Travel Real Estate – Before you purchase your recreational property

There are certain tips and checklists that travel enthusiasts must attend to when deciding whether or not to purchase recreational real estate at Canada’s winter resorts. Travel real estate as it is termed is recreational full ownership or fractional ownership based. Again, taken from Ski Press Magazine.

Owning versus Renting – The Pros & Cons

When it comes to spending quality time in ski country, the choice is clear: buy or rent. Not surprisingly, that is the last thing that’s clear. What is very unclear is which one is right for you. So let’s look at this rationally.

What’s so great about owning your own little slice of heaven?
- There actually is pride in ownership of recreational property
- You have a place to store your ski gear
- You might make a capital gain on the real estate property
- Your friends will all want to visit
- There will be extra virgin olive oil in the cupboard when you start preparing dinner

What’s not so great about ownership of recreational property?
- You’re stuck, baby. You know where you’re going… and going… and going
- Your friends will all want to visit… and stay in your place for free
- If it breaks, you have to fix it or pay for someone else to fix it.
- It’ll break
- You’ll get repetitive stress syndrome from writing cheques to cover the mortgage, condo fees, resort-association fees, special assessments, and user fees

On the other hand, you can rent recreational real estate. Renting is good isn’t it?
- Renting costs less up front
- You can visit new places every year
- If it breaks, it’s not your problem
- You’ll never look at something you don’t like and use the word ‘renovate’

Renting recreational property isn’t without its own drawbacks, though.
- So long, cash, it’s been good to know you
- You’re always a stranger, in a strange land
- Don’t even think about brining a black light into the bedroom
- You take higher quality cooking utensils camping than they supply in the condo

Can Renting Your Recreational Condo cover your Mortgage?

In a word, no. At least not if you’re thinking along the lines of a traditional 75 per cent mortgage. No way, here’s why.

Gross vs Net: Yes, that’s an expensive recreational condo you’re staying in and maybe thinking of buying. But unless you live at the resort, someone else is going to have to manage it for you. They take anywhere from 40% to 50% off the top for their services. Before other expenses.

Other Expenses 1: things break and have to be replaced; not wilful damage kind of break, but dropped glass, damaged appliance, leaking plumbing kind of break. Your insurance – another expense-doesn’t cover that. And then there’s phone, TV, hydro…. Those are all other expenses.

Other Expenses II: In at least three of the four highlighted areas, there’s a resort association that markets the resort. They charge homeowners a fee, kind of like another level of tax, based on size or revenue. And then there’s the actual property tax.

Other Expenses III: Common area expenses never go away. And special assessments – fix the roof, fix the pool, fix the hot tub, replace the furniture – seem to crop up more frequently than you’d expect.

Rack vs Reality: The nightly rack rate for your condominium recreational property seems high. But to hedge their bets, most big resort condos wholesale blocks of room nights to package companies. Don’t bank on the rack rate.

One Season; Two Shoulders: Shoulder seasons – early and late- attract, well cheapskates. Your recreational condo will either be vacant or inexpensive for all but the heart of the season.

So buy with your eyes open. Yes, there’s some income. There just may not be as much as you think.

Emerging Recreational Real Estate Markets: Three to Ponder

Not everywhere can be – or wants to be – Whistler, Banff, or Tremblant. If you’d like to spend your time in this kind of place big ski-town locals claim their town used to be, here are three spots you might want to consider purchasing recreational property.

Fernie, British Columbia
Fernie is a century-old mining town that’s making a big splash in mountain resort tourism. Anchored by Fernie Alpine Resort’s 2,500 acres of power-perfect skiing, the town is enjoying unprecedented international profile. “We’ve been discovered by the Brits and Aussies,” claims mayor Randall MacNair.

While Fernie’s travel destination skier business is likely to get a real boost when Cranbrook’s airport – about a hour and a half drive – goes international, in the not too distant future, the town has already become a favourite of Calgarians.

And why not? Aside from FAR’s groomed runs, alpine bowls and tempting backcountry, Fernie’s a hotspot for cat skiing, and snowmobiling in winter; fishing, hiking, mountain biking and golf in the summer. An increasingly sophisticated mix of good dining, shopping, and high-touch spas, appended to what Mayor MacNair likes to call a “real town,” makes Fernie one hot item.

Golden, BC
Kicking Horse Mountain Resort seemed, for so many years, to be almost ghostlike, a chimera whispered on the wind blowing down from Rogers Pass. But with 2,750 acres and a vertical of 1,260 metres, Kicking Horse Mountain Resort has kicked some life into formerly sleepy Golden.

“Golden’s gone crazy,” claims Janet Crandell, publisher of the Golden Star Weekly. “We’ve travelled light years from where we were just a decade ago because of the real estate recreational development of the ski hill.”

Three hours from Calgary and six from Edmonton, Golden is also cashing in on the petrocrazed economy of recreationally challenged Alberta and remaking itself into a four-season destination resort town. It has great skiing, a whole roster of summertime activities, and new resort real estate lodging project are being snapped up as fast as plans can be approved.

Big White, British Columbia
Big White Ski Resort, snuggled up against the Monashee Mountains, has spent the past half decade building itself into a regional powerhouse. With 777 metres of vertical, 2,765 acres and almost double that of accessible nearcountry terrain, and an average snowfall of 750 centimetres (that’s 27.5 feet!), Big White Ski Resort is one BC’s big players. Its village offers a critical mass of lodging, real estate opportunities and all the usual amenities.

But unlike the others, it also has nearby Kelowna – one of Canada’s fastest growing cities – as an urban lure. “A lot of growth around here is being fuelled by retired and semi-retired people who are embracing a very active lifestyle,” says Steve MacNaull, business reporter for the Kelowna Daily Courier. “They’re building big homes and want all the toys to pursue their passions.”

What are you waiting for?

How much does owning recreational real estate cost?

Let’s start with minimum requirements – basics for a family of four:
- Ski country vacation home: $200,000 plus (up to $5 million)
- Yearly property taxes, resort association fees, utilities, $8000 plus
- Monthly recreational condo common-area costs: $150 plus
- Special assessments (new roof, etc.): unpredictable
- Recreational property insurance: $1000 plus
- New bed linens, towels, duvets, etc.: $500
- Outfitting kitchen: $1500
- New TV and sound system: $2500
- New furniture: $10000 plus
- Refitting the “owners closet” to hold your stuff: $750
- Season passes (you’re not day skiers any more): $2800 plus
- Membership in the Saturday/Sunday ski club (so you can cut lift lines): $1500
- Incidentals: 5% of above