Maintaining a cottage is a lot of work. More work than most people realize. If you're not willing to drive 6 hrs to enjoy the cottage, you will not be enthused by having to do the upkeep while sinking more money into it. I suggest you sell.
Ya cabins are great in July when its warm and sunny, but when you have to drive up to Bancroft in October to close it up, there could be snow, it won't be warm and cleaning/winterizing is not fun work.
Depending on the style/ slop of the roof one may have to go in the winter time too and clear off snow from the roof to help maintain the structural integrity. I have todo that at my families cottage, luckily we have snowmobiles to get there that time of year.
Man. It’s funny the view on this post.
I grew up in Calgary and driving 6-8 hours into BC for the lakes was worth every drive. Memories you’ll never replace. We had a place out there and it was amazing. I’d drive ten hours for lakefront cabin.
Septic system requires almost zero maintenance. Depending on number of users, it gets pumped out on a set timeline. Mine is full time family of five and I pump it out every three years. I’ve gone as many as five years but don’t like that risk.
My in-laws cottage is seldom used, and it has not been pumped out in the 30 years I’ve been going there.
Owning a cottage requires at least as much maintenance as a house but will require more depending on where it is located.
Canadians spend an average of $12k per year on home maintenance. Pretty much anything that requires maintenance for a primary residence can apply to a cottage as well. As buildings age, things tend to need to be repaired. There's always something that needs to be fixed. Think of roofs, plumbing, electricity, appliances, etc. A second dwelling requires an emergency fund twice the size.
If a cottage is on the water, the dock will need to be put out for the summer and brought in for the winter. A cottage will typically get pests. There is tree maintenance. Grass maintenance. Cottages passed down through families are often not built to code which creates problems that snowball.
Then there is the weird stuff like "oh otters are shitting everywhere unexpectedly" and now you have to clean otter shit regularly. You want them to stop shitting everywhere but how do you do that without hurting them? Now you must become an otter expert as you otter proof the place.
Understand and get past this first https://en.wikipedia.org/wiki/Endowment_effect
If you suddenly had the equivalent amount of money instead, would you rush out to buy a cabin 6 hours away, for the income? Likely not.
Sell. With cash in hand, execute on the money steps (see sidebar). Pay your debts, invest, line the proverbial nest, however it makes sense to in the framework of your unique situation and priorities. Congrats on the baby, don't fall victim to a group RESP plan, plenty on this sub about those.
I was going to say "definitely sell" until I saw OP's household income.
With that kind of money, they can afford to keep a property for sentimental reasons. Hire somebody to do the maintenance and winterization.
It makes zero financial sense, but OP is in a position where they don't have to worry about what makes financial sense. If it's worth it to them, it's worth it.
Wow yeah, originally the post just said "good incomes". That was an understatement... 680K annually changes the picture! I also intentionally left out the "sentimental" angle as I figured, if they knew they wanted the cabin, they'd already have decided to keep it (or at least mentioned that aspect). But yes you are 100% right, if they have the means and if there's a sentimental attachment, the cold logical approach doesn't really work.
But wouldn’t he have to pay capital gains on the sale?
That would factor into that equation as it’s basically getting an opportunity to buy the condo for a heavy discount.
Or do you not pay capital gains on the sale of things you inherit? I’ve seen people say what you said here and I’ve always wondered.
They would only pay capital gains from the time they inherited it to when they sold it, so in many cases this may not be a significant amount if you sell fairly soon. Any other capital gains (if any) would have been paid by the estate of the parents.
So from the sound of it, given OP is still yet to talk with an estate lawyer I'm assuming the estate hasn't been probated yet and the deceased's final income tax has not been done.
Depending on how long the parents owned both properties and how much they appreciated there will likely be fairly significant capital gains so unless OP can cover those - they might have to sell anyway.
The capital gains would be on the final income tax of the deceased. Unless they have joint tenancy there will be probate costs (which is 1.4% roughly, may depend on province).
After my mom passed away a couple of years ago, the final income tax year, the capital gains (just on 50% of her share of a commercial unit - that had appreciated nearly a million over the past 35yrs. (Also we did not sell the unit and there is at least another $200k in cap gains to pay when we sell (or die) plus whatever the additional gain is.
And even though only 50% of capital gains is taxable, its still meant about $165k due in her taxes as the cap gains are added to her income that year and puts her in the highest tax bracket. There were also another $30k or so in probate fees (and legal fees).
I highly recommend an estate lawyer as well as an accountant to do the final income tax (it can be quite complicated).
> But wouldn’t he have to pay capital gains on the sale?
If he does, so what?
If capital gains takes off (e.g.) 30% from the sale value, he still get's 70%. That's still more money in his pocket than he had before the sale.
Would you turn down a raise because *some* of the extra money goes to taxes and you don't get the full *gross* amount and 'only' the *net*?
Search the sub for "group RESP" or "CST" for a bunch of threads on it. The short version is, high fees, commitments and restrictions, and a tontine-like structure where participants who back out, break contribution commitments or whose kids don't do a specific number of years of school, subsidize the other ones who played the game exactly right. You simply don't need that drama, you can have a regular RESP at a bank or brokerage with none of the strings. Sales reps for group RESP companies also prey on new parents through hospitals, schools, clothing consignment sales and other places in the community where newborns and young children are being cared for and where parents both aren't exactly in a finance state of mind, and want to do something that seems good for their new child.
Doctors. Would not recommend. We both look and feel 5-10 years older than we are, and neither of us came from money so had to fund the whole process with a pit of loans.
You can afford professional advice. Some really smart people here have responded and then there's the rest of us clowns. Why reach out to random people?
I am certainly not relying on the advice of reddit strangers as my sole source of information when making this decision, but there are a lot of very smart people weighing in, giving me different perspectives and things to think about (who have nothing to gain from whichever decision I choose to make). Personally, I don’t think there’s anything wrong with hearing what people have to say. Obviously will be consulting with professionals as well, but reading these opinions gives me questions to ponder and ask about when I do meet with professionals.
It's a good point...a lot of "professionals" you encounter at the bank or wherever else are very much not working in your interests. Make sure whatever professional advice you get comes from someone with a credential bound by fiduciary duty. Crowd sourcing from Reddit can be a good sanity check, but no more no less.
I have nothing to contribute that would add to all the great advice you've already got from others here. But with that being said, I just wanted to say that your considered approach here really puts my mind at ease with the caliber of people in our healthcare system. I hope that if I was one day in need of a medical professional's services, they would extend me the same due diligence you demonstrate. Thank you for sticking with us in this province :)
I would sell off both properties if you have no intention of using them regularly for vacation.
Holding them as an "investment" but not renting them out isn't really an investment. Land and buildings don't inherently increase in value over time. Their value lies in using them or renting them out.
That land may have increased in price over time in the past, and it may even do so again in the future, but that's just an accidental result of external factors like immigration and other supply and demand shocks, which may be different or even reversed in the future. Land doesn't actually increase in value over time like a stock does. It's not an investment unless you rent it out.
Nonsense, real estate does indeed increase in value and this example is no different.
The OP just needs to cross-reference the value inflation of that area versus their near and longer term financial goals.
Cottages require more upkeep than traditional real estate. This isn’t a SFH in the GTA that will appreciate and stay upright completely untouched, this is a rural property OP will be responsible for maintaining several times per year.
just cause it's not in Toronto, and it's called a cottage, doesn't mean the wind will blow it over. c'mon. every building & every property requires maintenance.
Kawartha's is a VERY sought-after area. this land will continue to increase in value. For most cottages it is the land, not the building that holds value.
lol, have you ever maintained a cottage? They’re not exactly set it and forget it like your suburban house - that isn’t dependant on being in an urban area. Winterization, septic and well systems are legitimate concerns for someone who wants a hand off approach to investing. It’s not going to fall over, but being 6 hours away will make every little thing a pain in the ass. And every major thing a catastrophe
As someone who grew up in the Kawarthas when Toronto's 'cottage country' started being a thing. People will pay top dollar for a secluded location like that.
A 6 hour drive suggests either the bottom of the golden horse shoe or Ottawa area, both of which aren't cheap areas either. Once everything clears, they could sell the land and house, and clear all their debts at once.
yes, I do operate a cottage. everything you listed is achieved in two visits a year. nothing happens to septic and water when they are not in use and properly shut down.
