Last updated on June 20, 2021

Owning a weekend home is an attractive proposition for many. Having the ability to leave at a moments notice to the country to enjoy some much deserved rest and relaxation may be reason enough. Or perhaps its the prospect of hosting friends and family at a place to call your own that attracts you. Perhaps even retirement planning enters the picture when buying a weekend home. Whatever the case, there are many legitimate reasons why it may be a good idea to buy a weekend home.

Before signing on the dotted line, however, there are certain items that you should consider beforehand given the magnitude of such a decision. In this article we explore the top 5 things to consider before buying a weekend home.    

(1) Is it Worth it (Costs vs. Benefits)

Its important to make a fully-informed decision and what better way to do so than by completing a cost-benefit analysis.

Will the prospect of regular weekend use of your new home and pride of ownership outweigh the costs of owning a weekend home? In particular, how much can you reasonably expect to use the property? Assuming the best case scenario, would it still make more financial sense to rent versus own a place in your desired area?

As a starting point, calculate carrying costs assuming a 10, 20 or 30 year ownership horizon. Now calculate the costs of renting in your desired location over the same period and see where you end up. For illustrative purposes, let’s assume the following:

• You are considering purchasing a 1,500 square foot cabin for $250,000, with 20% down on a 30 year mortgage and 4% interest rate.
• You plan on using the cabin for 30 days a year and comparable cabins can be rented for $200/night.
• Instead of buying a weekend home, you could invest the 20% down payment ($50,000) in the stock market for 30 years and expect a 6% return

The calculation would look something like this (without accounting for inflation):

Scenario #1: Buying a weekend home

• Initial down payment: $50,000
• Total mortgage payments over 30 years ($954.83 monthly): $343,739.01
• Total costs over 30 years (repairs, insurance, property taxes, etc. assuming annual 2% of the home value in maintenance costs and 2% in major repairs): $300,000
• Total value of cabin after 30 years (assuming 3.4% annual appreciation): $681,641.73
• Net gain/loss after 30 years: –$12,097.28

Scenario #2: Regularly renting a weekend home

• Total rental payments over 30 years ($6,000/yr):  $180,000
• Initial investment: $50,000
• Total value of original $50,000 investment in stock market after 30 years (assuming 6% annual return): $287,174.56
• Net gain/loss after 30 years: +$57,174.56

In the above scenario, it doesn’t appear to make financial sense to buy. Yet, if the cabin appreciates even 0.5% more annually, the result is another $100,000 in equity after 30 years. While its difficult to forecast such amounts with any degree of certainty, the above example should still serve as a useful guide in understanding the financial implications of owning a weekend home.

Regardless of whether or not it makes more economic sense to rent vs own, does ownership fit into your overall financial picture?

Owning a weekend home can have significant implications on your long-term finances. Talk to your financial planner to see if you can afford to buy a second home. For instance, purchasing a weekend home close to retirement may make sense especially with cash in the bank and a full pension on the horizon. It may similarly make sense for a younger couple to buy a vacation home in their prime earning years so that they can service the mortgage payments.  On the other hand, buying a weekend home before completing much needed renovations on your primary residence may not make the most sense. Ultimately there is no “one size fits all” approach and therefore its important to understand the overall financial implications of buying a weekend home. 

While owning a weekend home may be a good investment over the long term, the decision to buy is often made for other reasons. In particular, its important to acknowledge that the decision to buy a weekend home is often driven by an emotional desire to own. After all, can you really put a price on family memories at the cabin or the ability to recharge at the beach house at a moments notice? For some, these may be reasons enough to justify purchasing a weekend home. For most, however, financial considerations will also weigh heavily in the decision making process. 

The results of a cost-benefit analysis will undoubtedly be anything but black and white. By conducting such an analysis, however, it will help you better understand whether owning a weekend home is right for you.

(2) Consider the purpose of buying a weekend home

What is your motivation for buying a weekend home? If you’re buying primarily for investment purposes then you will have a different set of criteria from someone looking to buy as a place to eventually retire.

Similarly, if you’ve always dreamed of owning a second home to pass down to your children then you may not be overly concerned with the financial implications of ownership. If you are a true “weekend warrior” and plan on using your second home on weekends-only then you will yet again have different criteria to consider.

