Canada Number One Part Two

One theory for turning a profit on your real estate investment is to buy a home that needs some work. You pay less for a property that’s not in perfect condition and with some financial investment as well as investment of your time and energy, you can turn it into a much nicer property and realize a greater profit at resale. However, there are some things to be aware of. Take a look at your surroundings because you want to make sure that your home isn’t one of many that needs work in the neighbourhood. If all the homes are falling apart and you put a lot of work, time and effort into yours, you’ll still find yourself waiting on the rest of the neighbourhood to clean up before your property value rises. Also, make sure the work your home requires is within your capabilities. You have to be real honest with yourself because if you buy something that requires major reconstruction and your abilities only go halfway, you can end up paying someone to fix your mistakes before they can even get to doing the work you envisioned when you bought the place. Also, make sure you get the proper permits for the work so you don’t run into problems with inspections when you try and sell at a later date.

Buying a recreational property can mean buying anything from a cottage in the mountains to a rural farm to an empty lot that looks ripe for development. The reasons for buying a recreational property can also vary from one person to the next. If you’re fed up with the crowds, maybe it’s right for you as a primary residence situated far from the fast pace of city life. If you’re sick of the crowds but still need to retain that city home for business purposes, then it might be right for you as a secondary residence to be used as a weekend getaway. If you’re lucky enough to have some discretionary income that you’d rather put to use than let sit in the bank, then it could be strictly an investment device to be turned for a profit. Either way, you need to look at the inherent advantages and disadvantages to owning recreational property before you decide which one is right for you.

Recreational properties have unique advantages that make them attractive regardless of whether it’s a primary or secondary residence. With a recreational property, you tend to be away from the hustle and bustle of city life, leading to a more relaxed atmosphere, which is preferable for anyone who has spent considerable time living in a city. If this is a second home, you can obviously sell it if the need arose, but you have the option of keeping it for retirement purposes or even to pass on to your kids. If you are looking to sell it eventually, keep in mind that as the economy grows, so do the amount of people with discretionary incomes. This means larger numbers of people are looking for recreational property of their own and your chances of realizing a greater profit go up.

In addition to having to secure financing for what lenders tend to consider a luxury purchase, there are some disadvantages to consider when buying a recreational property. One of the attractions of a recreational property is the pristine nature of its surroundings but this also means there’s likely to be limits on what you can do to your property as well as limits to what the surrounding area is going to become. This means that, although maintaining the small town feel is nice for relaxation purposes, some developments that are necessary for natural growth end up getting denied on anti-growth principle.  And the remoteness of the property that makes it so attractive to city dwellers can be a nuisance if you need to get there quickly to make repairs.

Buying a secondary property usually requires some heavy decision making, not only by you but also by the lender.  To combat their second thoughts, consider saving even more money than you had originally planned so you can submit a larger down payment. Putting both your main home and the new recreational property under one mortgage can also be of help. And since you’re not the only one who wants a recreational property, try and recruit friends or family to split the costs. Not only does this increase your ability to pay a large down payment, but this also brings larger collateral to the deal in the eyes of the lender. 

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