Buying a vacation home represents a big decision and requires thoughtful preparation and planning. After all, a substantial amount of time and resources will be required to complete the purchase and ultimately maintain the property. Further complicating things is the fact that purchasing a vacation or recreational property may be grounded in emotions as opposed to rationality. For many, purchasing a vacation home is the realization of a dream and because of this its sometimes difficult to view such a purchase with an objective frame of mind. Yet with careful planning and fiscal responsibility, purchasing a vacation home can be a rewarding experience. With this goal in mind, we’ve prepared a list of the top eight mistakes to avoid when buying a vacation home and, more importantly, what to know before buying a vacation home. 

Mistake #8: Buying a Vacation Rental Property Without  Adequate Due Diligence

Business is booming in the vacation rental industry. Thanks to platforms such as Airbnb, VRBO and Booking.com, owners of vacation properties have access to thousands of vacationers eager for more intimate experiences.

Without completing adequate due diligence, however, owning a vacation rental property could become a challenging experience. Some of the questions you will need to consider include:

• How much money can you expect to bring in weekly, monthly and yearly?
• Is demand seasonal?
• How will the use of the property impact your tax status, mortgage, insurance and other related items?
• Are there short term rental regulations in place in the area? For strata properties, due the bylaws permit short term rentals?
• Who will manage the property?
• Are support services such as cleaning and repairs available?

These are only some of the questions that need to be considered. The good news is that, with a little upfront work, it is completely feasible to purchase a vacation rental property and thrive as many others have done.

Mistake #7: Completing a Purchase Without Adequate Tax Planning

At number seven in our list of mistakes to avoid when purchasing a vacation home is the often overlooked step of completing adequate tax planning.

The tax consequences of owning a vacation home are complex. Accordingly, appropriate advice should be sought before purchasing a vacation home.

Importantly, there may be certain steps that can be taken in advance that would otherwise be impossible to implement following completion of sale. For instance, are there different ownership structures that may provide benefits from a tax perspective? Is there an opportunity to take advantage of capital gains tax treatment for primary residences? If you will be renting out the property, do you need to complete additional tax filings and registrations? Taking the time to speak with an accountant familiar with these rules can help avoid headaches later down the road.

Mistake #6: Buying a Timeshare Without Reading the Fine Print

Its no secret that many vacationers have been taken advantage of by pushy sales people looking to sell timeshares to unsuspecting tourists. What seems like a great idea while riding that “vacation high” may turn into a feeling of regret.

With a timeshare, you own a portion of a vacation property that you can use on a limited basis, usually once a year. Depending upon the type of timeshare (fixed week, floating etc.), your usage rights may vary slightly. For these reasons, its important to read the fine print to better understand your usage rights, annual fees and other obligations. While timeshares are more affordable than outright ownership, the costs can add up over time and they are notoriously hard to sell. For these reasons and more, be sure to take your time to fully-understand what you’re signing-up for before completing a purchase.

Mistake #5: Buying a Vacation Home That is Too Far Away

At number five in our list of mistakes to avoid when purchasing a vacation home is the mistake of buying a vacation home that is too far away.

Above all else, a vacation home is a place for recreation and pleasure. Any time spent travelling will take away from your leisure time.

For this reason, you will need to consider the travel time between your primary residence and vacation home. So how far away should a vacation home be? Consider purchasing a property no more than 2 to 3 hours away if your vacation home will be used for trips of 1 to 2 days and avoid travelling more than 5 hours unless your vacation home will be used for trips of 7 days or more.

Mistake #4: Buying with Friends and Family Without Ironing out the Details

Buying a vacation property with friends, family or other loved ones can often seem like a great idea. Not only will your dollar go further by pooling savings together, but you will also get to share your property with loved ones. Important questions, however, need to be asked in advance in order to minimize the risk of conflict. Such questions may include:

• What purpose will the vacation home serve? For instance, will use of the property be reserved for family only?
• How is access to the property determined? Allocating a fair and equitable schedule annually can often be a challenge.
• How long is everyone’s ownership horizon? What happens if someone wants to sell before others are ready to do so?
• Who will maintain the property?
• How will title to the property be held and what happens upon the death of an owner?
• How will you decide the timing, scope and cost allocation of any necessary renovations?

These are only some of the questions that need to be asked and, for obvious reasons, its important to deal with them before jumping in.

Mistake #3: Buying Before You Visit the Area

Before buying a vacation home, be sure to visit the desired area first. Does the city or town have the desired amenities and infrastructure? Is the location safe and are the locals welcoming to tourists? By spending some time in the area you will have a better sense of whether you can see yourself returning year after year.

