9 Key Decisions Every Rental Owner Needs To Make

Renting out your cottage can be a thoroughly rewarding experience or it can be one you wish you’d never started.  It’s certainly not something you should go into without understanding the responsibilities and commitment that make it successful.

Bear in mind that the moment you accept money in exchange for accommodation you have become a provider to the travel industry.  It is a business, and comes with multiple responsibilities relating to hospitality, property operations and guest management.

With this in mind, getting the foundation in place is the key to making your rental businessswork and that entails making some decisions.

1 Do it yourself or go with an agency

If you have plenty of time to respond to requests for rental; multiple questions; calls, texts and emails and are OK with screening guests to make sure they are a right match for your property, then the DIY model could indeed work for you, as it does for many hospitality professionals.  Our recommendation if you got this route is to ensure you have multiple avenues for marketing – not just a listing on Airbnb.  Inside knowledge points to some upcoming changes that will impact hosts, as service fees to guests are gradually being withdrawn and replaced with a host commission charged on each booking of up to 15% of the reservation value.

A cottage rental agency may charge up to 20% commission on bookings but will handle all the communications, booking operations, guest issues that arise during their vacation, and will also screen guests to ensure a good match.  They also have a large audience of qualified guests who have booked with them before, so there is less of a risk.

2 Which agency to choose

There are many agencies in Ontario  and if you get a few out to view your place it might be tough to make a decision, as most agencies do much the same.  How do you choose?

Firstly, a difference of a point or two in commission should not be the basis to select the company that will be caring for your rental business.  I’m always reminded by this:

“The bitterness of poor quality remains long after the sweetness of low price is forgotten”

Check out this article that may help in finding the best company to manage your rentals.

3 How many weeks to rent

High season in Ontario runs from the end of June (usually the weekend before Canada Day) to the Labour Day weekend, so you’ll have 10 weeks to fill at a premium rate.  June and September are harder to fill because in a normal year supply is high and the demand is reduced due to children being back at school.  After Thanksgiving and before Victoria Day weekend a low season rate kicks in and unless you are marketing competitively in multiple locations, occupancy will be low.

You just need to look at your availability from the perspective of your business goals.  If it is to achieve maximum ROI then you should consider the consequences of taking high season weeks for your own use.  At the start, decide on what your bottom line is – the income you want to make –  and analyse what you will need to rent in order to achieve that figure.  Bear in mind, there are no guarantees of shoulder and low season occupancy while a competitively priced high season rental should fill all 10 weeks.

Taking the long weekends for personal use can also make a dent in projected revenue as renting orphaned nights may not be as easy in a market that may slump in a year or two.

4 Will you accept pets?

Here’s a simple statistic.  70% of potential cottage guests have a pet, usually a dog or two, and occasionally a cat.  Most will not consider leaving their fur babies at home so a non pet-friendly cottage is a deal breaker. 

In a seller’s market this is not much of an issue as there will be enough guest groups without pets to fill the weeks, but if you want to capture that more elusive low season market then accepting pets will bring more occupancy.  

There is a common myth that pets will bring fleas/pee on carpets and rugs/scratch doors and leave a smell.  If you look at it another way – say from a pets vs children perspective – we’ve never known a dog to eat cheetohs on a couch, post remote control down an air vent, Crayola on the walls or hide soiled diapers under a mattress (yes, this has happened).  Instead we’ve found pet owners to be generally respectful and careful and keep their pups off furniture and beds.  Of course there are exceptions but as a rule you’ll get more out of being pet-friendly.

If you are on the fence about this, don’t become a reluctant pet-friendly property. You should want your pet owning guests to feel they are welcome – not just tolerated.  Provide pet bowls, a temporary dog tag with your address on it, some old towels and a frisbee or ball. You’ll be amazed at how your kindness & hospitality will be received.

On the other hand, not accepting animals offers some appeal to people with allergic reactions to pet dander.  Just make sure you don’t ever bring your own pet to the place, or allow friends to do so as that will render your ‘pet-free zone’ invalid and could open you up to claims.

