![]() ![]() It’s worth noting that, by utilizing a tax sheltered account such as 401K plans in the United States or RRSP/TFSA programs in Canada, you may be able to reduce the tax burden and increase your overall return as a result. ![]() For example, the initial down payment and monthly cash outflow under Scenario 1 would then become the contribution amount under Scenario 2. Since Scenario 2 is provided primarily for comparison purposes, we have assumed that only out-of-pocket amounts under Scenario 1 would be invested under Scenario 2. In the interest of being conservative, we’ve included the lower rate as the default. Using the same date ranges above for US and Canadian housing data, US large-cap stocks returned 9.8% annually over such period and the TSX composite index rose 8.0% annually. As such, you will simply need to choose an expected annual return rate for your investment. The calculations in Scenario 2 rely upon the values provided under Scenario 1. Under Scenario 2 – Stock Market Investment: In order to ensure an apples-to-apples comparison, the final calculation in Scenario 2 uses the same period as the investment horizon. After adding the corresponding values to the various inputs, the calculation shows what the vacation property will be worth at the end of the loan period, the net return (after factoring in your aggregate cash outlays) and ROI. Any such increase in value will need to be taken into account separately. While we have included an input value for general maintenance and repairs, we have not accounted for any increase in value of your vacation property due to major home renovations, additions or capital improvements. Renovations and Other Capital Improvements.To simplify things, we have not accounted for the impact of inflation on the calculations, including rising costs and expenses. Since real estate price increases can vary substantially from state to state, province to province, city to city and property type to property type, national housing data may not be the best measure to utilize. For comparison, Canadian housing data grew 5.7% annually from 1996 to 2020. As a default, we have included a growth rate of 4% annually based on national US housing data from 1928 to 2020. In order to generate an accurate measure of your expected return on investment, you are required to input the expected annual price growth of your vacation property. length of mortgage and interest rate) and monthly expenses. Input values include the purchase price of your vacation property, down payment, mortgage terms (i.e. Under Scenario 1 – Vacation Property Investment: If you will be in fact generating rental income, try our investment property ROI calculator instead. Note about rental income: our vacation property investment calculator assumes that your vacation property will be used as a secondary residence as opposed to an investment property. By showing these two scenarios, you will be able to compare which investment will be more lucrative over the relevant period. Scenario 2 assumes that instead of purchasing a vacation property you invest in the stock market (for instance, by investing in an index fund). Scenario 1 assumes that you purchase a vacation property and contains a detailed list of inputs related to mortgage terms and vacation home expenses. Our vacation property investment calculator shows your total return under two different scenarios. To find out more about whether vacation properties make good investments, explore our article on vacation homes as investments here. For comparison, the calculator also shows your alternative return should you instead choose to invest in the stock market. Simply complete the inputs below to calculate your total return on investment at the end of the period. If you are contemplating buying a vacation property, this calculator will help you determine your total return on investment over the term of your vacation property mortgage. Welcome to our vacation property investment calculator. ![]()
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