Mistake #2: Buying While on Vacation

At number two in our list of mistakes to avoid when purchasing a vacation home is the mistake of buying a vacation home while on vacation. While it may seem like a good idea at the time, this may prove to be incorrect when reality sets in. Given all of the elements at play, whether it be sensory overload or other stimulus leading to a relaxed frame of mind, you are far more likely to make an emotional purchasing decision. And while it is important to spend some time in the vacation destination before purchasing a home in the area, be sure to take your time before completing a purchase. Often this means waiting until you return home with a clear frame of mind. The last thing you want to do is rush such an important decision by purchasing a property while riding that “vacation high” (see Mistake #6: Buying a Timeshare Without Reading the Fine Print).

Mistake #1: Spending More Than You Can Afford

The biggest mistake that people often make is spending more than they can afford on a vacation property.

Many factors need to be taken into account to determine how much vacation home you can afford. This may include the size of your down payment, your debt to income ratio and any rental income from the property. In terms of your total debt to income ratio (i.e. total expenses over total income), most financial experts recommend keeping it at a rate of 30% or less for home expenses. Rental income will certainly increase your borrowing power as will a sizable down payment, whether it be available through a home-equity line of credit, investments or other savings.  Importantly, crunch the numbers and be sure to avoid over-extending yourself. Owning a vacation home should be a positive experience and the financial stress of owning a vacation home can quickly erode any such positivity.

We hope you’ve enjoyed our top eight mistakes to avoid when buying a vacation home and, ultimately, what to know before buying a vacation home. Thanks for reading!

The post Eight Mistakes to Avoid When Buying a Vacation Home appeared first on Vacation Property Online.

1. Mont-Tremblant, Quebec
2. Cape Breton Island, Nova Scotia
3. Kelowna, British Columbia
4. Banff, Alberta
5. Whistler, British Columbia
6. Muskoka Lakes, Ontario
7. Niagara-on-the-Lake, Ontario
8. Tofino, British Columbia

Methodology

Each of the above markets was assigned a VPO Score based on the following criteria:

• Affordability
• Activities & Amenities
• Year Round Use
• Family Friendly

For more information on these markets, including popular activities and a detailed VPO Score breakdown, click here. Using the criteria noted above, here are the eight best places to buy a vacation home in Canada, ranked from #8 to #1.

#8. Tofino, British Columbia

• The skinny: Primarily a summer destination, Tofino is a true outdoor paradise. From the crashing waves on one of Tofino’s many beaches to the impressive forests, nature is never far away. While the temperature can dip in the winter months, many travellers frequent Tofino’s beaches even in the winter months to take in the beautiful winter swells. Tofino comes it at #8 on our list primarily because it ranks low on affordability and activities/amenities available.
• Closest major city: Victoria (315 km)
• Population: 1,932
• 2018 median sale price: $940,500
• 2019 median sale price: $1,250,000
• 2019/2018 Price (%): 32.9%

#7. Niagara-on-the-Lake, Ontario

• The skinny: Located where the Niagara River and Lake Ontario meet and less than 30 minutes from Niagara Falls, Niagara on the Lake, Ontario (or “NOTL” as the locals call it) is popular among tourists, retirees and day trippers. Shopping, wine tasting and tours to Niagara Falls are all popular activities as is the colonial-style architecture. NOTL also plays host to many festivals throughout the year which draws both locals and tourists to the lakeside community. NOTL scored relatively low in the affordability category and average in all other categories. 
• Closest major city: Toronto (129 km)
• Population: 17,500
• 2019 average sale price: $809,000
• 2019/2018 Price (%): 7.7%

#6. Muskoka Lakes, Ontario

• The skinny: A popular getaway for those seeking an escape from the hustle and bustle of busy city life, Muskoka Lakes, Ontario is Canada’s true cottage country. The township includes Lake Muskoka, Lake Rosseau, Lake Joseph and many other smaller lakes. Muskoka Lakes received top marks in the family friendly category but scored poorly in the activities/amenities category. 
• Closest major city: Toronto (238 km)
• Population: 6,588
• 2018 Single Family Median Price: $327,750
• 2019 Single Family Median Price: $350,000
• 2019/2018 Price (%): -6.8%
• 2020 Median Price Forecast: $385,000
• 2020 Median Price Forecast (%): 10.0%

#5. Whistler, British Columbia

• The skinny: Traditionally an alpine ski town, Whistler, BC is now a year round destination. Mountain biking, hiking, ziplining, swimming and whitewater rafting are just a sampling of the spring and summer activities that Whistler offers. Looking for a place to shop and eat? Look no further than Whistler Village, which has won numerous design awards over the years. Whistler scored high in the year round use and family friendly categories, but poorly in the affordability category. 
• Closest major city: Vancouver (121 km)
• Population: 11,854
• 2018 Single Family Median Price: $2,400,563
• 2019 Single Family Median Price: $2,359,875
• 2019/2018 Price (%): -1.7%

