Personal Finance

Buying a vacation property

Summer time is a time for vacation and for some it’s a time to dream about investing in a vacation property instead of throwing money out the door on some potentially expensive holidays.

More and more Canadians own more than one property and many of these are vacation properties. Buying vacation property is something that should be well thought out because of the financial impact it can have on your retirement planning. Before you buy vacation property here are a few things to think about

Where do you want to own?

There is no shortage of options when it comes to vacation property. You can look to one of the nearby lakes. Many Canadians are snapping up deals in Arizona, Nevada, Florida and other parts of the US. According to the National Association of Realtors, Canadians are the largest foreign buyers of property in the U.S., representing 23 per cent of all sales.

Last year, we took a family holiday in the Okanagan and it was amazing to see how many Albertans have invested in vacation property in BC. We even got drawn into the allure of owning vacation property in BC and started to look around at the options and possibilities.

Vacation at different times (and in different places)

We’ve been to the Okanagan for three years in a row and really enjoy the climate and the lifestyle. Every time we go, we think more and more about the idea of vacationing in the same place. The weather was perfect, there were no mosquitoes, and it’s just really relaxing there.

That being said, we also like the idea of going to explore other parts of Canada, North America and the world for that matter. It’s important to really think about whether you are the type of person that likes routine, consistency and enjoys vacationing in the same place every year or whether you prefer to try different things and see new places.

How much time will you spend there?

Vacation property makes more sense if you plan to spend a lot of time there. For me, I have flexible summers but I’m not sure it’s practical to spend more than 2 or 3 weeks away. It’s tough to justify the cost of buying vacation property if you can only spend 2 or 3 weeks there. For snowbirds who like to go to the same place for the entire winter, buying may make more sense than renting.

Do the math

When we went to Kelowna and Vernon last year, we actually looked around at some options for vacation property but every time I did the math, I realized it was not going to be prudent financially. One of the places we thought about was $300,000. The annual cost to own the property, which includes the mortgage, strata fees and property taxes, is $16,000. We can take some pretty nice holidays for $16,000 per year.

As much as we may have loved this place I could not rationalize the numbers. Before you get caught up in the sexiness and all the emotional and lifestyle reasons for owning a vacation property, remember to see if the math makes sense.

Adding up all the extras

Buying a vacation property will likely cost more than just the cost of the place. What about the property taxes, utilities, maintenance, etc? What about furniture and renovations? Have you budgeted for extra insurance, security, cleaning, etc? And what about the extra car, or boat and all the other toys that go along with vacation living?

Do your homework

Buying vacation property can be really sexy but don’t get caught up in that sexiness. Make sure you do your homework like:

  • Understanding the tax implications of owning vacation property in Canada, the US or some other international destination.
  • Is there opportunity to rent the place out? Do you really want to become a landlord? How much extra work would it be to rent out the place when you are not using it?
  • What happens if you die with foreign property? Are there estate implications?
  • If you need a mortgage, how will debt impact your retirement plan? Many baby boomers are retiring with debt and some of this debt is due to the purchase of other property including vacation homes.
  • Is renting vacation property more economical than buying?

Practice vacationing before you buy

Probably one of the best pieces of advice I was given in my temporary search for vacation property in the Okanagan was to stay in a few different places before you buy. It’s so important to get a good feel for the people, your neighbors, the community and your environment. I’ve seen many people who are surprised how many people buy impulsively only to have a rude awakening later.

This list is far from exhaustive so be sure to do your homework before you buy vacation property.



    All great points Jim, we’ve reviewed many of them ourselves. We have a lovely spot we vacation at every year that we found after visiting different spots in the area for years. It costs us $600/week to rent it and there’s 0 maintenance for us – so it’d be crazy to buy in the area at that price. Other than that week, we still have the flexibility of taking shorter vacations (long weekends etc) whenever we wish, whereever we wish. That’s the style we’ve turned to as it’s also not practical for us to take 3 weeks off in the summer.

    • C. Moir

      Sure, it’s great to have a known spot for a vacation, but times do change… No longer wanting to use my time-share, how do I get rid of it?!!!
      Any ideas would be appreciated.
      “Beached near Wasaga”

  2. Pret Personnel Mauvais

    While going on our official construction vacation weeks soon in montreal, we often remind ourselves being offered time-shares in Mont-Tremblant. A weekend may only cost you around 300$ to 400$ per couple and doing the math for time-shared condos in the mountain, we find it is not always a bad idea. It does really depend on the lifestyle and yearly income. Thank you Jim btw, we often get inspired by your unique view on things which pushes us for an original voice for our french audience in montreal. Thanks !

  3. Cassandra

    Are there any answers to the questions you’ve posed? As well, how much of the year are you legally allowed to stay in your vacation property if it’s still in Canada and you are Canadian (ie zoning that prohibits full time residential).

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