Renting versus Owning
October 31st, 2007When it comes to vacation properties we all seem to fall into the same trap. We’re on holidays; we’re having a great time; the weather is awesome, and we start to think, ‘wouldn’t it be great to own a property here?’ So we casually check out the listings. We might even attend a few open houses just to get an “idea” of what things cost.
Before you know it, you start the discussions with your spouse. Actually in my case, it was a well rehearsed, premeditated sales pitch. Picture Bambi caught in the headlights with a Hummer barreling down on him, and you an idea our conversation went.
My husband is the voice of reason, whereas I am the voice of emotion. I know from personal experience that cottages are an emotive purchase. We seldom buy these properties for their investment potential; we buy them for their fun potential.
Could we have the same enjoyment from a rented cottage? Arguably yes. Lots of my friends rent waterfront homes throughout the Gulf Islands every summer and have a great time. A one week rental at on a Gulf Island, depending on the condition of the cabin, will start at $900 and go up to $2,400. A three bedroom cottage in Ontario with all the amenities will range from $1,200 - $1,500. If you want the cottage for the whole season i.e. July and August, you can expect to pay $10,000 - $12,000.
If you factor in a mortgage, it’s cheaper to rent. So why do we own? There are close to 3 million cottagers out there and another 2.9 million who want to purchase one in the next three years. Roughly 18% of the Canadian population own or want to own a cottage. Did they do the math? I know I didn’t.
Running Car who commented on yesterday’s blog, “How Much Does a Cottage Cost,” summed it up best when he wrote,
“What value do you put on decreased stress or the 5 pound Walleye you just landed? I really don’t want to know what my cottage costs a year. I really don’t want to know what my gas bill is at the lake. All I really want to know about is the fun everyone is having there. That makes it all worth while.”
I’d love to hear how you “sold” your cottage to your spouse.
Cheers,
Julie
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October 31st, 2007 at 12:24 pm
Renting is a great way to test out different areas. The big lake experience on Lake Huron, Georgian Bay, or the Muskoka big three will be very different from that you will find on an idyllic river location. Don’t buy on a lake in the fall if you haven’t experienced it in the height of the summer - don’t buy a cottage for year round use if you haven’t tried getting to the location in the middle of February after a storm. Emotional decisions can have very long lasting consequences if the heart is allowed to overrule the head. A balance of both is essential.
Having said that Julie - I came out to Ontario from UK on a weekend buying trip and fell in love with a cottage and bought it there and then. It was fabulous for our vacations, but we had also planned on living there when we immigrated. The first winter highlighted so many issues we had not thought about: distance from shopping; constant shovelling; difficulty in finding a reliable contractor, and many others.
My upcoming e-book Buying your Dream Cottage covers many of the issues potential owners should consider before making that big decision.
October 31st, 2007 at 3:45 pm
We started out renting in various spots. It took a day or so to pack up for the holiday. Once we arrived at our destination, it took about a day to get unpacked and organized so we could start having some fun. At the end of the holiday it took a day to pack and to clean the cottage for the next people. Our precious limited holiday time was being eaten away. Now we throw a few clothes in the car and go. Because of the high demand for recreation property it is now a sellers market. Had we not jumped when we did at ownership, it would no longer be affordable. There just isn’t any on the market anymore in our area. Doing it again, I would buy earlier, and if I wasn’t keen on the area, I would flip it for one I liked better. Even though we love our cottage, I still wouldn’t rule this out if something better came along. Our lake is in the middle of no where. Our fridges and freezers are stocked accordingly as all the locals do. We adapt to the environment and have year round enjoyment.
October 31st, 2007 at 4:33 pm
Years ago the guys at work with waterfront property kept telling me how the prices were climbing. We had a young family at the time and buying a cottage was out of the question.
I convinced my wife to buy a lake front lot as an investment if nothing else. At the time mutual funds were not doing well so the property was a better investment, although more money than we wanted to spend at the time. After six years of ownership we were finally in a position to begin construction. It took six more years of work to have a complete cottage. It was a real lesson in patience. Looking back, it was a good decision to go into debt as our lot alone has tripled in value since we purchased. At todays prices we would not be able to purchase the cottage we have now.
October 31st, 2007 at 8:40 pm
My husband and I want to create a lifestyle for our children (one that neither of us had ourselves when we were kids) which involves lots of family time, being outdoors and adventurous and the creation of the special place. We decided, ultimately together but we both took turns waivering on whether a purchase was the right thing to do, that a rental just wouldn’t quite get us there. Given our hectic “real” lives, we need to be able to get to the lake on a last minute basis, something you can’t do with a rental unless you have it for the whole season. Quite honestly, we couldn’t find any cottages in the area we wanted which were available for full summer rentals. We would be left with the weekly rental option, which just does not work for us because we cannot plan far enough in advance and we don’t have many full weeks to spend at the lake. Now, we can get to the lake for 2 to 3 days at a time, without having to plan too much in advance. We have a piece of property, which will hopefully at least hold its value. We can work on the property over the years to make it what we want. Given the money we have tied up in our property and how short our summers are, we make the lake a priority, which in turn makes our family a priority. On a strict financial analysis, the lakefront purchase was not necessarily the wisest choice. However, it wasn’t an irresponsible decision for us, it fulfills a lifelong dream and life is short!!
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