While buying a vacation home can bring financial benefits, it can also be a risky endeavour.
One piece of advice he mentioned was following a precise financial equation before deciding to purchase the home.
To determine whether what you’ll be paying for the home will ultimately be worth it in terms of the money you’ll be getting back, calculate the total monthly costs of the property by adding together the following factors:
- The price of utilities
- Any costs of renovation (a step that McGillivray recommends you take)
- The mortgage cost
- Any taxes that will apply
If you can rent the property for one week at the same amount you’d spend on the total monthly costs, the home is likely to be a profitable endeavour for you.
The reason for this is that there are roughly 12 weeks of a high renting season, which means you want to be making enough in that time to cover lower renting periods throughout the year.
So if you’re ever looking into purchasing a vacation home and find yourself wondering whether its hefty price tag is worth it, keep this equation in mind.
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