Is a Waterfront Cottage a Good Investment?

By: Sylvia Smith

Is a Waterfront Cottage a Good Investment?



Buying a cottage in Ontario is a dream of many.  Many of us dream of spending our summer days boating, swimming, and enjoying the tranquility and peace that being surrounded by nature can offer.  But buying a cottage is also a big decision that requires careful consideration even more so if you are considering renting it out to help with the carrying costs.

Waterfront properties are great investments as there are only so many bodies of water which means that waterfront cottages retain and increase in value over time.  People are always interested in living by the water as the benefits and quality of life are just too appealing to turn down.  

A Cottage as a Real Estate Investment – Appreciation

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Many people invest in real estate with the hopes that the cottage or home will appreciate over time.  Cottage appreciation rates will depend on location and obviously, cottages that are right by the water tend to appreciate quicker.  We have in the past year seen a huge surge in demand for waterfront properties and this trend will most likely continue particularly with improved internet services in cottage country and with increased flexibility to work from home.

A Cottage as a Real Estate Investment – Renting It Out

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Many people purchase a cottage as purely an investment or to enjoy as a family but also enjoy supplementary income to support with expenses and possibly also generate extra income.  When purchasing a cottage with the intent of renting it out there are a number of things to consider:

- Amenities:  A modern and fully equipped cottage will result in more interest and higher rents.  Most renters want to escape the city and be outdoors but they still want to have all the comforts of modern living – including high-speed internet, a fully equipped kitchen, television, etc.
- Management:  Renting out a cottage will require some effort.  You can either manage it yourself or you will need to hire a property manager to screen renters, maintain, clean, cut the lawn, plow the snow and handle repairs, etc.
- Additional Costs:  Renting out the cottage will also mean incurring some additional costs such as advertising on various platforms, websites, and social media, maintenance and repair, and of course, your insurance costs will most likely be a bit higher.  Don’t forget that the rental income needs to be declared, expenses deducted and taxes paid.
Using your cottage for your friends’ and families’ personal enjoyment is definitely worth it but being able to make a little extra money if you choose to is a great plus with cottage ownership.  Renting out cottages has become quite lucrative given the increased demand for cottage rentals.  
Buying a place in the Muskokas or Parry Sound areas can be a great investment given the popularity of these two locations.  But like any investment do your research and make wise choices to increase the return on your investment.  Make sure to consider all the options before buying so you make an informed decision.  Have questions contact us today.