We lease a spot at a provincial park for the summer and they are now selling them for around $40K for a lease of 99 years. People seem to be buying at a fast rate. We would hate to lose our spot; is this a good investment? Also, if we had to borrow, would it be better to borrow from a bank or finance the lease through the company? They are willing to finance the lease with $10K down and $5K every year until paid in full, at 8% interest. Alternatively, is it better to buy farming land and rent it out to a farmer?
Asked by Lou, Porcupine Plain, SK
Your question about whether or not this is a good investment is subjective - it really is up to you.
The points to consider in answering this question are...
What does this purchase represent for me and my family?
What value do I place on this?
Am I willing and able to pay for it?
People buying at a fast rate could be more of an indication that they see the value in it for themselves, rather than it being a good deal that they want to snap up. An investment in your sustained happiness and enjoyment in life is always a valid one, as long as you are aware of the financial implications and know that you can manage it. Eyes wide open, as the saying goes.
Regarding borrowing avenues, you would be prudent to explore opportunities with your bank and compare the cost of borrowing with what the company is offering. An interest rate of 8% on a lease may be considerably higher than what your bank may be able to offer on an equity line of credit, for example. Explore your options and give it due diligence before making any decisions.
Your alternative consideration of buying farm land and renting it out could also be a valid investment opportunity. However don't underestimate the value of investing in an opportunity that brings a lifetime of enjoyment for your family by offering a place to gather in the summer, spend time together and create long-lasting memories for generations to come.