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North America’s vacation property resource

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Vacation Property Investment Calculator | Calculate ROI

Vacation Property Investment Calculator | Calculate ROI

vacation property investment calculator

Welcome to our vacation property investment calculator. If you are contemplating buying a vacation property, this calculator will help you determine your total return on investment over the term of your vacation property mortgage.

Simply complete the inputs below to calculate your total return on investment at the end of the period. For comparison, the calculator also shows your alternative return should you instead choose to invest in the stock market.

To find out more about whether vacation properties make good investments, explore our article on vacation homes as investments here.  

How it Works

Our vacation property investment calculator shows your total return under two different scenarios. Scenario 1 assumes that you purchase a vacation property and contains a detailed list of inputs related to mortgage terms and vacation home expenses. Scenario 2 assumes that instead of purchasing a vacation property you invest in the stock market (for instance, by investing in an index fund). By showing these two scenarios, you will be able to compare which investment will be more lucrative over the relevant period.

Note about rental income: our vacation property investment calculator assumes that your vacation property will be used as a secondary residence as opposed to an investment property. If you will be in fact generating rental income, try our investment property ROI calculator instead.  

Under Scenario 1 – Vacation Property Investment:

  • Inputs Explained. Input values include the purchase price of your vacation property, down payment, mortgage terms (i.e. length of mortgage and interest rate) and monthly expenses.
  • Expected Annual Price Growth. In order to generate an accurate measure of your expected return on investment, you are required to input the expected annual price growth of your vacation property. As a default, we have included a growth rate of 4% annually based on national US housing data from 1928 to 2020. For comparison, Canadian housing data grew 5.7% annually from 1996 to 2020. Since real estate price increases can vary substantially from state to state, province to province, city to city and property type to property type, national housing data may not be the best measure to utilize.
  • Impact of Inflation. To simplify things, we have not accounted for the impact of inflation on the calculations, including rising costs and expenses. 
  • Renovations and Other Capital Improvements. While we have included an input value for general maintenance and repairs, we have not accounted for any increase in value of your vacation property due to major home renovations, additions or capital improvements. Any such increase in value will need to be taken into account separately.
  • Final Calculation Explained. After adding the corresponding values to the various inputs, the calculation shows what the vacation property will be worth at the end of the loan period, the net return (after factoring in your aggregate cash outlays) and ROI. In order to ensure an apples-to-apples comparison, the final calculation in Scenario 2 uses the same period as the investment horizon.

Under Scenario 2 – Stock Market Investment:

  • Inputs Explained. The calculations in Scenario 2 rely upon the values provided under Scenario 1. As such, you will simply need to choose an expected annual return rate for your investment. Using the same date ranges above for US and Canadian housing data, US large-cap stocks returned 9.8% annually over such period and the TSX composite index rose 8.0% annually. In the interest of being conservative, we’ve included the lower rate as the default.
  • Contribution Amount. Since Scenario 2 is provided primarily for comparison purposes, we have assumed that only out-of-pocket amounts under Scenario 1 would be invested under Scenario 2. For example, the initial down payment and monthly cash outflow under Scenario 1 would then become the contribution amount under Scenario 2. 
  • Use of Tax Sheltered Accounts. It’s worth noting that, by utilizing a tax sheltered account such as 401K plans in the United States or RRSP/TFSA programs in Canada, you may be able to reduce the tax burden and increase your overall return as a result. Similarly, any tax consequences under Scenario 1, including capital gains tax, will also need to be taken into account.
  • Trading and Management Fees. The calculator does not take into account trading or management fees. Similarly, the calculator doesn’t factor in real estate commissions or sales taxes under Scenario 1 in the event you choose to sell your property.
  • Final Calculation Explained. After adding the corresponding values to the various inputs, the calculation shows what the value of your stock market investment will be worth at the end of the term (i.e. the loan period under Scenario 1), the net return (after factoring in your aggregate cash outlays) and return on investment.

Vacation Property Investment Calculator

For further calculations, be sure to explore our additional vacation property calculators here. Will you be generating rental income? If so, try our investment property calculator instead.  

  • Home
  • Vacation Home Blog
    • Buying a Vacation Home
    • Selling a Vacation Home
    • Owning a Vacation Home
  • Vacation Home Resources
    • Canadian Vacation Spots | Featured Markets
    • Vacation Property Prices Canada
    • Calculators
  • Listings
    • Recreational Property for Sale in BC
      • Recreational Property for Sale Okanagan BC
      • Recreational Property for Sale Vancouver Island
  • Illustrative Price Map
    • What $500K Buys in Canada
    • What $750K Buys in Canada
    • What $1M Buys in Canada
    • What $1M+ Buys in Canada
  • About Us
  • Contact
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