For those weekend-only users, perhaps a turn-key property is the best choice. Otherwise, it may not be worth the time spent fixing and maintaining your property relative to the amount of time you will actually use it. Further, if you will be primarily using it as a place for rest and relaxation, then perhaps a more rural setting away from the city will better suit you. If you’re an outdoor enthusiast then somewhere close to the beach, river, hiking trails or mountains would be obvious choices. Ultimately, in order to get full value out of a weekend home, as with any vacation property, you should ensure that it ticks all of the boxes, including location, facilities and amenities. 

(3 ) Consider distance, travel time and accessibility

Given that you will be only using your weekend home for short stays, travel time, distance and accessibility will all be important considerations. Ideally you will want a weekend home that is no more than 2 to 3 hours away, which rules out airline travel. Similarly, any time spent waiting at border crossings, ferry terminals or train stations will need to be taken into account.

Part of the draw of owning a weekend home is being able to leave at a moment’s notice and that may not be possible if you are reliant upon transportation methods that require advance planning. 

From an accessibility standpoint, are access roads, ferry services or other transportation methods available year-round? If not then you likely won’t be able to use the property for extended periods of time.   

For borrowers in the United States, keep in mind that a vacation home must typically be located at least 50 miles away from your primary residence in order to enjoy the “second home” classification that is coupled with a lower interest rate. For borrowers in Canada, similar considerations need to be taken into account. For a more detailed overview of these requirements, click here.

(4) Consider the local climate and seasonality

Its important to take into account any seasonal limitations when purchasing a weekend home. Owning a weekend home with year-round use will certainly be more attractive to ensure that you maximize use. On the other hand, owning a seasonal property that is only accessible during the summer months may be more difficult to justify, especially if you are typically on vacation elsewhere during such period thereby limiting the amount you can use your weekend home even further. 

You will also need to consider the required maintenance on the property as a result of local weather patterns. A ski chalet nestled in the mountains will require regular snow removal and upkeep. Similarly, an oceanfront house located in a jurisdiction prone to hurricanes will require regular care and maintenance, often at a moments notice. If your weekend home will remain empty for extended periods then appropriate arrangements will also need to be made to ensure that the property is maintained in your absence. 

(5) Will you be renting it out part time? 

If you are planning on renting out your weekend home part-time, keep in mind that weekends typically command the highest prices for short-term rentals. Further, there may be minimal demand for weekday rentals. Do your research ahead of time to get a better understanding of rental demand in the area. If you plan on using the home most weekends during peak season then you may not be able to rely upon much rental income during shoulder season. Alternatively, perhaps there is healthy demand locally for monthly rentals during the slow season which will help offset carrying costs.

Other things to keep in mind before renting out your weekend home include:

• Increased risk profile from lender’s perspective. As rental properties are often seen as higher risk, more stringent qualifying criteria may apply than if the vacation home is for personal use only. 
• Increased borrowing capacity. Depending upon the lender, they may give you credit for up to 80% of the projected fair market rents. 
• Tax implications. In the United States, the IRS uses specific thresholds to distinguish between a vacation home that is rented out part time and an investment property. In Canada, renting a vacation property more than occasionally could trigger a “change in use” of that property for income tax purposes. For a more detailed overview of these rules, click here. 

Quick hits: other items to consider

• Be sure to stay in the area before buying to ensure you enjoy the surrounding area.
• Having secure storage available at your weekend home will be useful if you want to avoid packing, and transporting, all of your gear every weekend.
• Similarly, having in-suite laundry will be useful if you want to avoid packing linens, towels etc.
• Is cell phone and internet service available? For some people, staying connected on weekends will be important whereas others may wish to completely disconnect. 

Is owning a weekend home right for you?

If you set realistic expectations regarding the costs and benefits of owning a weekend home, then buying a weekend home may be right for you. Its unavoidable that part of the decision will be an emotional one, which heightens the importance of fully-understanding the financial implications of owning a weekend home as well as the amount of time you can reasonably expect to use and enjoy the property. With proper consideration and planning, owning a weekend home can be a rewarding experience, both financially and from an overall enjoyment perspective.