5 What to invest in for maximum occupancy

At one time cottage rental was just a step up from camping, putting a hard roof overhead and having the luxury of an indoor toilet and running water.  Now, expectations are of a pristinely presented cottage whether traditional or contemporary, stainless steel appliances, laundry facilities, big screen TVs, unlimited Wifi and beautiful beds.  In many cases these are standard assumptions for a cottage of any size.  

Beyond those standards, you’ll need to think of the additional features that will attract guests out of season as well as in the summer.  Before you do, think about your ideal guest.  For a smaller cottage that will attract couples, a hot tub or sauna would be strong attraction, while family groups in larger properties may be swung by a pool table or table tennis, and a dedicated entertainment space.

Hot tub by lake

The waterfront is a big draw of course, so look at the dock.  Could this be expanded or extended?  What watercraft can you add?  Stand up paddleboards are apppealing as are pedal boats for families. 

For renovation options, before thinking of adding more sleeping space, consider an extra bathroom, and perhaps opt for a cute bunkie before reducing  bedroom sizes by making 2 small ones out of a larger space.

6 Offering Winter Rentals

Keeping a cottage open for the Winter involves a fair bit of expense and depends on an number of factors:

  • Is the cottage designed for 4-season use?
  • Is it well-insulated and heated – preferably via oil or gas?
  • On a ploughed road with no steep inclines
  • Does it have appeal to winter travelers – proximty to ski hills, trails etc?
  • Will there be ‘boots on the ground’ to deal with winter issues?

There are a number different facets that will combine to answer the ‘shall we rent in winter’ question. Obviously, the decision is made for you if either your cottage or your road are only designed for 3-season use. The cottage must be kept at an ambient temperature at around 10 degrees Celcius or more in order to keep pipes and critical infrastructure from freezing (This may include things like liquid crystal displays on some electronics). The drive and decks must be kept cleared and plowed. This is something that has to be done every time it snows, not just when guests are expected, otherwise you will find yourself dealing with ice that cannot be moved.

Your decision comes down to whether or not you can expect your rental income to cover your costs and provide a profit. This will depend on your amenities (a hot tub or open source of heat (propane stove) are practical necessities for winter rentals).

7 Insuring for rental

You will need insurance that specifically covers rental and should look for a policy that gives at least $2M in liability cover.  If you are only planning on rental for a few weeks per year there are companies that offer a pay-as-you-rent option and will insure for rental on a nightly basis, therefore saving $$$s on an annual policy.

Some insurers will only allow a few weeks of rental per year – others are more flexible.  If you are planning on renting more than 180 days you may have to consider a commercial policy so talk to your broker.   

8 Who will be your ‘boots on the ground’?

Things happen at cottages while guests are there that need urgent attention, and if you are not in the vicinity to fix them, you’ll be in a difficult situation.  For example, let’s say after a power outage, the water pump needs a prime.  Will guests have to wait for you to drive up from your home – maybe a few hours away?  What if you are at work, or having a social event?  Or if you have to pick the kids up from school?  You now have very annoyed guests who need water, and a quick fix that isn’t going to be fixed any time soon. 

Alternatively, if you have a local handyman on retainer who will pop over and fix it within an hour or so, your guests will see it as a minor inconvenience and not a reason to demand a rebate.

This goes for cleaning too.  If there is one really great decision you make that you’ll congratulate yourself on every week in the summer, it’s the cleaning team you hire.  

9 Will you register as a business and remit HST? 

This is a discussion to have with your accountant as there are pros and cons for registering your rental property as a business. However, if it is likely you will reach the HST threshold and want to go beyond it, there is no choice but to register and be issued a business number.

Here’s some examples that describe when you cease to become a small supplier (sales under $30K) and will need to register for HST

There’s more….

There are many more decisions you need to make if you want to step into the cottage rental business with confidence and get it right from the get-go. Speak to people who are already doing it and evaluate what’s right for you. Ask an agency….most are more than happy to advise without any obligation.

We’re Here to Help

Give us a call on 1 866 323 6698 and talk to one of our rental business advisors. We’ve been doing this for 18 years and know a thing or two!