We have a certain amount of disposable income we could invest. We already have RRSP deposits, RESP, TFSA, and pay extra down on our mortgage. Curently paying off a new truck super fast. Wondering if a cabin at the northern lake 1 hour away may be a godd place to put these funds and pay back the truck at a normal pace?
I’m a Canadian accountant and when I worked saw this all the time. My advise which often goes against traditional advise these days was to always pay off your debt. Use extra money to pay off your mortgage and truck loan and then think about a 2nd home. There is nothing like the free feeling you get when you have no debt and if you take on another mortgage, you will have 2 mortgages and a truck loan and it will just add a lot of stress.
My .02.
We pay the truck down now at roughly 2200 a month. In 1 year it will be paid off. Perhaps when that year is done we can take 1500.00 and put it into a cabin and shift the other 7 into the house? We currently pay down 175.00 extra every two weeks on the house. The truck is on a LOC against the home at 3.5% the house is floating at 2.25% currently, FWIW.
Both my wife and I are typically allergic to debt.
Good advice about paying down the debt, but it sounds like you have that under control.
You don’t say which lake / where - it could make a difference. The bank will likely not give you a mortgage for a vacation property, but if you buy it as an investment property and rent it out occasionally, the interest on the loan could be tax deductible, as could the maintenance / upkeep / utilities, etc. Since you’ll get dinged for the capital gains down the road anyway - non-principal residence - it’s a different way to look at it. If you cash in some non-registered investments as a down payment, and then re-borrow money to re-purchase the same investments, the interest on that portion of the loan is also now tax-deductible.
I’d only buy a cabin if I’d use it extensively and it would add quality to my life. Otherwise, I’d save for vacations - rent the cabin when I needed it and go different places to relax in a spot where I don’t have to clean, maintain, upkeep another property…
I’m not an accountant, FWIW, so the above is just my understanding of the ‘rules’…lol
How often does property come open at the lake? Is there a rush (are prices skyrocketing in that area) right now?
I would kill to have a lakefront cabin and would take the mortgage to get one. But isn’t anywhere near feasible for me. But if there is lots of property around the area you are looking,. I would hold off as well.
M~
**I’d only buy a cabin if I’d use it extensively and it would add quality to my life. Otherwise, I’d save for vacations - rent the cabin when I needed it and go different places to relax in a spot where I don’t have to clean, maintain, upkeep another property… **
All money issues aside these are the reasons I avoided buying a lakefront property that was in our family a number of years ago. I just couldn’t justify the expense in terms of upkeep for only summer use (it wasn’t winterized). The main issue for me was that now I can go to a cottage and relax (rent by the week or weekend) but if I own it there is always something to be done. It changes from a holiday retreat to a second job.
Also, I love to travel and can see different places all the time instead of the same one.
Out of curiosity, why would you think that buying a house would be an investment? I’m just curious about the thought process.
In general I’ve understood that a second home is not a good investment unless you rent it out year round.
I’m curious about this too.
We have an opportunity to buy a foreclosure in the mountains at about 1/5 the cost it took to build it four years ago. We’re on the fence as to whether to buy it - we would enjoy the cabin but it would be some work to get it up to ready to go.
Not sure about what RESP is, but found reference to other 2 types of savings.
Ideas
1.Keep saving in short term liquid savings so you can pay cash for every future vehicle.
2. save up money in accounts for future home repairs
3. save for emergency, loss of job, illness etc. save 6 months to 2 years salery
4. increase savings rate to 20% or more of gross income, not take home.
15 years ago people would have said that you were carzy. ; ^ )
You are absolutely right. Some people get a little extra cash in their pockets and think about what they can buy. The smart choice is to have no debt and money put away for an emergency. This ought to be taught starting in elementary school since it a concept that takes years to grasp.
We have a certain amount of disposable income we could invest. We already have RRSP deposits, RESP, TFSA, and pay extra down on our mortgage. Curently paying off a new truck super fast. Wondering if a cabin at the northern lake 1 hour away may be a godd place to put these funds and pay back the truck at a normal pace?
That sounds like a spendid idea.
Real assets are the only option these days.
I would think it depends on at least a few things.
- Do you plan to use it enough to justify the purchase vs. renting a place only when you decide to go to the lake?
- Do you plan to rent it out, and can you do so in a way that is not too difficult for you and consistently makes money or pays a significnt portion of the mortgage
- Do you feel pretty optimistic about the prospect for increasing property values, and is that rise greater than or equal to what you think you could get in another investment?
If the answer is yes to all or at least two of these questions, then it’s probably not a bad investment bet… unless you turn out to be wrong about your answers to these questions. 
Definitely a buyers market, with the exception of lake fronts, those sell fast. The cabin we would be looking at would not be LF, unless they drop below half a Million.
Renting is not something we had thought about. We currently have a 32foot rv, we will continue to use this and hold off on the cabin, unless the perfect one comes along.
I’d view any investment in a second property as, just that, an investment.
If its a second home, sits empty, can be rented for 4 months of the year which only covers 6 months mortgage payments, this is a money sink.
Whats the appreciation year on year of the cabin, whats the yield in terms of rental income?
How often will you visit the property? what are your alternatives.
I think property can be a great investment but it depends where, what your goal is etc
It would be a vacation property, not a rental. The market is currently flat and sales are down. not sure if it has hit rock bottom yet or not. In the past 6 years property at that lake has gone up 100%, it is down 15% from peak to date.
Are you going the investment property use or personal use?
We have a cabin. It’s nice but be prepared to rake leaves and pine needles, cut up trees that fall (hopefully not on your cabin) and fix shit that goes wrong since there may not be a wide assortment of construction services available.
Purely personal use.
My thought is it is better to put the money into something I can use and wil hopefully keep up with inflation.
My wife and I are 32 so we have plenty of earning years ahead of us (hopefully)
I agree that you would match or exceed the investment market if the property is located in a desirable area. You will have to do it all with inflation in value since there is no income to influence your yield.
15 years ago people would have said that you were carzy. ; ^ )
actually, even 15 years ago most of those would have been considered a good idea. Though back then some would have said you should invest those saved funds if you could earn more than your interest payments. But even then most said your house should be your ownly debt for most people.
And emergency funds and maintenance funds were considered important.
I noticed you’re the only one who commented on the idea of saving the money vs spending it on something. So I guess that message of “emergency funds/plan for major expenditures” has not really taken hold even now.