Real Estate

Investing in a cottage Purchase?

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  • Sep 23rd, 2020 7:32 am
[OP]
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Aug 29, 2019
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Investing in a cottage Purchase?

Hi All, How would you think about investing in a cottage purchase?

I’m looking to purchase a home, as a rental and to use periodically like a couple weeks of summer.

Normally, I‘m Aggressive on real estate, having two Rental condos in Toronto (1 completed, 1 closing in 4 years) Along with my primary residence. Considering a cottage is $1 million plus in the Muskoka region, with prices continuing to go up. Leveraging to buy such a property would make sense financially to me, Considering I know the rental demand is strong and can be used for our own enjoyment.

Any thoughts or feedback would be appreciated, OK? Any personal experiences? Or any thoughts on such decisions?
28 replies
Deal Fanatic
Mar 27, 2004
7741 posts
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Toronto
Look at the AIRBNB market in Huntsville.
2 bedrooms are easily 300 a night in and around huntsville and fairy lake ( looking at 2021 pricing for JUly August)
Not much for rent right now .


Check out the Summit in Huntsville. its preconstruction right now. Row towns and Stacked towns.
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Sep 16, 2009
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Markymark1234 wrote: Hi All, How would you think about investing in a cottage purchase?

I’m looking to purchase a home, as a rental and to use periodically like a couple weeks of summer.

Normally, I‘m Aggressive on real estate, having two Rental condos in Toronto (1 completed, 1 closing in 4 years) Along with my primary residence. Considering a cottage is $1 million plus in the Muskoka region, with prices continuing to go up. Leveraging to buy such a property would make sense financially to me, Considering I know the rental demand is strong and can be used for our own enjoyment.

Any thoughts or feedback would be appreciated, OK? Any personal experiences? Or any thoughts on such decisions?
Sounds good on paper - but how would you maintain it when not there and rent it when not there?
Sr. Member
Sep 16, 2009
685 posts
475 upvotes
oasis100 wrote: Look at the AIRBNB market in Huntsville.
2 bedrooms are easily 300 a night in and around huntsville and fairy lake ( looking at 2021 pricing for JUly August)
Not much for rent right now .


Check out the Summit in Huntsville. its preconstruction right now. Row towns and Stacked towns.
Would they allow AirBnb etc here?
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Mar 23, 2011
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Etobicoke
Just remember that you really can only make money between may and September as the demand drops severely after that. As mentioned you would also have to arrange a cleaning once a week and in today's world, more to sanitize.
Cottage prices don't appreciate as much as city prices and you are still looking at annual expenses of $5-$10k in taxes and maintenance of the property.
I am speaking only about a standalone cottage, not a resort property.
I have owned a cottage for about 20 years now in Parry sound.
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Sr. Member
Sep 16, 2009
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sherman51 wrote: Just remember that you really can only make money between may and September as the demand drops severely after that. As mentioned you would also have to arrange a cleaning once a week and in today's world, more to sanitize.
Cottage prices don't appreciate as much as city prices and you are still looking at annual expenses of $5-$10k in taxes and maintenance of the property.
I am speaking only about a standalone cottage, not a resort property.
I have owned a cottage for about 20 years now in Parry sound.
Are resort properties more practical then and appreciate more?
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Mar 27, 2004
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oasis2002 wrote: Would they allow AirBnb etc here?
yes
its a townhouse condo project.
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May 6, 2020
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We just purchased a home in Lakefield which is about 2 hours north of Toronto. We also have a trailer here so we were thinking of living in the house but periodically airbnb it for summertime, staying in the trailer when it’s rented. We know a couple who has a very strong Airbnb rental and the area in particular is quite attractive because iof it’s proximity to gta. I think there are a few resorts for sale on the lake but it is a huge responsibility and a lot of work.
We had to compete with 4 other offers and it was just listed on Friday so from our experience the market is quite hot right now but with an aging population and wfh big I think up north is looking good. It’s also nice to be able to escape the city.
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Mar 27, 2004
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Definitely

A lot of people are looking into retirement properties away from the city.
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Mar 31, 2008
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In the LONG-RUN, it's only going to up up up, and yes, the average folk now is considering a cottage. 10 years ago, it was out of the radar for many average folks. I have a feeling that trend will continue.
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Mar 27, 2004
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Primont at collingwood are like 900k to start.
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sherman51 wrote: Cottage prices don't appreciate as much as city prices and you are still looking at annual expenses of $5-$10k in taxes and maintenance of the property.
This is not necessarily true, although perhaps its true of cottages North of Toronto. Here South of Toronto, I've doubled on 2 summer rental properties in a span of ~5 years (i.e. $175K bought -> $345K sold, $300k -> $600k sold), while making profit all along the way. When you factor in 20% down, the profit margins were immense.
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[OP]
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Aug 29, 2019
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Interesting thoughts so far. Muskoka, being on the lake, and also having rental income would be really nice, Considering if the $1M plus price.

