It’s the stuff memories are made of. Whether it’s a cottage at the lake or a cabin in the mountains, a vacation property can provide years of amazing memories with loved ones. It can even become an idyllic retirement home. The good news is it may be closer within your reach than you realize. Here’s a few things to keep in mind:
1. Location, Location, Location
Where to buy is a huge decision. Do you love to swim in the lake? Or do you prefer the mountains for winter adventures? Is close proximity to Wine Country attractive? How far away can the home be located for everyone to reasonably be able to travel to the property is also an important consideration.
2. What will you use your Vacation Home for?
Will the place be used for family gatherings? To enjoy during regular vacation times, or will it be more regularly used since you are now retired? For example:
-A vacation property that will double as a retirement retreat should have easy access to
amenities, such as grocery stores, gas stations and hospitals.
-A family cottage should have adequate sleep areas for a growing family: the kids will want sleepovers, and later there maybe be grandkids to consider. Family size will factor into needing adequate kitchen and eating areas.
Make a list of your important features. Things that were important in your family home may not be as important in a vacation property.
3. How much money to spend on it?
Qualified Buyers can now purchase with as little as 5% down. For properties equal to, or less than $500,000, 5% down payment is required. Once the purchase price goes above the $500,000 threshold, you will need to put a higher percentage of money down. Also keep in mind the costs of heating the home and any strata fees that may be a factor.
Potential deal breakers to purchasing your vacation home with 5% include:
-Rental pool properties
Words of Wisdom from Personal Finance Experts:
“Consider the travel time and costs to commute. (i.e. getting to a Gulf Island can mean mooring a boat etc.)” –Alan Young, Portfolio Manager with Richardson GMP
“Considerations on our end would be:
*Capital Gains tax at death.
*Liquidity to pay that expense.
*Concern with keeping it in the family and separating it evenly amongst the kids.”
–Jay Gangnes, Certified Financial Planner with JR Financial
Should you be purchasing a vacation property in a popular area, you may need to brush up on this: Writing a Subject-free Offer?