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Does anyone have any experience with purchasing a cottage as an investment property? I admit it's seasonal and very hit or miss (depending on location and price paid) but it's a very alluring idea to have a property that you can visit on the weekends when it's not rented out, while the weeks that it is rented out in July/August go towards paying off your mortgage.
 

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I've known a couple of families that own compounds in cottage country and rent out many cottages as a business. I suspect buying a single cottage for yourself and renting it out when you're not using it would be a very poor investment.

How are you going to get the keys to and from the guests? How are you going to make sure it's clean? How are you going to respond to maintenance problems (when you're a couple hours away)? How are you going to advertise your unit? How are you going to collect payments from them? How will you manage bookings? etc, etc, etc. You obviously could hire someone near the cottage to do this sort of thing, but then that's another cost to pay (on top of maintenance, property tax, the mortgage, etc).

Even if the tenants were subsidizing your costs (I strongly doubt renters would cover all your expenses), the PITA factor would be huge.
 

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Good points raised above. It really depends on what kind of rent you can generate from a cottage. If you can get 8 weeks during the summer at $1500 to $2000 per week, plus some weekends in the lower season, you could see income in the $12,000 - $16,000 range per year. Expect property taxes of around $2000, insurance and maintenance another $2000 (perhaps higher). Then we have $8,000 - $12,000 to cover mortgage and utilities. I'm not sure what is reasonable for utilities, but let's say it's another $1000. At 6% interest, you can service $116k - $200k in mortgage debt (not including principle repayment). You're not going to get a cottage that can yield that kind of rent for less than $300k (if not higher).

So if you think you can get 12 weeks out of it in a season (booked solid from June to end of August), you might be looking at $18k to $24k in rental income, with $13k to $19k after taxes, maintenance, insurance and utilities. With that, you can service $216k to $316k in debt at 6%. So I'd say you'd need to get a good 12 weeks of rentals out of it to cover the cost of the cottage, but then you won't see much use out of it yourself, unless you come up short in terms of rent income.
 

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Yes and then there's the whole winter security issue and spring cleanup/fall shut down work. I think this scheme is going to be more WORK than it's worth.

Remember there's a lot of rhetoric out there regarding renting. Two of the famous quotes:

1. "we want renters so they pay our mortgage"
2. "don't throw your money away on renting, you are giving it away, invest in your own property instead"

Both are hogwash.

If money is what you need/want, go to work.
 

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I would look for a piece of land less than 2 hours from TO, with lake access. Build 4-6 small luxury cottages and rent for $100+ per day. Keep one for your self to watch over the place. Set up a side business providing food, booze, and boating activities to your guests. I would target the tourist industry. You would need a good web site.

Of course this is work, if you don't dealing with people then forget it. Then you option would be build a cottage and flip it, utilizing local bear power.
 

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Does anyone have any experience with purchasing a cottage as an investment property? I admit it's seasonal and very hit or miss (depending on location and price paid) but it's a very alluring idea to have a property that you can visit on the weekends when it's not rented out, while the weeks that it is rented out in July/August go towards paying off your mortgage.
Agree with Mr. Cheap. The cleaning between guests, keys, laundry for bedding will all result in you going up and doing this weekly, or hiring someone to do it.

Have you ever owned a cottage? It is alot of work. As an owner there isn't as much of relaxing putting your feet up as there is cutting grass, painting and doing maintenance.

And as per chaudi 'Build 4-6 small luxury cottages and rent for $100+ per day. Keep one for your self to watch over the place.' I am sure that you would need help selecting a lot or lots that the building inspector would even approve something like this. As a rule in cottage country they will allow 1 dwelling per lot.

If you want a cottage for personal use to enjoy. Then by all means. Even if you wanted to purchase a cottage, that is winterized, for year round use, to rent it out could be a PITA as it wouldn't be very close to check on things or do the maintenance.

And to fix a toilet, a 2 hours drive away would be an unreasonable thing for me to do with my investment $.
 

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It's probably not a great investment to buy a single cottage. However, if you want to buy a cottage anyway, then renting it out for part of the summer can certainly make it easier to pay for.

Alternatively, consider buying a partial ownership in a cottage. A friend did this and says it's pretty good. There are companies who set this up and you can buy 1/10 shares.

Or just rent.



FYI - July and Aug are the only good rental months.

My parents cottage costs about $8k/year for everything.
 

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Very bad idea. Owning a nice cottage is very expensive. I am sitting by the water at our cottage as I write this. Place is fantastic and it has really enhanced our life style but it costs us about $30k per year in basic expenses-taxes/heating/boat/insurance etc. Plus other upgrades that we felt were necessary. Owned it for about 13 years and capital appreciation has probably just kept pace with ongoing expenses over this period. This is over a very good period for capital appreciation given the baby boom generation demographics. Would never rent it-but often loan it to close friends. My view is: cottages are lifestyle decisions not investments. As such cottages are best left sans mortgage. It is difficult to rent a starter cottage for a decent amount. To get good rent you need a cottage worth in excess of $500k probably. Good cottage renters are hard to find and keep. Cottages are great-for personal use only.
 

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I would look for a piece of land less than 2 hours from TO, with lake access. Build 4-6 small luxury cottages and rent for $100+ per day. Keep one for your self to watch over the place. Set up a side business providing food, booze, and boating activities to your guests. I would target the tourist industry. You would need a good web site.

