A cottage can make a lovely, cozy home–but before you decide to make the move, be sure you’ve weighed the pros and cons of buying a cottage.
With the costs of city properties ticking steadily upward, many would-be homeowners are finding it difficult to break into the property market. This is why in recent years, buying a cottage has become a popular solution.
Not only is it a much more achievable goal financially but many relish the cottage lifestyle itself.
But before you commit, you would be right to ask if it’s a worthwhile investment. To decide if it’s the right choice for you, take a look at some of the pros and cons of living in a cottage.
The Pros of Buying a Cottage
A cottage can be an attractive property for several reasons. Whether the motivation is financial or lifestyle-oriented, there’s a lot to love.
Some of the biggest perks of buying a cottage include:
The Cottage Lifestyle
Among the most attractive aspects of buying a cottage is getting to live the cottage lifestyle.
Depending on where exactly you put down roots, you could have the privilege of enjoying all kinds of adventurous activities you could never experience in the city.
If you live close to the water, then you can fill your days with fishing, kayaking, or even wakeboarding if you crave a little more excitement. Alternatively, you could enjoy long woodland hikes.
In any case, you’ll benefit from the peace and quiet that comes from being away from urban centres. With the lack of traffic and air pollution, you’ll literally be able to breathe easier. And at night, you’ll be able to enjoy the tapestry of stars overhead.
The Real Estate Tends to Be Affordable
The other major consideration is the financial aspect. With properties in major cities becoming prohibitively expensive, particularly for new buyers, cottages have become a common solution.
As you move further outside of the cities the price points tend to drop. Not only does this make cottages more accessible to more people, but you can also count on getting more bang for your buck. A budget that would be more than modest by city standards, can reliably produce a variety of options in the countryside.
The Investment Potential
Due to their lower price-points, cottages also present an investment opportunity for young buyers. When you pay rent, that money is gone for good. But when you pay your mortgage, you’re building equity in that property.
And should you decide to move from your cottage later on, you put the property to work for you. With the popularity of summertime cottage rentals, you can generate reliable income by leasing out your former home to vacationers.
Alternatively, simply reselling your cottage can also be profitable, given that cottage prices soared more than 11% last year and are forecasted to rise another 8% this year.
The Cons of Buying a Cottage
Despite the benefits of living in a cottage, there are drawbacks. After all, if there weren’t, then everyone would do it, wouldn’t they?
Some of the downsides of cottage ownership include:
The Cost of Maintenance
You could consider this a point that applies to any property, but it bears mentioning that you’re responsible for maintaining any property that you own.
Exact costs will vary, but a good rule of thumb is that you can expect to pay 1% of a property’s value each year in maintenance and repairs.
While that may not be a huge sum, and indeed you’ll probably still come out ahead compared to what you’re already paying for rent, it’s a concern that many first-time homeowners overlook.
Setting up a New Property
While it may be a minor concern, you shouldn’t underestimate the amount of work that goes into setting up a new home.
Sure, setting up utilities and essential services is a chore that you need to attend to anytime you change addresses. But as cottages tend to be in more remote areas, your choice in certain amenities may be limited, and those you do have access may charge a premium for access.
And then, of course, there’s the physical moving to think about. Merely moving across town can be a hassle. Moving to your new country getaway, considerably more so.
You can help mitigate the hassle by planning for a successful move well in advance, but it is nevertheless a consideration to keep in mind.
Taxes on the Sale of a Cottage
While cottages can be a sound investment, it’s worthwhile to remember certain factors that can cut into your return on investment. And the taxman is chief among them.
As a significant asset, you can count on the CRA taking your cottage into account. Particularly if you plan to sell it somewhere down the line.
Of particular note is if you move to another primary residence later on, but retain your cottage as a second home. This may cause your cottage to be classified as an investment property and become eligible for capital gains taxes should you sell it.
Naturally, you’ll want to discuss the prospect with a qualified tax professional before making a major decision like that. But if you have a mind to resell your cottage at a later date, it’s something to keep in mind.
So Is a Cottage Worth It?
It’s understandable why living in a cottage would be appealing to so many of us. The peace and quiet, not to mention the accessibility to first-time buyers, make them an attractive prospect.
But all the same, buying a cottage is a major investment and is not to be done frivolously. Having weighed the pros and cons, only you can decide if it’s the right choice for you.
Of course, if you have the means, you can always take the best of both worlds. Cottages make for popular vacation homes for those of us who just need a reprieve from city life. To see if this might be the right path for you, check out some of the ins and outs of vacation homeownership.