Is a Waterfront Cottage a Good Investment?
Tags: COTTAGE, WATERFRONT, REAL ESTATE INVESTMENT, PARRY SOUND COTTAGES, MUSKOKA COTTAGES
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
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
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:
- - Location: If you are planning to purchase a cottage as a real estate investment – location will be a key consideration. Waterfront properties are the most popular rental properties and also keep in mind that you probably don’t want to go more than 2.5 hours from a major city.
- 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.