Anyone More experiences up in Muskoka (or other areas)? Or are there others that can share on their consideration?
Jr. Member
Jun 2, 2018
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oasis100 wrote: Primont at collingwood are like 900k to start.
Went to check it out over the weekend actually. There's a one-time fee to be part of the Blue Mountain Village Association when you buy the house and an annual fee to the association as well. Also, no short term (<30 days) rental allowed.
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Tailwind72 wrote: This is not necessarily true, although perhaps its true of cottages North of Toronto. Here South of Toronto, I've doubled on 2 summer rental properties in a span of ~5 years (i.e. $175K bought -> $345K sold, $300k -> $600k sold), while making profit all along the way. When you factor in 20% down, the profit margins were immense.
Cottages if you want to make big returns is about finding the that undiscovered area before everyone else does or the hot spot. It's still generally an inefficient market.
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zwz002 wrote: Went to check it out over the weekend actually. There's a one-time fee to be part of the Blue Mountain Village Association when you buy the house and an annual fee to the association as well. Also, no short term (<30 days) rental allowed.
that sucks.

The Summit in Huntsville looks better
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Jun 2, 2018
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oasis100 wrote: that sucks.

The Summit in Huntsville looks better
I don't think that makes it "suck". It's the price of being part of Blue Mountain. These are large detached homes on 60x130 lots. I don't think the potential buyers are the same as the Summit that you are recommending.
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Mar 27, 2004
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I think the value of owning property in these types of locations is being able to rent them out on AIRBNB.
w/o that. i dont see the value unless u are planning to live there permanent all year round.
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May 25, 2020
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My experience has been that a cottage is on the order of 5x the maintenance effort of a local, in town property. Most of it has to do with the place not being occupied so much of the time - there isnt someone around to notice little things that you can fix simply and immediately at home, like a leaking faucet or a little bit of mouse poop. Then when you finally do get up there and see it, the problem is more widespread than if you would have nipped it in the bud and you end up having to spend longer fixing it. You also have a lot more ice and snow, which seems to push something around every spring - potholes in the driveway, a dock crib, mailbox, whatever. Some of the new build townhomes might be a little better in this respect just by virtue of being newer and less "cottagey" - my experience is with an 80s era 4 season detached.

You should also keep in mind that its much, much harder to find good tradespeople in Muskoka than in the city. The whole area has an odd dynamic because theres so much money flowing into the area during the summer, and then the shoulder seasons are dead. Good tradespeople are booked solid through the summer and fall and then sort of seem to burn out, take a couple weeks off for hunting season and then not work again until the spring. Huntsville is a little bigger than some of the other cities up there and has some logging and the pipe factory so it isnt as bad as some of the other towns up there, but keep that in mind if youre not the type to do your own maintenance that hiring a good property manager might not be straightforward.

All that said if you do your own maintenance I definitely see cashflow potential on lakefront resale. Its just a matter of whether you can do it efficiently enough to pay yourself a decent hourly rate doing it. Depending what lake youre looking at you may be able to rent to snowmobilers in the winter as well, which is a nice way to bring your income up but will of course mean trips to turn on and shut off the heat, water, etc. Youll also probably want to install a backup generator if youre renting it in the winter - we average 20-40 hours a year of power outages, usually about once a month in the fall/winter/spring.
Sr. Member
Sep 16, 2009
685 posts
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BunchofJerks wrote: My experience has been that a cottage is on the order of 5x the maintenance effort of a local, in town property. Most of it has to do with the place not being occupied so much of the time - there isnt someone around to notice little things that you can fix simply and immediately at home, like a leaking faucet or a little bit of mouse poop. Then when you finally do get up there and see it, the problem is more widespread than if you would have nipped it in the bud and you end up having to spend longer fixing it. You also have a lot more ice and snow, which seems to push something around every spring - potholes in the driveway, a dock crib, mailbox, whatever. Some of the new build townhomes might be a little better in this respect just by virtue of being newer and less "cottagey" - my experience is with an 80s era 4 season detached.

You should also keep in mind that its much, much harder to find good tradespeople in Muskoka than in the city. The whole area has an odd dynamic because theres so much money flowing into the area during the summer, and then the shoulder seasons are dead. Good tradespeople are booked solid through the summer and fall and then sort of seem to burn out, take a couple weeks off for hunting season and then not work again until the spring. Huntsville is a little bigger than some of the other cities up there and has some logging and the pipe factory so it isnt as bad as some of the other towns up there, but keep that in mind if youre not the type to do your own maintenance that hiring a good property manager might not be straightforward.

All that said if you do your own maintenance I definitely see cashflow potential on lakefront resale. Its just a matter of whether you can do it efficiently enough to pay yourself a decent hourly rate doing it. Depending what lake youre looking at you may be able to rent to snowmobilers in the winter as well, which is a nice way to bring your income up but will of course mean trips to turn on and shut off the heat, water, etc. Youll also probably want to install a backup generator if youre renting it in the winter - we average 20-40 hours a year of power outages, usually about once a month in the fall/winter/spring.
sounds like a whole lot of painful work for not enough return. Anyone have experience with a "condo" in cottage country rather than actual cottage and airbnbing it out....

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