#4. Banff, Alberta

• The skinny: A resort town located in Banff National Park, Banff, Alberta offers the typical comforts from home while maintaining a delicate balance between commercial development and nature. Located on the eastern side of the Canadian Rockies, Banff is surrounded by towering mountains and beautiful countryside. Banff is also home to natural hot springs which draw tourists from far and wide. During the winter months, there is no shortage of ski terrain as Mt. Norquay, The Lake Louise Ski Resort and Sunshine Village are all close by. Similar to Whistler, Banff scored high in the year round use and family friendly categories, albeit at a lower price point than Whistler. 
• Closest major city: Calgary (127 km)
• Other nearby destinations: Canmore (24 km)
• Population: 7,851
• 2019 median detached/semi-detached price (Bow Valley): $975,000 (+14.7% from 2016)
• 2019 townhouse median price (Bow Valley): $700,000 (+18.6% from 2016)
• 2019 apartment median price (Bow Valley): $500,000 (+22% from 2016)

#3. Kelowna, British Columbia

• The skinny: Often called “Canada’s Napa Valley”, the beautiful Okanagan Valley is home to dozens of wineries, rolling vineyards, golf courses and more all overlooking picturesque Okanagan Lake. In the center lies the bustling city of Kelowna, BC.  As the largest city in the Okanagan Valley, Kelowna has more to offer than just beaches, wineries and sun.  Look no further than Kelowna’s downtown core where you’ll find restaurants, shopping, a casino and a lakeside boardwalk. Kelowna is the most affordable entrant out West and had a strong showing in all other categories. 
• Closest major city: Vancouver (389 km)
• Other nearby destinations: Vernon (51 km), Penticton (63 km)
• Population: 131,654
• 2018 Single Family Median Price: $659,950
• 2019 Single Family Median Price: $640,000
• 2019/2018 Price (%): -3.0%

#2. Cape Breton Island, Nova Scotia

• The skinny: Cape Breton Island, Nova Scotia has more to offer than just picturesque views and historic sites as tourists flock to the region year-round for sailing, golfing, cross country skiing and many other activities. The areas of Baddeck and Ingonish are particularly popular and real estate in these areas is in high demand as a result. Bras d’Or Lake is similarly popular among vacationers looking for some R&R and, as compared to the rest of the country, waterfront property in the region is quite affordable. Cape Breton Island scored particularly well in affordability (the best in the group) and the family friendly category. 
• Closest major city: Sydney
• Population: 98,722
• Average residential price: $153,352
• 2019/2018 Price (%): 10.5%

# 1. Mont-Tremblant, Quebec

• The skinny: The champ is here! A four season resort town, Mont-Tremblant has a bit of everything for the outdoor enthusiast. From skiing and snow shoeing in the winter, to hiking and swimming in the summer, there’s no shortage of activities to keep you occupied throughout the year. It’s no wonder Mont-Tremblant is one of the best places to buy a vacation home in Canada. Mont-Tremblant scored high in all categories, including affordability and activities/amenities.
• Closest major city: Montreal (137 km)
• Population: 9,646
• 2018 Single Family Median Price (Laurentides): $200,000
• 2019 Single Family Median Price (Laurentides): $206,500
• 2019/2018 Price (%) (Laurentides): 3.3%

The post Eight Best Places to Buy a Vacation Home in Canada – Ranked appeared first on Vacation Property Online.

What are the best vacation properties to buy? You may be asking yourself this very question if you are considering purchasing a vacation property. Should you purchase a house with room for the whole family or a condo in the interest of reducing the burden that comes with home ownership? Or perhaps a timeshare to avoid a larger cash outlay? In this article we take a closer look at the most common recreational property types and, in particular, the pros and cons of owning a vacation home, condo, timeshare or other vacation property type.

Best Vacation Properties to Buy: Preliminary Considerations

The first thing you should ask yourself is the reason behind buying a vacation property. Have you always dreamed of owning a vacation property? Having a place to escape the busy city life or a place to pass down to your children? Or are you simply looking to make a savvy real estate investment? Perhaps you are looking at renting out your property short term on Airbnb or VRBO.

The answer to these questions will help determine the appropriate vacation property type for you. For instance, if you’re seeking seclusion then perhaps a remote cabin is the best choice. If, on the other hand, you are looking to use the property only occasionally and otherwise want to rent it out short term, you may wish to buy a turn-key condo. If you are purchasing a vacation property as a lifestyle choice rather than an investment and are fine with limited use then perhaps a timeshare is appropriate.

In short, the motivation behind your purchase is an important factor to consider.

