​Considerations before buying recreational property

Beautiful sunsets, shimmering lake or fresh powder snow, the Okanagan has many options when it comes to recreational property. Before taking the leap, consider these questions:


How much time will you spend there?
Face it: Owning a recreational property is primarily an emotional decision, despite being fully justifiable by logic. Just don't forget to run the numbers. How much time will you spend there? What is the market doing? Can you rent it out, and if so, is there a rental pool or management company and what are their fees?


Has your mortgage been preapproved?

Know ahead of time what financing is available to you and under what circumstances. Not all lenders treat recreational properties the same, some require more money down while others charge higher rates.
Many people fund a recreational property by refinancing their principal residence and using the equity built up in that home, plus whatever their financial institution or accredited mortgage professional is willing to lend them. Check with your mortgage broker to find out your options…as well as the rules regarding the place you wish to purchase. Some places with rental pools and restrictions are not easily financed.

What are the extra costs?
Like your primary property, you'll need to factor in property taxes, land transfer fees and maintenance costs. If the property is located on a private-access roads, meaning you and other owners will need to share costs for snowplowing and other road maintenance.


Can you get property insurance?
Before committing to the purchase, make sure you won't have difficulty getting the place insured. If you are making an offer, make sure that one of the conditions is subject to attaining approval for insurance suitable to you. Is the property up to code, is it near a fire hydrant and fire protection services?


Some insurance companies may increase rates depending on the type of property. A seasonal or water access–only property, for instance, is harder to insure. And you may need additional coverage for detached buildings like a boathouse or shed. Often times, insurance companies require physical check in’s for vacant properties – you will need to factor that into the costs.


Are you planning to share ownership?
Splitting costs with family or friends can be a great idea, but what happens if something comes up and the other party doesn't have the money to pay for repairs? Sharing ownership has to be treated like a business relationship. I suggest using the services of a real estate lawyer versus a simple written agreement between buyers. "Make sure all expectations are set and you have a binding legal agreement."

Carla Dahlen

Carla Dahlen

Personal Real Estate Corporation
CENTURY 21 Executives Realty Ltd.
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