According to many property reports baby boomer demand has created an upswing in starting prices for recreation property. Western Canada is home to the most expensive average price on three bedroom waterfront properties. Typically resort real estate is selling upwards of $300.00 per square foot. The high consumer demand for recreation property has created many different alternatives. Vacation clubs, fractional ownership condominiums or homes, whole ownership condominiums or homes, rental revenueÉ the options are endless and mind boggling to the average consumer. The flexibility and choices have evolved, but can be confusing.
For most people looking to buy vacation property, the resort condominium is a smart alternative. Being able to continue to have a home base and have a vacation home with little up keep makes sense. Many of these of condominiums also offer rental revenue for owners should they choose this option. The challenge for the buyer becomes determining which resort condominium to choose as a good investment.
There are several good and profitable reasons to buy a resort condo/home:
Within the resort market are some of the most pressured and heated real estate markets you can find, and it is likely to remain that way for the next 10 to 15 years. The rate of return in Western Canada is typically 15-20% per annum and is not showing signs of slowing.
The rental revenue can contribute greatly to your costs of ownership which means that you can build your asset base faster.
By leveraging your purchase you stand to make very serious short term returns on investments. Most projects simply require 10% down as a deposit and you typically do not have to have financing in place until possession date. When you buy early, prices are typically more affordable and as the sales increase, the developer then increases the prices. Add to this the lift in property prices and recently the increased construction costs; you are sitting on a substantial rate of return.
If you are looking to purchase a recreation property with a rental option it is important to understand the area that you are buying into. Most mature hotel markets in the world have occupancies running around 50-60%; keep in mind that a portion of the profits will be split between a rental management company and the owners. Also, be realistic about potential rental revenue profits, often they are just enough to cover the condominium fees and part of your mortgage. The bottom line is that there are great opportunities to make profits and acquire that overseas vacation home that you have been dreaming about.