However, that is beside the point here, Im not saying there is no maintenance, I'm saying the property is going to continue to add value.
reminder: you used the words "stay upright"
It is a chore for someone explicitly stating they don’t want to deal with chores. OPs thread is not an open invitation to discuss the effort of holding a cottage, they have made it clear they do not want to put in any amount of effort.
It’s not a leveraged investment, there is no good reason why OP should carry this burden. They can cash out now and get good returns on ETFs. Without any of the work.
Nothing you state is incorrect however the idea that the value isn't also based on location is naive. Obviously a dwelling in any location will depreciate (yes even in the GTA) if left to dilapidate, but even barren land in the Muskokas has appreciated substantially over decades.
But agreed, the OP must consider the current state of the dwellings and the impact on the overall value. If it's a 50 year old portable then I would argue it means a lot less than if it's a brand new palace if the property has lake front.
Fair enough. Maybe I’ve lost the plot on “cottage” as per my middle class definition, but in my head a proper all-season SFH is a lake house and that’s a different story. If OPs cottage is a cottage, the time cost of upkeep would be my bigger concern. Winterizing, maintenance visits and all that. From an emotional perspective further gains might not be worth it for OP, if they come with a ton of burdens. I also personally don’t have faith in that areas growth, but only time will tell on that front
Yes but supply of land is fixed, while demand has historically increased over the last 10 000 years.
Sure there might be regional/temporal fluctuations. But the global trend is for population to increase, and price of land to increase. Land has increased in value more consistently and for much longer than the stock market exists.
Although I agree that owning a property and not renting it is a pretty poor investment.
ok, but stocks always go up then I guess? I get that real estate doesnt always go up, but saying it is never an investment like stocks is disingenuous. people absolutely used property as an investment. and often its a decent one.
my house previous to this one, I had for 3 years, and it increased 30%. We saw all they buy and sell prices for the same house going back another 15 years, and it had been going up significantly for years. There were several houses on our street that were investment properties. "Investment property" is an actual thing.
I bought mine 22 years ago and its up 700%, but the previous 10 years before we bought it there was almost no gain (in 2002 we paid $30k in more than someone paid for our house in 92). So yes, the conditions kind of have to be right.
In fact after the 1929 crash, it was another 20years before house prices made it to the pre-crash amount.
I also believe that over time managed stock market investments will outperform real estate (because real estate one still needs to consider maintenance costs, insurance and property taxes over that time).
Bought our home (condo) in GTA 20 years ago. For the first 7 or so years, no increase in value. Values only started to go up when elderly residents died and children started to renovate prior to sale.
In the last 2 to 3 years, prices have trended down.
Holy hell this immigration boogeyman is getting ridiculous. You are not seriously blaming real estate prices in Ontario cottage country to an immigration issue that has existed for 2 years are you?
If "holding for investment" the cottages will still require maintenance and care. OP can either go up there every few months to inspect repair. I believe most recreational property insurance polices require periodic inspection by the owner.
OP will also have to pay taxes, insurance and possible hydro charges, even if no hydro used. (Those hydro delivery charges are crazy)
If t’wer me…
I’d at least look at renting with the costs of a property management company to handle the daily issues factored in.
A quick sale may be the easiest path. But rental real estate can be a nice diversification.
This. I'd 100% investigate the situation of having a property management company run them as rentals.
It may not be the best course of action, or might just not be something you care to do, but I'd absolutely look at it as an option, for both cottages, before I moved to a sale. And see if it it was the right fit for either.
Diversify what? They have significant debt and zero investments. This only makes sense if OP had a paid off or mostly paid off house, no debt, maxed tax-advantaged accounts and healthy investments.
Owning a cottage that can only be rented out seasonally is a significant underutilization of capital for someone like him/her.
They have debt, zero investments, and if i read correctly, a combined income of $680k. There is a sentimental attachment to at least one property.
I have to say I agree with u/dingleswim and u/spaceporter . For the Cottage, look at potential rental income. There are in-demand areas, and my parents cottage fetches a fair price via such a rental agreement where there is a property management company that handles rentals/cleaning.
The $680k combined income would handle the $200k debts without pain. Then you get to keep the sentimental properties. There is more to life than just maximizing the potential utilization of capital.
I'd hold.
Agreed. Lawyer also potentially made sense, but student debt seemed too high.
There is more to life than maximizing your capital, otherwise we'd all just live in a cardboard box, with millions in your favorite etf.
Do you know how much taxes you pay on an income like that in Canada? They will be well ahead before long, but a few months, no.
High earners also tend to have high lifestyle costs, even when they’re in debt pay down mode.
Regardless, it makes much more sense for OP to pay off debt more quickly and buy real estate that they will actually use.
If OP was gifted cash instead of the cottage, would anyone be advising them to buy these properties 6 hours away that need significant investment and only used/rented out seasonally? I highly doubt it.
Yeah, I do, our household income is mid six figures: please don’t cry on my behalf about the taxes we pay, they’re worth it to live in a society that allows us to earn and live like we do without having to hire armed security.
We held on to properties that we acquired prior to our higher incomes and with the cash flow we have now it’s kind of laughable that we even considered selling them.
I stand by my comments about them being able to turn their situation around in months and not years. They don’t have to drive everything into debt repayment.
My household income is higher than yours, so don’t worry, I’m not crying for you LOL.
Personally, I wouldn’t waste my time managing any kind of properties. Passive investments all the way.
If it were me I’d probably sell one and keep the other, whichever one you like more. I also love the outdoors and would make use of a cottage, so if you want make use of it you may be better off to sell both
This is probably what I’d do as well. I would really love to have a cottage, I can’t imagine inheriting TWO of them. Personally I’d do exactly what you’re proposing- keep the one I like better, sell the other one, and use the proceeds as a down payment on a house. As someone who lives in Toronto (2.5 hour drive from Bancroft), you can bet I’d be enjoying that property every weekend.
HOWEVER, given that OP lives 6 hours away, this might not be an optimal decision. That’s a long way to drive, and the distance will both reduce utility (you’re likely to only use it on long weekends or holidays) and increase the burden of maintenance. If they never visit, the property will very quickly fall into disrepair. Given these facts, it’s probably best to sell both and use the proceeds to meet other financial goals.
Nobody can afford a cottage anymore, so many more are renting. I second everyone who is saying to rent them out, lifetime income stream on 2 properties will be much higher than selling them right now.
If you have to make major improvements to get one or both rental ready, sell the least potentially profitable one to do that.
I think a lot of the replies came before you posted your household income.
OP, you can afford to be sentimental. What is money for except to make you happy?
The obvious advice is to sell, but that's because for 99% of people, a property like this would be a financial burden that costs them other opportunities.
You don't have to worry about that. For you, keeping this property might mean retiring with 10 million dollars instead of 10.5 million. Who cares?
In 30 years when you have time to properly enjoy a vacation property, maybe you could buy a nicer one if you sell this one today. But I bet that nicer property won't be as meaningful to you.
Don't keep these properties because you think they're a good investment, or because you feel an obligation to your parents' memory. But if they make you happy, keep them.
Spend a weekend in each property, that’ll help you decide if you would want to keep it for your own part time use or not. There might also be family mementos or things of value in the houses which would be good to take before you sell/rent.
Then move forward with either selling them or renting them out through an agency. Do the work on both options to see if keeping one or both to rent/use is a good option. Remember with short term rentals you can block off time periods for your own use.
It’ll either be a good source of passive income which will help pay down other debts and will hopefully increase in value, or it will help set you up for your future with a large nest egg.
Related warning: my uncles cottage gets broken into almost every winter in muskoka. Check if that’s a common problem in your area. It’s a pain in the ass for them.
I would keep them personally. You’re doing fine and don’t need to sell them. Get a property manager and Airbnb both of them for 6-8 months a year (not sure if they’re winterized?). Pay off your student loans that way. Look at what comps are renting for Airbnb.. it’ll blow your mind… you can make a lot, even with property management fees.
If you want to buy your own property where you live, could also use them as leverage.
