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Posts Tagged ‘cottage property’

Purchase of recreational properties such as cottages is a means choice, and it will not necessarily result to a fatter bank account. Generally, seasoned investors don’t look at recreational properties as an investment option for they are not. As an alternative, the purchase of this type of properties is primarily motivated by their intention to provide their family with great holiday option. If you love the lifestyle, then you will surely be making a shrewd decision when you buy a cottage property. When you decide to buy your dream cottage, it is essential that you take into account the additional expense items such as applicable taxes, maintenance and upkeep, second mortgage, etc.

A main part of the value of recreational property is attributed to its location. This means that you have better chances in selling this type of recreational property. If you own a cottage property that has a full line of amenities, then you can make a good sales pitch if you focus on baby boomers that are looking for a great retirement home.

In spite of the high average price of this property segment, seasoned investors don’t consider them as a good investment option. Cottages are, in most instances, bad investment ventures since they exist in a market which experts consider as illiquid. You may have to accept significant decrease in your financial profile if you decide to sell the property below the principal amount.

You must have to compete with high ongoing cost if you allow yourself to be charmed by romantic images of sunsets and hammocks that go with owning a recreational property. You have to account for additional insurance, property taxes, maintenance cost, etc. Most lenders are reluctant to approve mortgage applications for recreational properties, and if you are to get an approval, the package may not be that great. Insurance companies may not be inclined to grant coverage to a recreational property that remains empty for the most part of the year.

In order to wrap some of the cost, you may consider renting out your cottage property. You have to spend time and resources to advertise the property. Finally, you must spend significant time in cleaning and maintaining the property.