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From
Canmore condos to idyllic islands, the
recreation property industry in Western Canada
continues to boom.
And
Albertans are chomping at the bit to get their
hands on that second home.
Depending on your budget, there really is no
limit to the options available. You can choose
to fully purchase a property or, if the option
is available, you can take fractional ownership,
which allows you to purchase a 1/4 or even a
1/12 share in a property.
Although Albertans are buying properties around
the world, British Columbia is by far the most
popular out-of-province destination, since many
locations are within either a few hours' drive
or an hour's flight from Calgary, making them
ideal spots for weekend getaways.
:Landcor Data Corp recently completed a sales
survey for B.C. that revealed that Albertans
spent $1.1. billion on residential properties
there in 2005, more than four times the amount
spent by, for example, purchasers from
California.
"These are Albertans who are buying property in
B.C. and they're not moving there (full-time),"
says Landcor president Rudy Nielsen. "I always
think of British Columbia as the playground for
Alberta. We're the only province where you can
go salmon fishing in the morning, skiing in the
afternoon, and golf in the evening."
Nielsen says the growth in Albertans buying
recreational property in B.C. can be tied
directly to the province's economic success and
the rising price of oil.
And
that means more people are taking advantage of
the opportunity to expand their financial
portfolios by purchasing recreational
properties, not only for personal use now, but
also as investments and, in many cases, future
retirement homes.
Anticipating further increases in real estate
costs, some have decided to hedge their bet by
purchasing retirement property now, years in
advance of their actual retirement. In the
meantime, the property is used for those weekend
and holiday time escapes and can be rented out
privately or through a rental pool during the
weeks and months when the property isn't being
used by the owner.
"This
has some tax advantages," says John Newton of
High Country Properties, which rents out
privately owned homes in the Columbia Valley.
Newton likens the practice to having "a vacation
home RRSP."
Paying for a second home can be a daunting
prospect at first glance, but there are
options.
"With
our healthy economy, people are buying (second)
homes," says Mary Ann Krahulic, regional manager
of business development with Canada Mortgage and
Housing Corp. "With the increase in housing
costs, affordability does come into play.
Alberta's smoking hot, but not everywhere else
is."
CMHC
offers the Second Home Program that allows
qualified consumers to obtain mortgages for
second residences- including recreational
property- for as little as five per cent down
(compared to the usual requirement of paying 25
per cent down).
There
are some limitations to this, however.
"It
must be owner-occupied, which means no rental
agreements in place," says Krahulic (this
includes rental pools)."(And) it must be
accessible year round."
Although some forms of recreational property are
ineligible for this program, and are generally
more challenging to obtain mortgages for- such
as fractional ownership- there are other
options. For example, it is possible to use the
equity on your current home, refinancing it to
pay for the second residence.
Alternately, one might even be able to secure a
personal loan to pay for some of the fractional
ownership options out there; consider that
1/12th fraction of a $400,000 property is a
little more than $33,000- often less than a
price of a SUV.
Doug
Thompson with Rogers Associate Financial
Partners says it's tough for the average
individual to keep up to date on all the new
financing products on the market.
"Twenty years ago, most people walked into a
bank and the bank said, 'here's your mortgage-
here's what we'll give you and here's what it's
going to cost.' You didn't have choices," he
says.
These
days, customers often walk out of Thompson's
office with a better deal than they had
expected.
"There are so many new products coming out, like
new loans," he says.
It's
important to do your homework when buying an
out-of-town property. Rules, regulations, and
by-laws differ from province to province and
from country to country. Much of this
information may be available on the Internet,
but consumers should also contact local experts
such as real estate experts such as real estate
agents or mortgage brokers to learn the lay of
the land.
For
more information on the CMHC's Second Home
Program, visit www.cmhc-schl.gc.ca. |
