Buying a House or Car

Money tips for life’s big ticket items.

What to Think About Before Buying a Vacation Home

Q: Our neighbours came home with a unique holiday souvenir last week; a vacant lot close to where they had rented a cabin for the week. On top of all their regular household spending, they now plan to build a cabin on their lot. Our lifestyle is similar to theirs and we can’t help but feel that we’d like to buy vacation property too. Is this a good financial choice?

A: Between spending time with friends and family, vacations give us the time to kick back and relax. It’s only natural to want to bring a piece of those good feelings home, and everyone finds a different way to do that. Photos or small souvenirs typically come to mind first. But if your souvenirs need financing, here are some things to consider about whether or not to buy vacation property:

Location

Is it easily accessible or do you need to depend on a costly ferry or minimally maintained service road? Is it close enough to home so that you can use it on weekends or is it just for longer stays a few times a year?

Looking Ahead

Your family needs will change over time. You may face retirement or changes to your work situation. Teenagers may not want to spend time away from friends or may have work and school schedules that make family vacations harder. Could your kids or extended family use the cabin without you there?

Financial Factors

Beyond the initial expense of buying a lot, consider how you will pay for building a cabin. Will you invest sweat-equity during vacation time or take on additional financing? What ongoing maintenance, insurance, property taxes and strata fees might you need to plan for?

Before you buy, if your plan is to rent it out and off-set some expenses, find out if rentals are permitted in that area. Then consider when you may want to use it, as during peak times, you’ll lose a portion of your rental income. With a rental, you’ll also have additional insurance and maintenance costs, possibly property management costs, as well as further tax considerations.

Vacation home ownership isn’t for everyone, and your decision should be based on your household budget. You need to know that you can afford your regular lifestyle and that you have what you need for the future, without saddling yourself with debt. Before you take on the additional commitment, consider what you value most about your holidays, and then let that guide your decisions.

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