Purchasing Vacation/ retirement Real Estate

Take your time deciding, what’s the rush?

As a 60 something Realtor, I see some of my peer group (and clientele)considering a non-Canadian vacation and/or retirement property. The idea is to purchase now, use it to holiday and maybe eventually retire there, or at the least spend the winter somewhere warmer (and it is an investment). Sounds like an excellent idea, especially in Edmonton during February. Often people are in an area during a winter holiday, Phoenix, Cabo, Palm Springs or Costa Rica, and are ‘smitten’ with how awesome it is, the weather, the great price of Real Estate and the whatever else is tugging your strings. If you are considering a purchase, WAIT, DON’T BUY YET!

A few of pieces of advice that come from my professional experience.

1) Go back for another vacation of a longer duration, (like a month or 2) and see if you are still in love.
2) If you are still pumped, go back on a “buying trip” not a holiday, check out the local market with a Realtor and treat it like a business decision.
3) Check into the crime rates, carrying costs (condo , HOA fees, property taxes etc.) and taxation issues surrounding your dream. These properties sometimes are not so much an “investment”, but an expensive liability when you are unable to enjoy it for some reason, down the road. And your kids may not have the time, money or desire to keep it, if you aren’t paying the bills.
4) Take a look at the local tax laws for the ‘hit’ when selling, many foreign governments like to tax the heck out of “non-voting residents”, as they suffer very little political backlash….see Florida. Any or most of the money actually made on your property goes back to the local economy, not to you or your family.
5) Remember by the time you are 70 or before, health insurance can be prohibitively expensive  and statistically,  23%+/- of your peer group are deceased (really), so you may actually only have a relatively short window to enjoy paradise.
6) If you are going to spend less than 5-6 months a year there, renting or seasonally leasing may be a much more cost effective alternative. When you can’t or don’t want to go….It’s someone else’s problem!

Time shares may be OK if you intend to use the weeks EVERY year, like a forced vacation, or trade the weeks for an alternate resort that you are interested in seeing. Remember they have little to no value when you are done, and the yearly/ monthly ‘maintenance fees’ can really begin to wear on you…. tip: you can generally buy them re-sale at less than 50 cents on the dollar, that way you won’t feel too bad when you try to sell them at a seriously depreciated price…..be realistic.

I don’t mean to be a “buzz-kill”, but the flush of new love during a vacation has lead many normally sane individuals to rash decisions. Be cool and consider all the angles before making a decision. It may all work out as you have envisioned, but you can be satisfied that you considered both the positive and negative ramifications of your choice.

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