At first glance, vacation properties might seem an unnecessary luxury during a recession ... but actually, buying or keeping a second home can be a good investment - if you're OK with renting it out in the short term.
That's because most people (with jobs) don't stop taking time off in bad economic times. They do, however, seek out cheaper vacation spots, often closer to home...
And that could be your lakeside cottage, cabin in the woods, or waterfront condo.
Vacation property rental can be a great source of income for you right now - if you can bear the thought of sharing it with others - whether you are working or retired.
In fact, renting out your holiday spot could end up being a great financial boon; real estate journalist Broderick Perkins writes on Realty Times
, "When your monthly mortgage payment is less than or equal to 1 peak week rental, 12 weeks of rental will cover your mortgage payments for the entire year."
Rental Choices for your Vacation Place
- Run a Bed and Breakfast - either managing operations yourself, or hiring someone to do so.
- Work with a vacation rental property management company to list/book your place for you.
- Rent the place yourself without a middle man. The proliferation of websites marketing vacation properties makes this easier now than ever.)
- Make a charitable donation: rent your vacation property for use by a non-profit organization (church retreat, for example) and get a tax deduction.
Good Time to Buy that Second Home
You don't have to already own a vacation property to benefit from this stream of revenue generation. Now is a great time to buy a cottage or other type of second home - what with low interest rates and lower prices and less competition looking.
You could even consider buying a vacation property with another family
; the same rules of caution apply as to any form of co-buying a home
with someone who isn't your spouse/partner in life. Recreational Mortgages
Whether you already have a vacation property, or you're thinking of buying one, there are several options for Canadian recreational mortgages.
According to Scotiabank,
"Most financial institutions offer financing programs for vacation properties and/or second homes. Depending on the type of property you buy, you may be eligible to obtain financing for up to 95% of its value." (The small print adds: "Subject to approval by a mortgage default insurer. All Scotiabank mortgages are subject to applicable credit approval, Scotiabank residential mortgage standards and maximum permitted loan amounts.")
Do you have a vacation property and are renting it out? Considering buying a second home/vacation property? Please leave your stories below.