Should you buy a vacation property? Aug 27th

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The benefits of owning a vacation property are obvious. A cottage, cabin, condo or trailer a short drive from your home can provide a quick weekend recharge. A property down south can serve as a regular vacation destination or extended winter stay for a snowbird.
There are many emotion-driven reasons for buying a vacation property, or not. I like to evaluate a property purchase from a financial point of view—and here’s how. 
Say a property’s purchase price is $500,000. Whether you use cash, a mortgage/home equity line of credit, or a combination, there are other costs to consider. If you purchase with cash that you could otherwise invest at a 4% return (to use a conservative assumption), there is an opportunity cost of not investing that money. If you borrowed money, despite current mortgage rates being around 2%, over the long run the interest rate is likely to go higher. On a $500,000 property, there may therefore be an initial cost of 4%, or $20,000.
Property taxes, utilities, insurance, condo fees and maintenance could easily add another 2% to 4% per year in costs…

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