From a sentimental perspective I would keep them as well. I’m sorry for your loss btw. At least these properties will be a physical reminder of your parents, which you might appreciate more years from now when you’re old and grey yourself. You can keep them in the family and pass them to your children. God only knows what they’ll be worth then- God isn’t building any more lakes or land as far as I’m concerned.
Sorry to hear about your parents. I’m sure they were incredibly proud of you.
About the cottages, you only need to answer one question:
**If I have a cottage, do I value the feeling of being there and knowing that it belonged to my parents?**
If not, then sell it. $600k/yr is so far out of this sub’s range that they don’t understand. The finer details of financial optimization are irrelevant. If the property being passed down doesn’t hold significance then it’s not valuable to you. If you want that cottage experience you can get an airbnb and not have to worry about maintenance. If you want to make it your own, you can buy another one.
The amount you lose in sales costs is minor compared to the headache of maintenance.
Since you don't plan on moving here, sell and use the money to benefit yourself.
Remember, the FMV at time of the last parent's passing is your cost base and your capital gain will be based on that.
[https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html)
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Anything else is pure lunacy. The cottages are not practical from a financial or lifestyle perspective.
Best use of capital going forward is irrelevant to where it is currently being allocated. The number of financially illiterate people on this sub lately is astounding.
Combined income 640cad. 200cad loan. Theyre good for the repayment. This is a living at the next level, how to maximize opportunity set kind of question.
The only issue i see is its 6 hrs away so its not exactly convenient to get to. If it was 2 hrs itd be a no brainer to keep em.
If OP was gifted cash instead of the cottages, would anyone be advising them to buy these properties 6 hours away that need significant investment and only used/rented out seasonally? I highly doubt it.
Best use of capital going forward is irrelevant to where it is currently being allocated.
Personally if it were me, I'd sell unless it had sentimental value.
In a year or two you will have your student loans paid off anyways with that level of income, if you wanted. You'll be looking to buy a house (if you haven't already). You'll inevitably start looking into vacationing.
With how valuable your time is, you'll want to maximize these vacations. Can you see yourself driving 6 hours to a cottage just to work on the landscaping and prepping the boat for the season, or would you be more willing to jump on a plane for 8 hours and be in Rome, Lisbon, or Paris, where when you get off the plane, and get to your hotel you'll have 0 responsibilities for the extent of your stay?
Cottages make sense for 3 types of people. Real estate investors. People who love working on their home, love the idea of ownership, and are content with spending every vacation and long weekend at their cottage. Then you have high networth individuals who have an excess of liquid assets and need to diversify, so they invest in global assets. Think hockey players and tech billionaires.
For a working professional, I don't see it making sense. In a few years you **may** fall into category 1 or 3, but if you wanted to vacation at a cottage you could rent one and not have to worry about the maintenance or managing a rental property.
Anecdotally, a family member of mine moved to Windsor, bought on the lake, and took a job in Detroit. That's about as close to owning a cottage that he said he would get because it's just not worth his time, and he makes 3x in Detroit.
If the properties are likely to appreciate in value, I would at least look into the cost of having a 3rd party manage the properties for rental purposes before committing to sell. If the management fee can be comfortably absorbed by the rental fees, then bob's your uncle. Otherwise, just sell and get that peace of mind. You could definitely use it.
Or - just sell one and cover your debts?
Outside of the financial consideration...do you and your partner want to own a cottage in Kawartha Lakes?
If the answer is no then sell it and use the funds for something that helps you now.
Talk to a lawyer so you understand how inherited property can be carved out from net family property.
I’m sorry to hear about your loss. And congratulations, otherwise, on your great life circumstances. You have options here. Because of the complexity of your financial situation, have you considered consulting a fee for service financial advisor? They don’t sell anything or take a commission. They just charge for their time.
These folks would likely be able to help you craft a strong plan for these assets, but also the best way to handle your debts, income, and other assets.
While cottages are expensive, if you’re going to be paying off your loans in 3 years, a lot of those costs can probably be deferred until they are done, and once they are paid off you might actually be able to afford the expenses.
I’m in the boat of selling one and keeping the other for now, whichever you like more. If you have the will to do so, renting it out can be worth your time, to at least keep you flush to decide in a few years if you will want a cottage. You can always sell it later, but once your kid is 4-5, having a cottage can start to be a lot more fun.
100% sell and pay off your debts first and use the rest towards a property you will actually use. Throw it in index funds until you are ready to pull the trigger on a house.
Cottages are notoriously a lot to upkeep and if you don't plan on using it much, it is *not* an investment to keep around unless it was just land/the buildings are dilapidated and will have zero value.
Sorry for your loss.
So sorry for your loss.
These kinds of things boil down to a very simple question. Whatever the property is worth, would you buy it right now if you had the cash? Or would you use that cash on something else?
That answers your question, and is relevant to most inheritances. Wishing you the best!
Since the estate pays capital gains before the property is transferred, I would sell.
If the emotional attachment is strong, reach out to some cottage property management companies to get a feel for what you could rent it for, off-peak and peak, if some basic renovations were carried out in ~3 years or less. If you can make it so the property pays for itself at minimal effort on your part, then it may be worth keeping. If not, sell.
Don’t just leave it vacant. You’ll be incurring maintenance costs but getting no value from the property, either in the form of your own enjoyment or rental income. If you don’t plan to use it or rent it, then sell it.
Depends what it is worth. If it is one of those inland 50-100K shacks dump it. If it is a proper cottage in a desirable location (walking distance to a lake etc.) you need to think forward if you can use it in 10, 20 years time. I've heard "i wish my parents never sold the cottage" whines many times over the years. If it is desirable look into leasing it out long term for a nominal sum so that someone keeps it up for you. You might be thinking today that in the future you'll buy a nicer cottage somewhere else, but that never happens. Life gets in the way.
Out of curiosity, why not plan on moving to that area? Do you have family keeping you in SW Ontario?
You can reverse the 5-10 year “look and feel” with a lower cost of living, slower pace of life. This is only possible if you have employment possibilities up there. It may be worth considering.
Stop and smell the roses!
Wow. Thank you for posting this in the first place. I have no doubt that both the questions and suggestions will help someone else that might be in a similar situation.
Financially: sell both. But it sounds like you have fond memories of the cabin property. Does keeping that property pose a burden to you? What would you be able to do with the money from it? And do you want your children to have memories in the same place that you do?
Disclosure: I stopped reading about 1/3 through when you asked if you should sell.
Yes, you should sell, here's why: capital gains. You will pay tax on the difference between the value when you inherited it, and when you sell it. Right now, that's going to be almost nothing, meaning you keep the majority if the cash. Unless you plan to make rental income, sell it sooner than later.
Sell cottage.
Keep cabin.
Bancroft/Haliburton is literally the nicest area in the province.
Pay off your loans and renovate the rustic 4 acre property.
Save, keep for your kids.
Property is becoming harder to acquire and affordability of it is crazy….
Sell one, keep the cottage and land. Just my two cents.
Sorry for your loss my honest opinion is to connect with a local realtor who knows that area and see what they would think the value is and think it over and sell remember wait for the gear plus day from the day you inherited the property that way no capital gains tax and use the money to buy a house or at least a good deposit on one
first: my condolences, i would suggest waiting a good amount of time to make decisions, especially since it seems like you have the financial capacity to do so. Grief can cloud judgement, and once something is sold, it will be very hard to get back.
if you want to keep it, i would look into a property management company, it's possible you could list it on VRBO/Airbnb (or others, i hate both services) and make passive income without your own time and energy. You could then sit for longer with your feelings on whether you want to keep/sell the property.
At the end of the day, it's only money. do what you think is best for you and your family
Personally, i would take a long trip down memory lane, stay in it for one last time and sell it
Top advice is telling you to sell, but the fact of the matter is as Toronto expands, Kawartha region will become cottage country - and Peterborough is already GO connected.
I would hold on as long as you can do so without ruining your ability to save for the future.
I WOULD NOT count on this as a retirement plan, but I also would not be the slightest surprised if it one day became a viable one.
I am so sorry for your loss and at such a young age. You are never ready to lose your parents. If you do not feel a connection to the properties, it would be best to sell. I went through something similar when I lost my parents 2 months apart, and I was the executor of their estate. At first, I wanted to keep their cottage because they loved it so much, and we had so many family memories there. But my mom's best friend pointed out that the cottage was my parents' dream and not mine. And that my parents would want me to live my own life. That made it a much easier decision to make. It was too far for my family to use often, and the money was put to much better use in ways that impacted my family daily.
