Dreaming of a home away from home? Buying a summer cottage, a winter chalet or a tropical hideaway may be a goal of yours.
How do you make sure you find the right fit for you and your finances? Vacation properties come with a different set of factors to consider compared to those you’d think of when buying your primary home. Things like shoreline access and road maintenance in the winter may have a huge impact on whether you’re going to enjoy the space, or if heading up becomes more of an inconvenience than a relaxing getaway.
Here are 7 tips to consider before purchasing your dream vacation home.
As with any real estate purchase, where your cabin is located is probably the most important thing to consider. Are you looking to be in the mountains so you can ski in the winter? Or is having access to a lake more important to you? What you want out of a cottage is going to influence where you buy.
The other thing to keep in mind is how far the cottage or chalet is from your home and how easy it is to get to. An additional 20 minutes north may mean a cheaper sale price, but, in peak season, that could add significant travel time. Battling traffic for hours may become too much of a nuisance and eventually deter you from using your property. In that case, the money you saved might not make the purchase worth it.
If you have your eye on a particular spot, try heading up at different times during the week to get a realistic sense of what the trip entails.
The total price of ownership may surprise you, and it’s better to know what you’re in for sooner rather than later. Buying your cottage is just the beginning – factor in property taxes, insurance (which tends to be steeper for vacation homes), maintenance costs and other carrying costs.
Depending on where the property is located, there might be additional costs you’re not used to. For instance, if it’s not connected to a municipal sewage system, you’ll likely be dealing with a sceptic tank, and maintaining it will affect your yearly costs. The property may also need a new roof or upgrades to make it winterized. These types of renovations are all things to consider.
Financing terms for a second home can also be more stringent. If you buy outside of the country, you’ll need to weigh fluctuating exchange rates and look into taxation for foreign residents.
The good news is you could offset the costs and even get the cabin to pay for itself by renting the property out on Airbnb or other short-term rental sites. However, depending on where you buy, there could be extra municipal costs associated with making your property a vacation rental and you may need to hire a property management company to help with the listing and the upkeep – that will eat into your rental income.
Once you have your eye on an area, make sure you love it – you’ll likely be setting down roots for a long time. Try to visit the location more than once and ideally at different times of the year to get a feel for what it’s like being there in the spring versus fall. Consider the number of seasonal pests there are and whether the lake warms up or stays cold even during the summer months. Dealing with long stretches of mosquitos and black flies may not be for everyone and certain lakes are worse than others.
It also never hurts to explore other areas for comparisons to be sure the locale is right for you. Are there necessities, like being nearby a town, that you just can’t be without? Or do you have your sights set on something remote and private?
Again, consider how long the drive up takes. Travel time will play a role in how often you visit.
Privacy may have a big appeal for you, but there could be trade-offs to getting a secluded spot. Do you need internet connection? In some remote areas, it could be spotty at best.
Say you find the perfect cabin only to discover it’s not connected to the power grid and a generator is needed to turn on the lights. There goes some convenience and likely money for fuel if it is gas powered. For some, that’s not worth the hassle.
Where will you be getting your water? This can be a factor in cottage country. Does the property have drinkable water, or will you have to install a system to make it potable?
Road maintenance during the winter is another big one. Some municipalities or chalet communities will have plows that pass through after a big snow fall, others won’t, which means getting to your property could be difficult.
Knowing where you stand on certain must haves for your vacation property will help you avoid the let downs.
The view of the lake from the top could be phenomenal, but the stairs down to the dock might be a workout. Elevation may play a role in your decision making especially if you’re older, have elderly family members who will be spending a lot of time at your second home or are looking for a place that is wheelchair accessible.
If you’re looking at a waterfront property, consider the size of the lake it’s on as this will determine what activates are permitted. Larger lakes may allow motorboats and fishing, while smaller ones may not.
The shoreline itself could also come with its own restrictions that will determine what you can build on the property. Many regions are encouraging cottage owners to keep the shoreline as natural as possible to prevent erosion and protect water quality and wildlife habitats.*
It really depends on a few factors such as: location, how long you plan to own it, whether you’re able to rent it out, if it’s an investment property, how much you need to maintain the space etc.
Putting together a list of pros and cons can help you figure out if you can afford a vacation home. This should include the down payment you have, what the mortgage payments will look like, and costs if you need to hire a management company if you chose to have certain months occupied by renters.
Make it a family affair. Does your family share your dream? Vacation homes can often bring families closer together, but as children grow their interests and commitments may change. Passing the property on to your children is an incredible gift, but they could be subjected to hefty capital gains taxes and other estate planning considerations should be explored.
Also, don’t be scared to think outside the box. Time sharing with friends or renting might provide you with greater flexibility. Joining the tiny home movement might be more financially feasible. Camping or RVing might give you the freedom to live the dream for a few years until priorities change. Explore all the options out there before finalizing your vacation home goals.
The Fall seems to be when most cottages go up for sale. Buyers can stumble across a good deal since many sellers want to enjoy one last summer in the space and sell it before they must get it ready for winter.
Opting for a local real estate agent is a good way to hear about upcoming listings. They can also provide inside knowledge of the municipality and its regulations so you know what to expect.
Toronto Star, Oct. 19, 2020. "Muskoka Lakes considers new building rules for lakeside property owners"
CBC, May 20, 2021. "Shorelines 'not a backyard swimming pool,' lakefront landowners reminded"