SmartHomeOwners

A summer or winter cottage can bring joy to you and your family year after year.  You can choose a cottage at a location where you love to vacation the most.  It can be your "home away from home" and provide much relaxation when you need a break from the cares of life.  But should you rent or buy your cottage?  This is an important question and will depend on a number of factors.  Here are some tips to help you determine if buying a cottage is right for you.

Temporary Fun or Investment?

First determine if the cottage will be used as a temporary vacation spot for a few years or a possible investment for now and the future.  If you purchase a cottage now, it could very well bring a profit through potential rentals and if you choose to sell it later.  If only using it as a temporary vacation spot (perhaps until the kids are grown), you might consider renting a cottage instead. 

The benefits of owning a cottage are numerous.  You can decorate it however you want and take frequent getaways to your favorite spot if your job permits.  Use the cottage as a weekend family spot or to entertain friends.  If the cottage is located near snow-covered mountains, you can take a skiing or tubing holiday whenever you want.  If it's near a lake, consider keep a boat or jet skis nearby!

Owning a cottage in a community also enables you to make new friends with locals in the area as well as other vacationers.  And you won't have to worry about whether or not the cottage will be available when you need it, as you would when merely renting a cottage.

A Few Disadvantages

There are a few drawbacks to cottage ownership as well.  When renting a cottage, the owner takes care of all maintenance, furnishings, plumbing issues, heating/air, lawn work, etc.  But if you own a cottage, you'll be the one responsible for all these things.  You can either hire someone to take care of the cottage for you or do it yourself if you live close enough.  If renting out your cottage to others, even more maintenance and upkeep will be required, including a thorough cleaning between guests.

You'll also be responsible for the cottage payments, insurance and property taxes.  These can eat up finances in a hurry if you are still making payments on your current primary residence.  If you rent the cottage, you will have to claim the rental money as income but can also take expenses of the cottage off your taxes.

Another drawback is you will be limited as to where you can go on family trips unless you have enough money to travel to other places and still enjoy your cottage occasionally.  You must determine if the cottage is located in a place you will love to visit over and over again.  If not, then renting might be best.

If you're still not sure about how buying a cottage will impact your life and finances, write down all the pros and cons on a piece of paper.  Speak with your accountant about how it will affect your finances.  Determine if it's something you can afford to do after all potential expenses have been included.  Think about how it will affect your family for the long term.  After carefully weighing the pros and cons, you should know whether or not buying a cottage fits into your financial goals.