When people think of recreational properties, they often think of a small house in Palm Springs or Arizona that they can retreat to during the cold winter months. This is absolutely true: many people who can afford the cost and upkeep of a second property somewhere outside of their primary area of living choose to invest.
Recreational properties are great for personal use, but they can also make extremely sound investments. Many people pursue real estate as a way to make money, whether its their primary job or not, and investment properties are one of the ways they do this. An investment property is not so different from a recreational property. In fact, the only difference is the mindset: a recreational property is for personal enjoyment, and an investment property is a place for personal enjoyment and financial gain.
So, how do you make your recreational property an investment property?
Everything you buy is an investment. Therefore, regardless of why you first bought a secondary property, it is an investment property. However, the best investment properties have three qualities. They must be…
1). A property that can be easily sold at a higher price than it was originally bought for. Because of this, location is key. A beautiful home somewhere like Sylvan Lake or Radium will often be easier to sell/will sell at a higher price rather than a beautiful home in the middle of nowhere, simply because it is in an area that is in high demand.
2). A property that isn’t too risky. Any property is a risk, especially investment properties, but you need to pick something you are confident you can make a return on. One year you could be set to make a massive return if you sell, the next that price can plummet to a point where your investment property loses you money. Are you even willing to risk it? Finding a property you feel confident will bring you financial success is important.
3). A property that doesn’t require constant management. The biggest hitch with recreation properties and investment properties is that they seem like a fantastic idea until you realize how much upkeep they will require. Because of the upkeep issue, many people will rent out their vacation property to other people on long-term vacations, or will rent it out to tenants for the times that they are not going to be using the property. This can get tricky, but having reliable tenants (or really nice neighbours) can reduce a lot of the stress surrounding this issue. If you don’t want to rent it out or have a service look after it while you are away, find something very low-maitenence.
All in all, investment properties are very popular and an excellent way to have a home away from home, as well as something that will provide you with a large financial return. As always, consult experts before you make any big purchase!
Your Real Estate Professional,