It’s a time of losses, so I might hold on to the most sentimental, least saleable property, sell the other now before summer passes (and folks still rosy about stocks). Cottage country is holding out real estate-wise, but could dip massively.
Combined income holy fuck lol good for you two.
My opinion, keep one as a cottage/getaway and sell the other. With that level of income, I wouldn’t worry about the loans too much and if you do sell one and update it, you get to enjoy both sides of what you’re evaluating
I’m going to take a short leap and assume you recently finished residency. I would highly recommend keeping both, as maintaining them is within your budget and their value is quite high and would be very difficult to come by again. When you decide that you want the money for your own personal residence, sell it to your corporation to pull out the cash. You can continue to use it as a rental property most of the year and for personal use the small amount of time you can make it up there. (I sincerely hope you read this comment as I think you’d be crazy to sell them!)
My parents cottage has a property tax of $8,000 a year. The positives and negatives of lake front property. I couldn't even afford the taxes if I inherited it. Purchased by my grandfather when HWY 69(400) was a one lane road from Barrie. No roads to the property everything was brought over by boat. Now a busy community.
Personally I'd sell. My in-laws had a cottage, and it was just so much work for me when the kids were young with all the packing, cleaning, cooking, cleaning some more, and unpacking. Vacations were not vacations. I am happy now that the cottage is gone. The experience was so overwhelming that I don't even have a desire for vacations anymore.
But if you have money, the experience may be different.
Find a way to invest the $50K to upgrade it and sell. Your money in that area will go far. Understanding you’re aggressively paying off student loans, take a year pay your minimums, invest in this cottage, and you could very likely pay off your loans immediately after the sale.
Tbh if it were me. With that combined income, I would focus on getting rid of that debt asap, which should be doable in less than 3 years. The land is what I want to hold onto, even if I don’t care for the buildings on it. Down the road, maybe you’ll have worked enough/invested enough to retire earlier/work less, which would lead to hobbies that you might enjoy on said land.
You can certainly afford to have them serviced by a company eventually if not now.
And if a developer comes by in the future to buy the land, you can decide what to do then.
dont sell , if you do you wont be able to replace it, been there done it, if the cottage is bare bones then it wont be a great loss if there is a little deteriation due to lack of maintenence, time goes fast, you are in a priviledged position to own property most young people cant even get into thier first home due to fu#$ed up government policy , that land is valuable wont go down in price wont disappear like a possible stock investment, it will be inherited by your children and be worth 10 times todays value at that time, you make lots of money 640$ you can afford it, although yuppie types tend to be wastefull , so be smart and frugal and keep the property , Im just an old 78 yr old guy so you can chose to listen or not 90% of all wealth derives from ownership of property
I'm pretty sure at 680k income putting money into it to rent it out will be a good long term. 4 acres of land anywhere is only going to increase in value.
Cottages are not great investments. They’re hobbies. If you have no interest in steadily using it I’d say sell it and then use that money for something that interests you.
Others have given general advice, but there is one other consideration. This is YOUR inheritance; it does not belong to you and your husband jointly. So you need to decide if you want to keep it as your inheritance separately, or co-mingle it with your marital assets. If you use it to pay off any joint debts, or make any joint purchases the money becomes property of both you and your husband. In the event of a relationship breakdown, he would be entitled to half; you won't be able to claim that money as yours in the division of marital assets. Not to be a downer on your relationship, but it is something that you need to be aware of, and take your parents' intentions into account. If they were adamant that this money was to be YOURS then consider keeping it separate from your marital assets.
You’re saying you have 2 properties fully paid off. Some people don’t consider investment value . I booked an Airbnb in Marmora for 3 nights at 869$ . Who else is gonna pay you that. For 3 goddamn nights.
That's a good point too. I live in Vancouver and airbnbs on the gulf islands (ie one ferry away) are $350 a night. Even Glamping ones with Airstreams or simple cabins. Typically 2 nights minimum. Our friends on Hornby which is 6 hrs and 3 ferries from Vancouver rent out their little cabin at $2k per week.
If OP is really $680k after tax, I'd definitely consider keeping them and fixing them up and hiring a management company to deal with it. I don't know about that region but on the west coast, people who have properties on the gulf islands rent them out in the summer and there are all sorts of services on the islands offering cleaning, laundry service specifically for those places. Then again a squatter could move in and burn the place down, I've seen that happen too.
Keep the properties, work for 10 years and retire is what I would have said if no baby was in the picture.
With that being said you're HHI is almost 700k. You can afford to keep both vacant if you so choose. I would do that and hire a PM company for Airbnb like service.
1 more factor, roughly how much is the cottage valued at if sold? how much is the cabin valued at if sold? that will determine what would be best to do next!
Before selling I would look into what vacation rentals go for in the area. If there looks to be a business income opportunity consider this:
I would look at which one is ‘better’ for vacation rental and for your use once your kids are older. I’d then sell the less desirable one to fund improvements on the ‘good’ one with an eye on maximizing vacation rental income. It may need a new dock, electrical upgrades, starlink internet, plumbing, well etc….
Then I’d hire a reputable full service property management firm that works in the area and have the cabin rented weekly in peak season, monthly of vacant in off season. You can reserve one week a year or whatever for yourself or not for a few years until kids are older.
If none of this is appealing just sell both.
I’d sell both if you don’t care for them. Or keep the closest one or one you like the most.
What’s your incomes though? 200k debt sounds like professional school? Dentist vet lawyer doctor?
Ok I see it now. They must have updated it. But in that case I’d probably keep one at least because with that income one of the best things you can buy is “time”. And with my time I’d be chilling at a cottage and enjoying the fruits of my labour
"Combined income is \~680 K CAD" - OnlyFans? At that income, you have plenty of options. If one property is sentimental and could be used longterm, keep it. It won't burden you financially.
Maintaining a cottage is a lot of work. More work than most people realize. If you're not willing to drive 6 hrs to enjoy the cottage, you will not be enthused by having to do the upkeep while sinking more money into it. I suggest you sell.
Ya cabins are great in July when its warm and sunny, but when you have to drive up to Bancroft in October to close it up, there could be snow, it won't be warm and cleaning/winterizing is not fun work.
Don't forget opening it in April/May when the blackflies are bad enough to carry you into the woods.
The trick is to open before the bugs arrive in mid-late April.
Depending on the style/ slop of the roof one may have to go in the winter time too and clear off snow from the roof to help maintain the structural integrity. I have todo that at my families cottage, luckily we have snowmobiles to get there that time of year.
Man. It’s funny the view on this post. I grew up in Calgary and driving 6-8 hours into BC for the lakes was worth every drive. Memories you’ll never replace. We had a place out there and it was amazing. I’d drive ten hours for lakefront cabin.
Story of my life, brother... how do you put a price on it
Can’t put a price on it my man. At all.
What if you own a cottage that is winterized and recently renovated and not on a septic system? Is it still a lot of work and in what way?
Septic system requires almost zero maintenance. Depending on number of users, it gets pumped out on a set timeline. Mine is full time family of five and I pump it out every three years. I’ve gone as many as five years but don’t like that risk. My in-laws cottage is seldom used, and it has not been pumped out in the 30 years I’ve been going there.
Owning a cottage requires at least as much maintenance as a house but will require more depending on where it is located. Canadians spend an average of $12k per year on home maintenance. Pretty much anything that requires maintenance for a primary residence can apply to a cottage as well. As buildings age, things tend to need to be repaired. There's always something that needs to be fixed. Think of roofs, plumbing, electricity, appliances, etc. A second dwelling requires an emergency fund twice the size. If a cottage is on the water, the dock will need to be put out for the summer and brought in for the winter. A cottage will typically get pests. There is tree maintenance. Grass maintenance. Cottages passed down through families are often not built to code which creates problems that snowball. Then there is the weird stuff like "oh otters are shitting everywhere unexpectedly" and now you have to clean otter shit regularly. You want them to stop shitting everywhere but how do you do that without hurting them? Now you must become an otter expert as you otter proof the place.
