Wednesday 12 August 2009

Gail Bebee Warns on Treating Cottage as an Investment

No Hype Investing author Gail Bebee sent along the following note on cottages.

"Five reasons to avoid the allure of cottage country real estate

Toronto, August 12 – The long awaited summer weather may be tempting some Canadians to join the ranks of those who own cottages. “I don’t think owning a cottage is a good investment,” says independent investor and personal finance author Gail Bebee. “If you love the cottage lifestyle, go ahead and buy a property by the lake, but don’t buy it strictly as an investment. There are better places to put your money to work.”

Here are some of the reasons Bebee thinks owning a cottage is not a good investment:

1. Real estate is illiquid, so your money may not be available when you need it.

2. The return on your investment is not guaranteed.

3. Ongoing costs (taxes, insurance, maintenance etc.) eat into your profits.

4. Cottages demand your personal time, especially for upkeep.

5. Transferring the family cottage to the next generation often results in family quarrels, or misery if the cottage must be sold to settle an estate.

For more information on the pros and cons of investing in a cottage or to arrange an interview, please contact:

Gail Bebee

Canada’s Independent Voice on Personal Finance

Personal finance speaker and author of No Hype—The Straight Goods on Investing Your Money

Tel: 416-733-0221"

As a cottage owner, I can only agree that a cottage should be for fun not profit. What you gain in appreciation seems to be more than taken up with maintenance and tax increases alone. Came across this useful summary of advice on how to minimize various taxes by CIBC's Jamie Golombeck in this article by Jonathan Chevreau in June.

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