3 things to consider when buying a vacation home

We talked to Johnny Hunt, an Ottawa realtor, about what home buyers should consider when buying a second home.

By Homicity

Jan 15, 2019

3 things to consider when buying a vacation home

Buying a vacation home is a dream for many homeowners. It is a place where you can escape the everyday routine, where you can take a break and even perhaps your future retirement home.

This home could be a cottage, a beach house or a condo, but you will have to pay for it for the entire year, even though you will only get the chance to use on the weekends or during the holidays. If you’re thinking of buying a getaway home, you need to determine what kind of vacation property you want. Is it a vacation home to rent out while you are away or is it for your personal use only? If your house is rented out, remember to make additional arrangements and research landlord obligations. Once you determine this, you are ready to start the home buying process over again.

We talked to Johnny Hunt, an Ottawa realtor, to discuss what homeowners should consider when purchasing a vacation home.


Getting a mortgage pre-approval 

For Hunt, the first step is to get pre-approved for a mortgage. Before looking at places to buy, a mortgage pre-approval will give you an idea of your home buying budget, what kind of mortgage term you will get and what type of down payment you need.

The second time you buy a home, the mortgage process will not be the same. Since you are already a homeowner, different documents will be required to prove your worthiness for another mortgage. Hunt says that “you will be asked to provide details about your current residence. The bank will use it to determine the proper mortgage rate and down payment information”.


Choosing the right location 

A vacation home is an investment - and it can be a profitable one, depending on your location. Hunt says you need to choose carefully where your vacation home will be. It all depends on what type of property it is. If you want a ski chalet to use during the winter season, the proximity to a ski resort is fundamental. For a fishing or hunting cabin, access to land and lakes is a strong factor to consider.

A smart move is to purchase a vacation home near a city close to the outdoors.  Their value will increase over time. “These types of investment can be lucrative, especially in a city like Ottawa where parks and nature are accessible. These cottages, chalets or condos will increase in value from year to year,” recommends Hunt.

The location of your future vacation home needs to be close to your primary residence. If you need a plane, a train and a rental to get to your destination, you might as well skip buying a second home. Ideally, a two-hour drive is a good indicator of optimal distance.


Affording the extra cost 

Buying a second home comes with a cost. You have to be prepared to carry this extra expense during the periods where the vacation home is unused. There might be additional costs like hiring a local property manager or doing maintenance yourself - both in the summer and winter. You’ll even spend some days repairing and updating your vacation home.

Home insurance is also a necessary cost. Most vacation homes are near areas where natural disasters tend to happen. If bad luck strikes your home, your investment property might not be worth it after all. Home insurance will protect your purchase against any unpleasant and disastrous weather.  

With two properties, you can’t miss a mortgage payment, or it will severely impact your credit score and ability to maintain the investment. “If you’re lucky enough to be able to use the space on a weekly or monthly basis, it is definitely a benefit that far outweighs the cost,” says Hunt.

If you are renting out your second investment, consider the costs during the time the property will be vacant. This could be two or three months each time a tenant moves out. You’ll have to spend some extra money updating, cleaning and maintaining the property after each lease term ends. Ideally, your rental income should cover this.

Hunt warns about one common mistake to avoid - and one that costs you. “Do not start looking for a vacation home until you are 100% aware of all the costs involved with the process. Not just the mortgage and the down payment, but also any of the closing costs, property taxes or other tax implications that might incur at the end of the process”, says Hunt. For him, too many people jump right into investing in real estate without any thought or planning. Do things right from the start and save yourself from any hassle!


Once you consider these factors in your home buying decision, the next step is to search for a home.



Homicity helps you find your dream home in the perfect community. Whether you are buying, renting, or selling, you can navigate the Canadian real estate market with confidence with our expert advice, market news, and recommendations powered by AI.

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