Think through recreation purchases
Some advice for owners of recreation properties, as well as for people considering making a purchase:
There are three main financing alternatives for purchasing a vacation home:
A conventional mortgage allows you to finance up to 75 per cent of the purchase price of the home, thus requiring a down payment of at least 25 per cent.
An insured mortgage makes it possible to finance up to 95 per cent of the value of a second home. If you happen to already own a cottage that has no debt on it, then you can also refinance that existing property for up to 90 per cent of its value and get an insured mortgage to purchase another vacation home.
A home equity line of credit makes use of the equity built up in your primary residence to let you borrow up to 75 per cent of the value of the home less the debt still owing on it.
You will need to have an up-to-date appraisal done to determine the home’s current value.
Again, you will need to come up with a schedule of when you want to use your vacation home.
Then, the management company will look after marketing your property, handling reservations and payment, providing linens, cleaning and maintenance, and send you a cheque for rental revenue, less expenses and a management fee, usually about 40 per cent.
You can do it yourself, but first you will need to make sure zoning bylaws allow short-term rentals in your area.
Then, arrange appropriate insurance and keep suitable accounting records. Also, arrange for someone to handle cleaning, emergency repairs, or any check in difficulties that your guests may experience.