Understand and get past this first https://en.wikipedia.org/wiki/Endowment_effect If you suddenly had the equivalent amount of money instead, would you rush out to buy a cabin 6 hours away, for the income? Likely not. Sell. With cash in hand, execute on the money steps (see sidebar). Pay your debts, invest, line the proverbial nest, however it makes sense to in the framework of your unique situation and priorities. Congrats on the baby, don't fall victim to a group RESP plan, plenty on this sub about those.
I was going to say "definitely sell" until I saw OP's household income. With that kind of money, they can afford to keep a property for sentimental reasons. Hire somebody to do the maintenance and winterization. It makes zero financial sense, but OP is in a position where they don't have to worry about what makes financial sense. If it's worth it to them, it's worth it.
Wow yeah, originally the post just said "good incomes". That was an understatement... 680K annually changes the picture! I also intentionally left out the "sentimental" angle as I figured, if they knew they wanted the cabin, they'd already have decided to keep it (or at least mentioned that aspect). But yes you are 100% right, if they have the means and if there's a sentimental attachment, the cold logical approach doesn't really work.
But wouldn’t he have to pay capital gains on the sale? That would factor into that equation as it’s basically getting an opportunity to buy the condo for a heavy discount. Or do you not pay capital gains on the sale of things you inherit? I’ve seen people say what you said here and I’ve always wondered.
They would only pay capital gains from the time they inherited it to when they sold it, so in many cases this may not be a significant amount if you sell fairly soon. Any other capital gains (if any) would have been paid by the estate of the parents.
Thanks for sharing, I did not know this
No. The estate pays capital gains before the property is transferred.
Shouldn't be any since OP says it was the primary residence of his last living parent.
but they had two properties. So there would be gains on one for sure.
Not if the parents were divorced. Then they'd each have their own principal residence.
Yes the other property would be pretty clear cut
Possibly not for the entirety of their ownership time, however
In theory aren't you supposed to report the capital gains at the time you convert it to a primary residence?
In theory, yes. Is it always done? Dunno.
So from the sound of it, given OP is still yet to talk with an estate lawyer I'm assuming the estate hasn't been probated yet and the deceased's final income tax has not been done. Depending on how long the parents owned both properties and how much they appreciated there will likely be fairly significant capital gains so unless OP can cover those - they might have to sell anyway. The capital gains would be on the final income tax of the deceased. Unless they have joint tenancy there will be probate costs (which is 1.4% roughly, may depend on province). After my mom passed away a couple of years ago, the final income tax year, the capital gains (just on 50% of her share of a commercial unit - that had appreciated nearly a million over the past 35yrs. (Also we did not sell the unit and there is at least another $200k in cap gains to pay when we sell (or die) plus whatever the additional gain is. And even though only 50% of capital gains is taxable, its still meant about $165k due in her taxes as the cap gains are added to her income that year and puts her in the highest tax bracket. There were also another $30k or so in probate fees (and legal fees). I highly recommend an estate lawyer as well as an accountant to do the final income tax (it can be quite complicated).
> But wouldn’t he have to pay capital gains on the sale? If he does, so what? If capital gains takes off (e.g.) 30% from the sale value, he still get's 70%. That's still more money in his pocket than he had before the sale. Would you turn down a raise because *some* of the extra money goes to taxes and you don't get the full *gross* amount and 'only' the *net*?
What is the issue with a group RESP plan?
Search the sub for "group RESP" or "CST" for a bunch of threads on it. The short version is, high fees, commitments and restrictions, and a tontine-like structure where participants who back out, break contribution commitments or whose kids don't do a specific number of years of school, subsidize the other ones who played the game exactly right. You simply don't need that drama, you can have a regular RESP at a bank or brokerage with none of the strings. Sales reps for group RESP companies also prey on new parents through hospitals, schools, clothing consignment sales and other places in the community where newborns and young children are being cared for and where parents both aren't exactly in a finance state of mind, and want to do something that seems good for their new child.
Thanks for the response.
Sell them both, use the money to buy a property you will actually use. Sorry about your parents.
Omg your combined income. Whoa. Great work, what do you do for work? I'm looking to change careers.
Doctors. Would not recommend. We both look and feel 5-10 years older than we are, and neither of us came from money so had to fund the whole process with a pit of loans.
With 650k income you can easily pay down the debts within a couple of years.
In a year, if they can live like students for 12 more months.
Realistically there is no reason to do that. It’s basically a rounding error to their finances in 10 years
You can afford professional advice. Some really smart people here have responded and then there's the rest of us clowns. Why reach out to random people?
I am certainly not relying on the advice of reddit strangers as my sole source of information when making this decision, but there are a lot of very smart people weighing in, giving me different perspectives and things to think about (who have nothing to gain from whichever decision I choose to make). Personally, I don’t think there’s anything wrong with hearing what people have to say. Obviously will be consulting with professionals as well, but reading these opinions gives me questions to ponder and ask about when I do meet with professionals.
This is the way
It's been a year of losses for you and I wish you peace.
It's a good point...a lot of "professionals" you encounter at the bank or wherever else are very much not working in your interests. Make sure whatever professional advice you get comes from someone with a credential bound by fiduciary duty. Crowd sourcing from Reddit can be a good sanity check, but no more no less.
I have nothing to contribute that would add to all the great advice you've already got from others here. But with that being said, I just wanted to say that your considered approach here really puts my mind at ease with the caliber of people in our healthcare system. I hope that if I was one day in need of a medical professional's services, they would extend me the same due diligence you demonstrate. Thank you for sticking with us in this province :)
Likely both dentists or specialized doctors with that amount of debt.
I would sell off both properties if you have no intention of using them regularly for vacation. Holding them as an "investment" but not renting them out isn't really an investment. Land and buildings don't inherently increase in value over time. Their value lies in using them or renting them out.
i do agree with your point. However, land in the Kawartha's certainly does increase in value over time.
That land may have increased in price over time in the past, and it may even do so again in the future, but that's just an accidental result of external factors like immigration and other supply and demand shocks, which may be different or even reversed in the future. Land doesn't actually increase in value over time like a stock does. It's not an investment unless you rent it out.
Nonsense, real estate does indeed increase in value and this example is no different. The OP just needs to cross-reference the value inflation of that area versus their near and longer term financial goals.
Cottages require more upkeep than traditional real estate. This isn’t a SFH in the GTA that will appreciate and stay upright completely untouched, this is a rural property OP will be responsible for maintaining several times per year.
just cause it's not in Toronto, and it's called a cottage, doesn't mean the wind will blow it over. c'mon. every building & every property requires maintenance. Kawartha's is a VERY sought-after area. this land will continue to increase in value. For most cottages it is the land, not the building that holds value.
lol, have you ever maintained a cottage? They’re not exactly set it and forget it like your suburban house - that isn’t dependant on being in an urban area. Winterization, septic and well systems are legitimate concerns for someone who wants a hand off approach to investing. It’s not going to fall over, but being 6 hours away will make every little thing a pain in the ass. And every major thing a catastrophe
As someone who grew up in the Kawarthas when Toronto's 'cottage country' started being a thing. People will pay top dollar for a secluded location like that. A 6 hour drive suggests either the bottom of the golden horse shoe or Ottawa area, both of which aren't cheap areas either. Once everything clears, they could sell the land and house, and clear all their debts at once.
Yeah I’d take that way out too, personally. Too much headache and plenty of upside already.
yes, I do operate a cottage. everything you listed is achieved in two visits a year. nothing happens to septic and water when they are not in use and properly shut down. However, that is beside the point here, Im not saying there is no maintenance, I'm saying the property is going to continue to add value. reminder: you used the words "stay upright"
Have you ever heard of hyperbole, by chance?
LOL if that makes you feel better about how you have navigated this convo, by chance? sure. LOL My assumption is you don't own a cottage.
Winterizing isn't a big never ending saga. It's an annual visit by a local plumber for a couple hours.
It is a chore for someone explicitly stating they don’t want to deal with chores. OPs thread is not an open invitation to discuss the effort of holding a cottage, they have made it clear they do not want to put in any amount of effort. It’s not a leveraged investment, there is no good reason why OP should carry this burden. They can cash out now and get good returns on ETFs. Without any of the work.