Of course this is work, if you don't dealing with people then forget it. Then you option would be build a cottage and flip it, utilizing local bear power.
Totally impractical-ever been to a cottage?
 

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If you're serious about having a place to go to relax, while generating income, then you should also consider other types of properties such as hotel rooms. These can run similar to the cost of a home, but are both maintained and managed for you.

My experience with these is that with a reasonable downpayment, it will pay for itself.

My advice, if you are interested in this path, is to begin by considering destinations relatively close to home, or somewhere near where you often visit annually.
 

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My family owns two waterfront cottages (Okanagan and Kawarthas) and we have many years of experience renting.

The one issue that no one has mentioned so far is liability. You are bringing together people operating outside their normal settings, "on vacation" (often = booze), and your boating equipment. Bad combination if you don't know the people VERY well, and your insurance will NOT cover your liability if you are renting the space, your renter has an accident and sues you(r insurance company), and you have not disclosed the commercial activity to your insurance company and purchased the appropriate (expensive) riders.

However. That said, I love cottaging and the rewards are not investment rewards for me. Here's a picture from yesterday in the Kawarthas.

 

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Place is fantastic and it has really enhanced our life style but it costs us about $30k per year in basic expenses-taxes/heating/boat/insurance etc. Plus other upgrades that we felt were necessary.
Wow. 30K (or even half that) can buy a lot of vacation. I can't agree more that a cottage sounds like a rather expensive lifestyle choice. Personally, we'd like one but probably when the kids are a bit older.
 

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Wow. 30K (or even half that) can buy a lot of vacation. I can't agree more that a cottage sounds like a rather expensive lifestyle choice. Personally, we'd like one but probably when the kids are a bit older.
Agree. Our place is pretty nice. Electricity heating costs $7k,per year, taxes also $7k, insurance $6k, boat $2k, other maintenance (mostly deck related), $3k. Really adds up. No doubt it can be done much cheaper. But they can be expensive. Having said that there is nowhere in the world we would rather be on a nice sunny summer's day. PS we travel a lot as well. About 65 days this year. Life is good.
 

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Our family had a cottage on the water for 55 years. Just 80 miles from Toronto. Many fun memories from summers there as kids. But we spent 8 weeks there in the summer (Dad came up at weekends).

When Dad died in 2000, I sold it for $200K (50 foot frontage, tear down cottage) because of the added investment needed to make it currently usable.

I was really happy we had it to get away from the city. But it was not a good investment. A lifestyle expense
 

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Investing in cottage real estate and carpentry is my retirement hobby / investment. I've got 4 on the go (in Manitoba), all waterfront. Purchase prices of the properties were $10K to $30K. I'm building cottages on 3 of them. I have'nt yet tried to sell one. Based on current market conditions 2 of them have appreciated significanty. Taxes and insurance average less than $1K/yr each. I don't rent them out, so there is no income. Here's what they look like:
http://www.dropbox.com/gallery/2116412/1/Cottages?h=031cba

Fred
 

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If you want a cheap alternative to a cottage it would by a boat, preferable 26-28ft that is trainable by your own vehicle.
You can take a boat to many different lakes launch at even find a place to anchor it in front of a marina or someones property. You can a have canoe or dinghy to get out it on weekends. Essentially mooring it for free.
You should take a sailing/boating course. You can store in some rural place with your own tailor. The next year you can try a new lake! Even in TO if you sail a boat out 5 km you'll feel like your far away.

A Boat offers some great advantages over a cottage. No neighbours, no tax, no bills, no trees to block the view (cottages can feel very dark and wet), perfect view all the time! no leaves to rake or grass to cut. You can get a heater in a boat too.

It gets down to how many days do you want to use it per year. 60 days a year @30k is $500 a day! How many days will you spend maintaining it?
 

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Wow. 30K (or even half that) can buy a lot of vacation. I can't agree more that a cottage sounds like a rather expensive lifestyle choice. Personally, we'd like one but probably when the kids are a bit older.
+1. In my books, that would be 1.5-2 months at a resort in Tahiti every year.

A cottage would be nice though. :rolleyes:
 

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Good post by chaudi. I tend to agree. We could also say the same things for the RV lifestyle. Far more economical and flexible than the cottage thing.

My main objection to the cottage is that you are basically paying two mortgages, two tax bills, always worry about security and spend your summer weekends driving and working on the property. Sorry. I work all week. In the evening and after work I want to NOT work. Owning a cottage is a serious drain on that.

A lot of people perhaps don't know that you can rent a cottage for far cheaper than owning your own and can go at will.

I actually get a lot more enjoyment out of daytripping and exploring rural towns and such, then go home at the end of the day. A lot cheaper and simpler. I think cottages are more of a status symbol than anything else.
 

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+1 Chaudi

I'm considering a yacht in place of a cottage for many of the reasons stated above.

I will likely pay for mooring at a local club, for the convenience of having the boat close to home for weeknight excursions.
 

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Boats are great, but I think you're comparing apples to oranges.

Boats are to cottages what a studio apartment is to a house.

Boats are much, much smaller - mobile, yet very confining if you are not at port.
 
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