Do you dream of waking up surrounded by nature, whether that’s opening your eyes to a sea of spruce trees and glistening mountain tops or hearing the gentle waves from the lake washing ashore on the beach below?
Cottage season is just throwing open it’s shutters and for many it reawakens the dream of owning a second home. Prices of recreational properties have sky rocketed in recent years and like the housing market as a whole, there’s a serious shortage of homes available in Canada. Before you turn that dream into a reality, here are some pointers to guide you..
Location, location, location…
Distance is key. It is so tempting when scrolling through MLS to see a beautiful property and stretch the travel time to put it in reach. The reality is though that the travel time matters hugely. It affects how often and maybe even how much you use your dream property. If you have to drive 8 hours, you won’t be able to visit for long weekends, only longer stays make sense. So if getting to the mountains or lake as much as possible is a high priority, then you may have to look closer to home.
Distance can also affect costs. The further away a property is the more you will have to outsource maintenance like yard work or snow removal and that adds up quickly. Some insurance companies also insist you visit a recreational property regularly throughout the year, so remember to factor that in. Access to the property is crucial. Not everywhere has year round access so check you’ll be able to get there even in the winter if that’s what you want. Questions like asking yourself if you want the convenience of take outs and delivery for the occasions you don’t want to cook, can really help define where to look.
Can I afford it?
It used to be that you needed a larger deposit for a recreational property but some of the big banks like RBC and Scotiabank are making the dream a little easier and offering mortgages of up to 95% of the value of the second home. Also an option is using the equity you’ve built up on your main home to help finance the second one. Scotiabank advertises it’ll let you access up to 80% of the value of your first home.
The mortgage however is just the tip of the iceberg when it comes to recreational property costs. Really go through the numbers carefully. Don’t forget to add in home insurance, all your bills and of course taxes. Leave a little extra for winter heating bills to protect the pipes from freezing. The vacation home needs to be a vacation too. Some people love nothing more than yard work but for others it’s an awful chore. Remember to allow funds to pay for the jobs you don’t like doing. Understand the tax bill. Some parts of British Colombia have speculation tax so make sure you know exactly what the tax bill will be before you buy. Don’t forget to factor in strata fees with a condo and leave some wiggle room. Hiccups like the boiler or air conditioning failing always happen at the worst possible time.
To Rent or not to Rent?
It seems like the perfect answer. You’re not going to be there the whole time so renting can help cover all those costs we just talked about. Certainly it’s a great way to get the second home to help pay for itself. But renting will require management and renters may not always be as delighted with your property as you are. One of the big tips here is to just check the zoning. Some residential areas and buildings have restrictions on rentals. Remember too you’ll have to declare rental income for tax purposes. You’ll also need need to add renters insurance to your costs. Finally one option many landlords choose is to add too is umbrella insurance which gives liability coverage.
Hot property
Recreational home values soared across Canada last year and are predicted to rise again this year. It’s no surprise that mountain and waterfront locations top the list. Royal LePage surveyed its REALTORS® across the country. Here are the top 5 most expensive recreational areas in 2021. All prices are for single detached homes.
- Whistler - $2,738,000
- Central Okanagan waterfront - $2,350,000
- Canmore - $1,360,000
- North Okanagan waterfront - $1,350,000
- Pemberton - $1,247,000
According to the survey, Quebec and Atlantic Canada are expecting to see the biggest price jumps in recreational property values this year
Posted by Kirby Cox on
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