What you Need to Consider Before Purchasing your Vacation Home
There is little more appealing than a second property that provides a getaway from your hectic city life; a place to host family and build memories; and an investment from which rental revenue can be generated during the weeks or months you won’t be using it. But before you take on a dream that ends up a costly burden, think over the following steps when researching for the purchase of your home away from home.
How will you Pay for it? Is it better for you to refinance your current mortgage, take out a Home Equity Line of Credit on your current home or apply for a completely separate second mortgage? Discuss your options with a reputable mortgage broker or financial adviser and be sure to pick the option that will see you attain the lowest mortgage rate possible, and pay the least amount of taxes. Before you cash in an RRSP or other investment to come up with a down payment, examine your equity take out options.
How Much Work Can you Put in? As alluring as that rustic cabin with a wood stove and tin roof situated in the middle of seclusion is, how much longer can it stand that way without major repairs? How rentable is that aging character abode? The more remote your vacation home is situated, the more costly and difficult any renovations it needs will be to have done. Just as you are banking on the value of your home to appreciate, you should consider the probability of your vacation home to do the same. Cottages and vacation condos will need upkeep too. Remember to factor needed repairs and basic maintenance into your monthly budget when determining how much you can afford to spend on your second property. In addition, be sure to have any prospective properties thoroughly inspected by a professional home inspector.
Is Your Cottage Accessible Year-Round? It’s beautiful in pictures and lush in summer, but are the roads to that cottage open during a heavily snowing Canadian winter? If generating rental income from this property is essential to its affordability, you are better off seeking a location that is all-season friendly, and attractive. Many lakeside summer homes are also in close proximity to a ski hill, or offer winter skating, cross country trails, snowmobiling paths and a cozy place to have a fire and hot cocoa when the day is done.
Where does the Property’s Water Supply Come From? Is the water to your property pumped in from a well, a tank or a nearby body of water? Is it treated and safe to drink? If from a well, has it had a tendency to dry? Is it positioned higher than the sewage lines? What are the bylaws governing water usage in the area? Visit the area websites and call the appropriate sources to get answers to these questions.
What Area/Bylaw Restrictions Might be Foreseen or Pose Future Issues? Find out what the bylaws and regulations are in the area you are considering to buy in. Are fishing, boating or other water sports restricted to some areas of the nearby lake or to specific seasons and clauses? Will you be allowed to implement desired additions or renovations to the property? Can you hunt in nearby public lands? Is the sewage system working? Could it become blocked by tree roots, or could it become your cost to update and have it integrated into a town sewer line? Is the community zoned for year-round residency? Does the area have a waste or recycling service in place?
Much like the purchase of your primary residence, acquisition of your cottage will involve plenty of research, question asking, looking around and work in general. However, like your home became your castle, your second property will become your vacation palace with the employment of some strategy and mindful shopping technique.