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I Want To Rent Out The Cottage – 10 Questions To Ask Your Realtor

When I bought my first Ontario cottage in 1998 I flew out from England on a buying mission and an agent took me to a dozen properties he’d decided I would want to buy. I finally settled on a cottage on a no-motor lake, after he’d told me it would never rent because of that designation. Not only did I prove him wrong there, I went on to buy 6 more river cottages (with other agents) that rented amazingly well.

I learned the hard way that a choice of buyer’s agent can make a significant difference down the line in a rental business, if they don’t know their stuff.

It’s a reasonable assumption that realtors selling in the second-home market would be familiar with rental facts.  After all they know the locations where most residences are holiday homes, so you’d naturally expect they would have at least a broad range of knowledge of the market.

This is not always the case and stories abound of people buying cottages after assurances from their agent that it woud rent for a high rate only to find that it was missing features that put it in a higher rental bracket (good waterfront for example).

Just like they tell you when going to a specialist, write down your questions before you head out on a viewing trip. This simple thing can make all the difference to your ultimate success.

  1. What is your track record as a buyer’s agent with cottage rental properties?

An experienced agent will be able to produce examples of properties with income potential that are now producing results for their owners.  They should know the numbers – average nightly rates (ANR) in different seasons, occupancy percentages, dynamic pricing variables etc.

2. How many other rental properties are there in the area?

While this doesn’t necessarily give an indication on saturation levels it will show how competitive the market is.  Although you can research this yourself on Airbnb, Vrbo Canada and Cottages in Canada, expect your agent to be able to share numbers confidently.

3. What locations are the most popular ?

Which lakes are the most desirable for rental purposes? Are people renting on the rivers? Ask for statistics to back-up any claims that one area is more desirable than another, and why this is so.  Are there specific attractions in the area that may not be obvious?

4. What are the average rental rates – what return can I expect?

Points go to the realtor that can show detailed analysis of different homes in the area – for example, a direct lakefront cottage vs deeded accesss vs water access. Rates could be significantly different for a range of property styles and locations, so unless you are looking at one particular type of cottage, expect to have the variations explained to you.

5. Does it have rental history?

Purchasing a property that is a seasoned rental can take a lot of legwork and anxiety out of the process as they will often come with several years of rental history showing occupancy, income and expenditure.  Homes like this are often offered ‘turnkey’ and with advance rentals included.  Only an agent who fully understands the industry should help you with this type of purchase as there are disadvantages as well as benefits.  They should be able to answer questions about gaps in occupancy periods, changes in rate structures and the analysis of costs.

6. Are there rental restrictions?

You’ll want to know about legislation from every level as there could be state, municipal, and homeowner association (HOA) restrictions (for condo developments).  Different communities may have widely varying rules on length of stays, occupancy, etc.  In the Oro-Medonte area, for example, there is currently an outright ban on short-term rentals, while in Huntsville a more measured approach has been taken to licensing. It is important to do your own investigations; however, expect your realtor to be knowledgeable about current and pending ordinances.

7. What taxes will I have to pay?

Expenses can add up quickly on a vacation home, so having these costs to hand will help with a final buying decision.  You should not expect a realtor to offer the type of advice an accountant will, but they should have some idea on what the outgoing costs will be.  You will be looking for the ROI on your purchase and the agent should be aware of this and provide some figures on the expenses. HST will be payable after income reaches $30K so you will need to evaluate how this would impact the businesss.

8. Who will look after the property?

Most second-home owners are remote from their properties, so finding a property management service is important.  Expect a savvy agent to have connections with full-service companies or cleaning and caretaking only options if you’ll be marketing yourself.  These services can be challenging to find in cottage country, so finding a realtor who has this information to hand is a real bonus.

9. How can I furnish it?

Vacation homes will often come fully furnished and ready for rental; however, a sale may take place at a time when upgrades are required.  Realtors who know the business and understand the types of furniture and furnishings required to meet the needs of a rental market should have connections they can share with you.  Ask about their network of suppliers and how you can tap into it.

10. Will this cottage rent in the winter?

Buying a 4-season cottage makes sense if you plan on renting to capacity. However, there are no guarantees on winter rentals, so ask your agent what activities and attractions there are in the area that would make it appealing to a winter market. What is the access like? Is 4WD necessary to get there?

The role of a buyer’s agent is to help you find the right property at the right price for the right purpose.  Finding the one who fully appreciates the purpose can make a big difference in the time it takes to purchase an income generating second home.  They will work diligently on your behalf if they know exactly what you want, and if they know the rental market in the area.

Choose wisely and it will benefit you both in terms of an ongoing relationship and the success of your investment.

CottageLINK Rental Management
Toll Free: 1-866 323 6698

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Business Address:
PO Box 39036
Columbia PO, Waterloo, ON, Canada N2T 0A7

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