to offset costs - if need be - is a helpful reassurance. Is it a place where a lot of people like to visit? Is the location walkable and close to area attractions? Does the condo or community have restrictions on short-term rentals? If so, that will dramatically impact your ability to monetize your investment. Ensure that you’ll have flexibility in the event that you don’t or can’t use the property as much as you intended.

Having a second home to escape to can be a wonderful thing. By doing the proper due diligence up front, you’ll ensure that you make the best possible decision on a second home that you and your family can enjoy for years to come.