From there, budgetary considerations, owner involvement and other matters described below need to be taken into account.

Vacation Home: King of the Castle

When considering the best vacation properties to buy, the analysis should begin with a vacation home. As a homeowner in Canada or the United States, you not only own the house but also the land on which the house is situated. As “king of the castle” you are not subject to the same restrictions that come with owning a condo or other strata property. But owning a home also comes at a cost. Some of the pros and cons of owning a vacation home include:

Pros

• More space/privacy
• Unique compared to a condo
• More customizable through personal design touches

Cons

• Higher purchase price (see how far your dollar goes across Canada here)
• Higher maintenance and utilities costs
• Tougher to rent out short term

Bonus: annoy your friends by referring to your vacation home as a chalet, villa, compound or other pretentious description to show what a big deal you are!

Vacation Condo: Anything You Can Do I Can Do Better

As an owner of a condo, you own the interior space of your unit whereas common areas and outdoor spaces are owned in common with the other owners in your building. Monthly strata fees will cover the general expenses of the strata and in some cases special assessments will be levied when major repairs to the common areas and building exterior are required. If the strata is well run, owning a condo can be a lot less work and responsibility. Some of the pros and cons of owning a vacation condo include:

Pros

• Lower purchase price compared to a house
• Lower maintenance costs
• Amenities on site
• Easier to rent out short term
• Better security

Cons

• Less space/privacy
• Less control
• Strata by-laws may restrict use

Bonus: if you buy a top floor unit you can brag to all your friends that you own a penthouse 😉

Timeshare: It’s a Lifestyle Choice

With a timeshare, you own a portion of a vacation property that you can use on a limited basis, usually once a year.

Depending upon the type of timeshare (fixed week, floating etc.), your usage rights may vary slightly. For these reasons, a timeshare is more of a lifestyle purchase than an investment. No matter the type of timeshare, be sure to take some time before completing a purchase, as buying a timeshare can often be an emotional decision. What seemed like a great idea following the consumption of five margaritas may turn into a feeling of regret. Some of the pros and cons of owning a timeshare include:

Pros:

• Less responsibility
• Affordable (pay for use model)
• Certainty as to where and when to take your vacation

Cons:

• Annual fees
• No control over the property
• Difficult to resell

Bonus: a free meal likely awaits anyone willing to suffer through attend a timeshare sales presentation!

Other Vacation Property Types

• Townhouse/Duplex – if you’re looking for the conveniences of a condo but with more space and privacy then this may be a good option. You’ll also have your own private entrance without the need for an elevator typically seen in condo towers. Unlike a house, however, you won’t have any physical separation from your neighbors and will typically have a smaller yard, if any.
• Fractional Ownership – fractional ownership involves several buyers that each holds an equal part of the title. This differs from timeshares where property title is 100% owned by the principal owner. With fractional ownership you are also often allowed to use the property for a longer period of time than timeshares. For these reasons, fractional ownership is a legitimate investment with opportunity to see an increase in the value of your fractional ownership over time.
• Water Access Only – the obvious benefit to water access only property is privacy, yet remoteness and inaccessibility may deter many buyers. Simple conveniences like restaurants and grocery stores may be difficult to access. Such properties may also be inaccessible by first responders in the case of an emergency.
• Leasehold – a buyer of leasehold property will have an exclusive right to occupy the property for a specified period, in some cases up to 99 years or more. At the end of the lease, the right to occupy the property reverts to the owner.

Other things to consider

• Are you particularly handy? If not, you may want to steer clear of buying an older home.
• How much time do you have to devote to care and maintenance? If you do not want to be very hands on then you should consider buying a newer condo or hiring a property management company.
• How accessible is the property? If its further than a two hour drive, do you have someone locally that can assist in the case of an emergency?
• Have you visited the location you’re interested in? If not, a lot of insight can be gained by renting a comparable property in the area before taking the plunge and completing a purchase.
• Do your due diligence no matter what type of recreational property you are purchasing. A complete home inspection will be important when purchasing a home and reviewing the strata by-laws and recent minutes will be important when purchasing a condo. For timeshares, be sure to read all of the relevant documentation to understand exactly what you’re buying into.

Conclusion

Purchasing a vacation property is the realization of a lifelong dream for many. Depending upon the type of property, it’s also a significant financial undertaking and time commitment. Before making any such purchase, be sure to consider the motivation for your purchase, your budget, your ability and willingness to handle maintenance and the other items noted above.

So what are the best vacation properties to buy? If this article has shown anything, it’s that there are many questions and other considerations that need to be taken into account. Many of us at Vacation Property Online wrestled with these very questions before taking the plunge. After having asked these questions, completed our due diligence and made the purchase, we can assure you that it has been a very rewarding experience. Happy hunting!

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