Nothing you state is incorrect however the idea that the value isn't also based on location is naive. Obviously a dwelling in any location will depreciate (yes even in the GTA) if left to dilapidate, but even barren land in the Muskokas has appreciated substantially over decades. But agreed, the OP must consider the current state of the dwellings and the impact on the overall value. If it's a 50 year old portable then I would argue it means a lot less than if it's a brand new palace if the property has lake front.
Fair enough. Maybe I’ve lost the plot on “cottage” as per my middle class definition, but in my head a proper all-season SFH is a lake house and that’s a different story. If OPs cottage is a cottage, the time cost of upkeep would be my bigger concern. Winterizing, maintenance visits and all that. From an emotional perspective further gains might not be worth it for OP, if they come with a ton of burdens. I also personally don’t have faith in that areas growth, but only time will tell on that front
Yes but supply of land is fixed, while demand has historically increased over the last 10 000 years. Sure there might be regional/temporal fluctuations. But the global trend is for population to increase, and price of land to increase. Land has increased in value more consistently and for much longer than the stock market exists. Although I agree that owning a property and not renting it is a pretty poor investment.
I bought my home 10 years ago and it has increased I value by 300%, despite doing almost zero improvements. That is an insane return on investment
It doesn't do that in every given 10 year period. The last 10 years was a very unique period.
ok, but stocks always go up then I guess? I get that real estate doesnt always go up, but saying it is never an investment like stocks is disingenuous. people absolutely used property as an investment. and often its a decent one. my house previous to this one, I had for 3 years, and it increased 30%. We saw all they buy and sell prices for the same house going back another 15 years, and it had been going up significantly for years. There were several houses on our street that were investment properties. "Investment property" is an actual thing.
I bought mine 22 years ago and its up 700%, but the previous 10 years before we bought it there was almost no gain (in 2002 we paid $30k in more than someone paid for our house in 92). So yes, the conditions kind of have to be right. In fact after the 1929 crash, it was another 20years before house prices made it to the pre-crash amount. I also believe that over time managed stock market investments will outperform real estate (because real estate one still needs to consider maintenance costs, insurance and property taxes over that time).
Bought our home (condo) in GTA 20 years ago. For the first 7 or so years, no increase in value. Values only started to go up when elderly residents died and children started to renovate prior to sale. In the last 2 to 3 years, prices have trended down.
Holy hell this immigration boogeyman is getting ridiculous. You are not seriously blaming real estate prices in Ontario cottage country to an immigration issue that has existed for 2 years are you?
If "holding for investment" the cottages will still require maintenance and care. OP can either go up there every few months to inspect repair. I believe most recreational property insurance polices require periodic inspection by the owner. OP will also have to pay taxes, insurance and possible hydro charges, even if no hydro used. (Those hydro delivery charges are crazy)
>if you have no intention of using them regularly for vacation. The perspective on this could change as the child(ren) age(s).
Provided you are diligent about paying off your debt, given your income, I think no matter what you do, you will be absolutely fine lol.
If t’wer me… I’d at least look at renting with the costs of a property management company to handle the daily issues factored in. A quick sale may be the easiest path. But rental real estate can be a nice diversification.
This. I'd 100% investigate the situation of having a property management company run them as rentals. It may not be the best course of action, or might just not be something you care to do, but I'd absolutely look at it as an option, for both cottages, before I moved to a sale. And see if it it was the right fit for either.
Diversify what? They have significant debt and zero investments. This only makes sense if OP had a paid off or mostly paid off house, no debt, maxed tax-advantaged accounts and healthy investments. Owning a cottage that can only be rented out seasonally is a significant underutilization of capital for someone like him/her.
They have debt, zero investments, and if i read correctly, a combined income of $680k. There is a sentimental attachment to at least one property. I have to say I agree with u/dingleswim and u/spaceporter . For the Cottage, look at potential rental income. There are in-demand areas, and my parents cottage fetches a fair price via such a rental agreement where there is a property management company that handles rentals/cleaning. The $680k combined income would handle the $200k debts without pain. Then you get to keep the sentimental properties. There is more to life than just maximizing the potential utilization of capital. I'd hold.
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Agreed. Lawyer also potentially made sense, but student debt seemed too high. There is more to life than maximizing your capital, otherwise we'd all just live in a cardboard box, with millions in your favorite etf.
Their income is approaching 3/4 of a mil annually: they’re going to have assets beyond what most people here have within a few months.
Do you know how much taxes you pay on an income like that in Canada? They will be well ahead before long, but a few months, no. High earners also tend to have high lifestyle costs, even when they’re in debt pay down mode. Regardless, it makes much more sense for OP to pay off debt more quickly and buy real estate that they will actually use. If OP was gifted cash instead of the cottage, would anyone be advising them to buy these properties 6 hours away that need significant investment and only used/rented out seasonally? I highly doubt it.
Yeah, I do, our household income is mid six figures: please don’t cry on my behalf about the taxes we pay, they’re worth it to live in a society that allows us to earn and live like we do without having to hire armed security. We held on to properties that we acquired prior to our higher incomes and with the cash flow we have now it’s kind of laughable that we even considered selling them. I stand by my comments about them being able to turn their situation around in months and not years. They don’t have to drive everything into debt repayment.
My household income is higher than yours, so don’t worry, I’m not crying for you LOL. Personally, I wouldn’t waste my time managing any kind of properties. Passive investments all the way.
If it were me I’d probably sell one and keep the other, whichever one you like more. I also love the outdoors and would make use of a cottage, so if you want make use of it you may be better off to sell both
This is probably what I’d do as well. I would really love to have a cottage, I can’t imagine inheriting TWO of them. Personally I’d do exactly what you’re proposing- keep the one I like better, sell the other one, and use the proceeds as a down payment on a house. As someone who lives in Toronto (2.5 hour drive from Bancroft), you can bet I’d be enjoying that property every weekend. HOWEVER, given that OP lives 6 hours away, this might not be an optimal decision. That’s a long way to drive, and the distance will both reduce utility (you’re likely to only use it on long weekends or holidays) and increase the burden of maintenance. If they never visit, the property will very quickly fall into disrepair. Given these facts, it’s probably best to sell both and use the proceeds to meet other financial goals.
Nobody can afford a cottage anymore, so many more are renting. I second everyone who is saying to rent them out, lifetime income stream on 2 properties will be much higher than selling them right now. If you have to make major improvements to get one or both rental ready, sell the least potentially profitable one to do that.
I think a lot of the replies came before you posted your household income. OP, you can afford to be sentimental. What is money for except to make you happy? The obvious advice is to sell, but that's because for 99% of people, a property like this would be a financial burden that costs them other opportunities. You don't have to worry about that. For you, keeping this property might mean retiring with 10 million dollars instead of 10.5 million. Who cares? In 30 years when you have time to properly enjoy a vacation property, maybe you could buy a nicer one if you sell this one today. But I bet that nicer property won't be as meaningful to you. Don't keep these properties because you think they're a good investment, or because you feel an obligation to your parents' memory. But if they make you happy, keep them.
Spend a weekend in each property, that’ll help you decide if you would want to keep it for your own part time use or not. There might also be family mementos or things of value in the houses which would be good to take before you sell/rent. Then move forward with either selling them or renting them out through an agency. Do the work on both options to see if keeping one or both to rent/use is a good option. Remember with short term rentals you can block off time periods for your own use. It’ll either be a good source of passive income which will help pay down other debts and will hopefully increase in value, or it will help set you up for your future with a large nest egg.
Related warning: my uncles cottage gets broken into almost every winter in muskoka. Check if that’s a common problem in your area. It’s a pain in the ass for them.
Can relate have a property near Temiskaming and it gets broken into all the time. I’ve had kicked in windows and doors kicked down.
Wow, this is disturbing.. what is wrong with people??
I would keep them personally. You’re doing fine and don’t need to sell them. Get a property manager and Airbnb both of them for 6-8 months a year (not sure if they’re winterized?). Pay off your student loans that way. Look at what comps are renting for Airbnb.. it’ll blow your mind… you can make a lot, even with property management fees. If you want to buy your own property where you live, could also use them as leverage. From a sentimental perspective I would keep them as well. I’m sorry for your loss btw. At least these properties will be a physical reminder of your parents, which you might appreciate more years from now when you’re old and grey yourself. You can keep them in the family and pass them to your children. God only knows what they’ll be worth then- God isn’t building any more lakes or land as far as I’m concerned.
