We’ve all done it. After a glorious vacation at some exotic locale, we’re tempted to buy a home there so we always have a place of our own in the middle of paradise.
But there are a number of things to consider before you take the plunge.
The first is your overall financial picture. Can you realistically afford a vacation home? Or are you saddled with other debts? Most banks won’t let someone carry two mortgages at once.
There’s also cost of the vacation home to consider. It isn’t just the price of the home itself, it’s also things like maintenance fees or paying someone to manage it when you’re not there. Will you be able to rent it out when you’re not around?
Remember, you’re also making a big bet on a real estate market you’re not familiar with. This could turn out badly, although real estate does usually go up over time.
You also must consider any foreign ownership restrictions if your vacation home is in another country. Will multiple trips to the property each year really be realistic if it’s so far away?
Finally, there are tax considerations. The Canadian government will want their piece of the pie when you sell. This can cause complications when passing the home to your children.
Buying a vacation home can make sense, but most would be better off to rent. The internet has made it much easier to find suitable properties for that purpose. There’s no additional work with renting. Owning comes with headaches that can be annoying for an owner thousands of miles away.
