You do not have to be a multimillionaire to have a vacation home. In fact, buying a holiday cottage can be a wise business decision for any family seeking a reliable investment.
Purchasing a second house for your family’s holidays will become a source of fun and fond memories for a lifetime. It can also become a source of income and even a nest egg for your future!
However, you need to consider all of the possible factors that will affect this decision before you take the plunge.
Here is a list of some of the ins and outs of vacation homeownership.
1. Saves Money on Annual Holidays
You and your family probably take a trip two or three times a year at least. There are winter holidays when you get together with relatives. There is summer when you want to get away from it all and relax.
If a family of four travels three or four times a year, the expenses rack up. There are airfares and hotel costs. Eating out while on vacation becomes quite expensive.
When you own a vacation cottage of your own, you no longer have to shell out for accommodations for your holidays. You can invite relatives to come and visit you, and cook cost-efficient meals at home.
2. Provides a Respite from the Busy City
If you and your spouse live and work in a busy metropolis like Toronto, you probably long for a chance to get away from the noise, crowds, and stress. Your physical and emotional health may suffer if you fail to unplug occasionally and take it easy.
Holidays can become even more stressful when you have to book hotels and plan for everything. If you own your own vacation home, on the other hand, you can hop in the car and be there in a couple of hours. You don’t even have to pack!
Relax with a swim or by fishing with your kids on a peaceful lake. Go birdwatching. Drink in nature and allow yourself to sleep late. These are the benefits of owning a vacation home.
3. A Treasured Spot for Generations
People all over the world find their fondest childhood memories come from lazy summers spent with their families. These happy times become preserved in our minds as the idyll, and what we want to give to our own children, and then to theirs.
You may want to pass down your mother’s chocolate cake recipe, taught to you years ago during rainy summer days. You may want to read aloud to each other in the evening dusk, sharing favourite books from “Harry Potter” to “Walden Pond.”
When you own a vacation home, you can create these special memories for your children and grandchildren, savouring the universal joys of being together in nature.
4. Source of Rental Income
Of course, the joys of a vacation home are not purely nostalgic. There are good, hard financial reasons to invest in a second home.
Vacation home rentals can provide a steady stream of income to supplement your earnings. If you choose a home in a desirable area, you may discover you can rent your place out whenever you yourself are not using it.
Vacation homeowners in the United States make lots of money when they can offer rentals in areas that people want to visit, such as Florida for the warm weather or New England for skiing.
Renting may bring a few added expenses, however. Make sure you include in the rental fees the extra costs for managing the rental, cleaning, utilities and insurance. You may also want to keep your personal or valuable items out of the house if strangers will be using it.
5. Possible Retirement Option
Your vacation spot may turn out to be the place where you dream of settling down eventually. Choosing a home now to live in later gives you plenty of time to do necessary renovations.
Consider any challenges that may be harder for seniors, such as the need to shovel snow or navigate steep staircases. You may want to equip the house with appropriate heating and air conditioning if you think at some point you may live there full time.
6. Calculate the Hidden Expenses
In deciding whether to invest in a vacation home, you need to look at more than how much the house costs.
Will you need to take out a loan? Calculate the interest and the taxes, in addition to utilities. Think about how much certain expenses like heat or electricity may go up in different seasons.
If you plan on renting out, how much can you pay someone to manage the property? You may not live close enough to run over to hammer a nail or unclog a toilet if you get a call from your AirBnB customer. You will need a caretaker to keep an eye on things in your absence.
7. Consider Your Family’s Needs
When you think about making a major purchase, you must consider how much use you may actually get out of the investment.
If your kids hate the beach, a tropical hacienda may not be the right choice for you. If your folks refuse to drive longer than two hours for anything, that may limit your selection of options.
If you all enjoy gaming, find a place with reliable Wifi. If you have a boat, you may decide on a smaller lot with waterfront, rather than the bigger house where you need to drive a half an hour to the dock.
8. Real Estate Goes up in Value
Whether you use your vacation home every weekend or rent it out to others as a source of income, eventually you may decide to sell. Provided you have done your homework and selected a spot where others will want to visit, you should be able to make a profit on your investment.
Ontario house prices are expected to rise by 6.9% during 2020, to an average of CA$ 648,100.
Unlike so many other investment vehicles, real estate is generally considered to be one of the most trustworthy ways to make money over time.
Your Vacation Home: For Fun and Profit
A vacation home may be one of the only ways you can make money while enjoying your investment at the same time. You can rent out your home when you are not using it, and use it yourself when you need to get away from it all.
For more information on the right vacation home for you, contact us.