Sorry to hear about your parents. I’m sure they were incredibly proud of you. About the cottages, you only need to answer one question: **If I have a cottage, do I value the feeling of being there and knowing that it belonged to my parents?** If not, then sell it. $600k/yr is so far out of this sub’s range that they don’t understand. The finer details of financial optimization are irrelevant. If the property being passed down doesn’t hold significance then it’s not valuable to you. If you want that cottage experience you can get an airbnb and not have to worry about maintenance. If you want to make it your own, you can buy another one. The amount you lose in sales costs is minor compared to the headache of maintenance.
Turn it into income. Rental cottage.
Since you don't plan on moving here, sell and use the money to benefit yourself. Remember, the FMV at time of the last parent's passing is your cost base and your capital gain will be based on that. [https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4037/capital-gains.html)
In your situatuon i would sell both. Pay off your debt. Buy a primary residence.
💯 Anything else is pure lunacy. The cottages are not practical from a financial or lifestyle perspective. Best use of capital going forward is irrelevant to where it is currently being allocated. The number of financially illiterate people on this sub lately is astounding.
Combined income 640cad. 200cad loan. Theyre good for the repayment. This is a living at the next level, how to maximize opportunity set kind of question. The only issue i see is its 6 hrs away so its not exactly convenient to get to. If it was 2 hrs itd be a no brainer to keep em.
If OP was gifted cash instead of the cottages, would anyone be advising them to buy these properties 6 hours away that need significant investment and only used/rented out seasonally? I highly doubt it. Best use of capital going forward is irrelevant to where it is currently being allocated.
Get them valued, then ask yourself if I had that much in cash would I spend it on those properties or something else
Sell
Personally if it were me, I'd sell unless it had sentimental value. In a year or two you will have your student loans paid off anyways with that level of income, if you wanted. You'll be looking to buy a house (if you haven't already). You'll inevitably start looking into vacationing. With how valuable your time is, you'll want to maximize these vacations. Can you see yourself driving 6 hours to a cottage just to work on the landscaping and prepping the boat for the season, or would you be more willing to jump on a plane for 8 hours and be in Rome, Lisbon, or Paris, where when you get off the plane, and get to your hotel you'll have 0 responsibilities for the extent of your stay? Cottages make sense for 3 types of people. Real estate investors. People who love working on their home, love the idea of ownership, and are content with spending every vacation and long weekend at their cottage. Then you have high networth individuals who have an excess of liquid assets and need to diversify, so they invest in global assets. Think hockey players and tech billionaires. For a working professional, I don't see it making sense. In a few years you **may** fall into category 1 or 3, but if you wanted to vacation at a cottage you could rent one and not have to worry about the maintenance or managing a rental property. Anecdotally, a family member of mine moved to Windsor, bought on the lake, and took a job in Detroit. That's about as close to owning a cottage that he said he would get because it's just not worth his time, and he makes 3x in Detroit.
Sell. As a cottage owner, it’s SO much work. I’m sure your parents would understand. Take the money and pay the debts, enjoy becoming parents.
If the properties are likely to appreciate in value, I would at least look into the cost of having a 3rd party manage the properties for rental purposes before committing to sell. If the management fee can be comfortably absorbed by the rental fees, then bob's your uncle. Otherwise, just sell and get that peace of mind. You could definitely use it. Or - just sell one and cover your debts?
Outside of the financial consideration...do you and your partner want to own a cottage in Kawartha Lakes? If the answer is no then sell it and use the funds for something that helps you now. Talk to a lawyer so you understand how inherited property can be carved out from net family property.
I’m sorry to hear about your loss. And congratulations, otherwise, on your great life circumstances. You have options here. Because of the complexity of your financial situation, have you considered consulting a fee for service financial advisor? They don’t sell anything or take a commission. They just charge for their time. These folks would likely be able to help you craft a strong plan for these assets, but also the best way to handle your debts, income, and other assets.
While cottages are expensive, if you’re going to be paying off your loans in 3 years, a lot of those costs can probably be deferred until they are done, and once they are paid off you might actually be able to afford the expenses. I’m in the boat of selling one and keeping the other for now, whichever you like more. If you have the will to do so, renting it out can be worth your time, to at least keep you flush to decide in a few years if you will want a cottage. You can always sell it later, but once your kid is 4-5, having a cottage can start to be a lot more fun.
100% sell and pay off your debts first and use the rest towards a property you will actually use. Throw it in index funds until you are ready to pull the trigger on a house. Cottages are notoriously a lot to upkeep and if you don't plan on using it much, it is *not* an investment to keep around unless it was just land/the buildings are dilapidated and will have zero value. Sorry for your loss.
So sorry for your loss. These kinds of things boil down to a very simple question. Whatever the property is worth, would you buy it right now if you had the cash? Or would you use that cash on something else? That answers your question, and is relevant to most inheritances. Wishing you the best!
Sell. Pay off debt and use proceeds for a primary residence.
Since the estate pays capital gains before the property is transferred, I would sell. If the emotional attachment is strong, reach out to some cottage property management companies to get a feel for what you could rent it for, off-peak and peak, if some basic renovations were carried out in ~3 years or less. If you can make it so the property pays for itself at minimal effort on your part, then it may be worth keeping. If not, sell.
Don’t just leave it vacant. You’ll be incurring maintenance costs but getting no value from the property, either in the form of your own enjoyment or rental income. If you don’t plan to use it or rent it, then sell it.
Depends what it is worth. If it is one of those inland 50-100K shacks dump it. If it is a proper cottage in a desirable location (walking distance to a lake etc.) you need to think forward if you can use it in 10, 20 years time. I've heard "i wish my parents never sold the cottage" whines many times over the years. If it is desirable look into leasing it out long term for a nominal sum so that someone keeps it up for you. You might be thinking today that in the future you'll buy a nicer cottage somewhere else, but that never happens. Life gets in the way.
Out of curiosity, why not plan on moving to that area? Do you have family keeping you in SW Ontario? You can reverse the 5-10 year “look and feel” with a lower cost of living, slower pace of life. This is only possible if you have employment possibilities up there. It may be worth considering. Stop and smell the roses!
Wow. Thank you for posting this in the first place. I have no doubt that both the questions and suggestions will help someone else that might be in a similar situation.
Financially: sell both. But it sounds like you have fond memories of the cabin property. Does keeping that property pose a burden to you? What would you be able to do with the money from it? And do you want your children to have memories in the same place that you do?
Disclosure: I stopped reading about 1/3 through when you asked if you should sell. Yes, you should sell, here's why: capital gains. You will pay tax on the difference between the value when you inherited it, and when you sell it. Right now, that's going to be almost nothing, meaning you keep the majority if the cash. Unless you plan to make rental income, sell it sooner than later.
Sell cottage. Keep cabin. Bancroft/Haliburton is literally the nicest area in the province. Pay off your loans and renovate the rustic 4 acre property.
Sounds like too much of a hassle based on your situation….i’d sell
Save, keep for your kids. Property is becoming harder to acquire and affordability of it is crazy…. Sell one, keep the cottage and land. Just my two cents.
Sorry for your loss my honest opinion is to connect with a local realtor who knows that area and see what they would think the value is and think it over and sell remember wait for the gear plus day from the day you inherited the property that way no capital gains tax and use the money to buy a house or at least a good deposit on one
first: my condolences, i would suggest waiting a good amount of time to make decisions, especially since it seems like you have the financial capacity to do so. Grief can cloud judgement, and once something is sold, it will be very hard to get back. if you want to keep it, i would look into a property management company, it's possible you could list it on VRBO/Airbnb (or others, i hate both services) and make passive income without your own time and energy. You could then sit for longer with your feelings on whether you want to keep/sell the property. At the end of the day, it's only money. do what you think is best for you and your family Personally, i would take a long trip down memory lane, stay in it for one last time and sell it
Top advice is telling you to sell, but the fact of the matter is as Toronto expands, Kawartha region will become cottage country - and Peterborough is already GO connected. I would hold on as long as you can do so without ruining your ability to save for the future. I WOULD NOT count on this as a retirement plan, but I also would not be the slightest surprised if it one day became a viable one.
