Photo by Duncan Rawlinson
While many Canadians choose to travel south for a vacation during the frigid winter months, many of us prefer to enjoy the snow-covered Canadian landscape with some good, old-fashioned winter fun.
From sliding down the slopes to skating on frozen lakes, and navigating tree-laden cross country trails, there’s no shortage of things to do – that is, if you don’t mind the sub-zero temperatures.
If you’re lucky, you might be able to book a free weekend away at your aunt’s ski chalet or best friend’s family cottage. But the rest of us really only have two options, if we’re looking for a winter getaway each year: rent or buy.
The Cost of Renting vs. Buying
Let’s take a minute to compare the cost of buying a winter vacation property at Whistler to the cost to renting a similar property.
Ownership of a winter home can come at a premium, especially in a hot area like Whistler, B.C. where a three-bedroom ski chalet will run you a minimum $1.5-million. A condo is much more affordable, in the $350,000 to $500,000 range, depending on location and size.
A one-bedroom condo at the base of the mountain in Whistler would cost you roughly $2,506 for a two-week rental, while it would cost just $952 in mortgage payments for the same period. However, this doesn’t take into account monthly costs, such as utilities and maintenance; and there’s always that down payment that needs to be made in order to purchase a property, plus a variety of closing costs.
A three-bedroom chalet is also cheaper, when comparing bi-weekly or monthly numbers. Although, with a nearly $2-million price tag, a property like this would not be realistic for most Canadians to purchase. And buying either of these homes would mean you’re making the above mortgage payments on a regular basis, as opposed to a one-time rental fee, so it is more costly long-term.
However, the rental cost is not always the only cost associated with your vacation: some rentals don’t include taxes in their prices and some have extra fees, such as a cleaning fee or a charge for more than a certain number of people. While renting is certainly the cheapest option for a short-term getaway, it’s not an investment beyond your week-long urban escape.
A chalet or mountainside condo can be a worthwhile investment, especially if you can rent it out when you’re not using it. In a hot area like Whistler, it’s likely the value of your property will only increase as time goes on; and by renting it out you’ll be able to recoup most of your annual mortgage.
Take our one-bedroom condo above, for example. Over the course of a year, your total mortgage payments would ring in at $20,304. If you rent it for just 12 weeks of the 16-week peak period from December 1 to March 31, at $174 a night, you would make $14,616 – and that’s not including the possibility of a summer rental or increased charges for popular booking times like Christmas, New Years, or spring break.
If you’re already a homeowner and a second winter vacation property sounds like an attractive option, you could consider using a home equity line of credit (HELOC) to fund your down payment. As you pay off the mortgage on your first home, a HELOC allows you to borrow up to 65 per cent of the property value – less your outstanding mortgage amount. This could give you the extra cash needed for a down payment on a second home, like a vacation property, from an asset you already have.
The Bottom Line
Owning isn’t right for everyone: if you can only fit a week’s vacation into your already busy winter, renting might be more logical – and cheaper – for your lifestyle.
Although I’d love to own a vacation home someday (and rent it out when I’m not using it!) realistically that can’t happen now, so I’d rent if I wanted a weekend getaway with friends.
Do you own a winter (or summer) vacation property? And if not, is it something you’d like to purchase one day or do you prefer renting?