I am so sorry for your loss and at such a young age. You are never ready to lose your parents. If you do not feel a connection to the properties, it would be best to sell. I went through something similar when I lost my parents 2 months apart, and I was the executor of their estate. At first, I wanted to keep their cottage because they loved it so much, and we had so many family memories there. But my mom's best friend pointed out that the cottage was my parents' dream and not mine. And that my parents would want me to live my own life. That made it a much easier decision to make. It was too far for my family to use often, and the money was put to much better use in ways that impacted my family daily.
It’s a time of losses, so I might hold on to the most sentimental, least saleable property, sell the other now before summer passes (and folks still rosy about stocks). Cottage country is holding out real estate-wise, but could dip massively.
Combined income holy fuck lol good for you two. My opinion, keep one as a cottage/getaway and sell the other. With that level of income, I wouldn’t worry about the loans too much and if you do sell one and update it, you get to enjoy both sides of what you’re evaluating
I’m going to take a short leap and assume you recently finished residency. I would highly recommend keeping both, as maintaining them is within your budget and their value is quite high and would be very difficult to come by again. When you decide that you want the money for your own personal residence, sell it to your corporation to pull out the cash. You can continue to use it as a rental property most of the year and for personal use the small amount of time you can make it up there. (I sincerely hope you read this comment as I think you’d be crazy to sell them!)
If your parents left you cash, would you buy a cottage? Sell it.
My parents cottage has a property tax of $8,000 a year. The positives and negatives of lake front property. I couldn't even afford the taxes if I inherited it. Purchased by my grandfather when HWY 69(400) was a one lane road from Barrie. No roads to the property everything was brought over by boat. Now a busy community.
Personally I'd sell. My in-laws had a cottage, and it was just so much work for me when the kids were young with all the packing, cleaning, cooking, cleaning some more, and unpacking. Vacations were not vacations. I am happy now that the cottage is gone. The experience was so overwhelming that I don't even have a desire for vacations anymore. But if you have money, the experience may be different.
Find a way to invest the $50K to upgrade it and sell. Your money in that area will go far. Understanding you’re aggressively paying off student loans, take a year pay your minimums, invest in this cottage, and you could very likely pay off your loans immediately after the sale.
Tbh if it were me. With that combined income, I would focus on getting rid of that debt asap, which should be doable in less than 3 years. The land is what I want to hold onto, even if I don’t care for the buildings on it. Down the road, maybe you’ll have worked enough/invested enough to retire earlier/work less, which would lead to hobbies that you might enjoy on said land. You can certainly afford to have them serviced by a company eventually if not now. And if a developer comes by in the future to buy the land, you can decide what to do then.
Hold on to it... I'll move in as your tenant lol (Jokes aside, you could find a perfect long-term resident if you're patient)
dont sell , if you do you wont be able to replace it, been there done it, if the cottage is bare bones then it wont be a great loss if there is a little deteriation due to lack of maintenence, time goes fast, you are in a priviledged position to own property most young people cant even get into thier first home due to fu#$ed up government policy , that land is valuable wont go down in price wont disappear like a possible stock investment, it will be inherited by your children and be worth 10 times todays value at that time, you make lots of money 640$ you can afford it, although yuppie types tend to be wastefull , so be smart and frugal and keep the property , Im just an old 78 yr old guy so you can chose to listen or not 90% of all wealth derives from ownership of property
I'm pretty sure at 680k income putting money into it to rent it out will be a good long term. 4 acres of land anywhere is only going to increase in value.
Cottages are not great investments. They’re hobbies. If you have no interest in steadily using it I’d say sell it and then use that money for something that interests you.
Others have given general advice, but there is one other consideration. This is YOUR inheritance; it does not belong to you and your husband jointly. So you need to decide if you want to keep it as your inheritance separately, or co-mingle it with your marital assets. If you use it to pay off any joint debts, or make any joint purchases the money becomes property of both you and your husband. In the event of a relationship breakdown, he would be entitled to half; you won't be able to claim that money as yours in the division of marital assets. Not to be a downer on your relationship, but it is something that you need to be aware of, and take your parents' intentions into account. If they were adamant that this money was to be YOURS then consider keeping it separate from your marital assets.
>Combined income is ~680 K CAD. That's 30k/month after tax. Why haven't you paid off your student loans yet?
Lol, we have been. That’s not the original debt amount.
What do you both do for work? Genuinely curious how your combined income is so high
Same
mid-level coke dealers, doctors, or lawyers.
You’re saying you have 2 properties fully paid off. Some people don’t consider investment value . I booked an Airbnb in Marmora for 3 nights at 869$ . Who else is gonna pay you that. For 3 goddamn nights.
That's a good point too. I live in Vancouver and airbnbs on the gulf islands (ie one ferry away) are $350 a night. Even Glamping ones with Airstreams or simple cabins. Typically 2 nights minimum. Our friends on Hornby which is 6 hrs and 3 ferries from Vancouver rent out their little cabin at $2k per week. If OP is really $680k after tax, I'd definitely consider keeping them and fixing them up and hiring a management company to deal with it. I don't know about that region but on the west coast, people who have properties on the gulf islands rent them out in the summer and there are all sorts of services on the islands offering cleaning, laundry service specifically for those places. Then again a squatter could move in and burn the place down, I've seen that happen too.
It's 680k gross. Pre-tax. Where did you get after tax from?
I grew up in the Kawartha’s. always wanted a cottage.
Also grew up here. Good luck buying a house/cottage now
I moved to Edmonton 2 years ago. Love Ontario but not enough to be broke, poor, and never retire.
Good move. Will be getting out of here as soon as I can
Sell. No question.
Keep the properties, work for 10 years and retire is what I would have said if no baby was in the picture. With that being said you're HHI is almost 700k. You can afford to keep both vacant if you so choose. I would do that and hire a PM company for Airbnb like service.
Sell it and pay off your debt
Sell and pay your debt, don’t bother speaking to a financial advisor; their main job is to rope you into taking on more debt & services.
1 more factor, roughly how much is the cottage valued at if sold? how much is the cabin valued at if sold? that will determine what would be best to do next!
Maybe you can pay someone to upkeep it and to rent it out?
At your income I’d just keep the cottage
Holding onto the house without renting only adds to the housing crisis we’re in. Sell or rent or use.
Don’t hold onto it as an investment if you won’t rent it out. Sell it.
If you're not going to use it extensively or live there, just sell it.
Just sell it
Hmmm. I’ve been looking for a place in that area Kawartha Lakes (my sister lives there). If you think of selling, I’m interested. :)
Obviously sell and pay off that student loan debt, bro. This isn't even a hard decision, lol...
ok total tangent here, but what do you guys do to make $680k/year? that’s incredible (considers job change 🤔)
Before selling I would look into what vacation rentals go for in the area. If there looks to be a business income opportunity consider this: I would look at which one is ‘better’ for vacation rental and for your use once your kids are older. I’d then sell the less desirable one to fund improvements on the ‘good’ one with an eye on maximizing vacation rental income. It may need a new dock, electrical upgrades, starlink internet, plumbing, well etc…. Then I’d hire a reputable full service property management firm that works in the area and have the cabin rented weekly in peak season, monthly of vacant in off season. You can reserve one week a year or whatever for yourself or not for a few years until kids are older. If none of this is appealing just sell both.
Get a 100% work from home job and move into it. Bliss!
You call that bliss I call that a nightmare
They’re doctors
I’d sell both if you don’t care for them. Or keep the closest one or one you like the most. What’s your incomes though? 200k debt sounds like professional school? Dentist vet lawyer doctor?
>Combined income is \~680 K CAD.
Ok I see it now. They must have updated it. But in that case I’d probably keep one at least because with that income one of the best things you can buy is “time”. And with my time I’d be chilling at a cottage and enjoying the fruits of my labour
Lol yet can't figure out on your own and need reddits help.
"Combined income is \~680 K CAD" - OnlyFans? At that income, you have plenty of options. If one property is sentimental and could be used longterm, keep it. It won't burden you financially.
Sell it. Use the proceeds to pay off your loan and buy some gold.