Real Estate Investment: Is a Second Home a Good Option?

Buying a cottage is an important decision. Will its value increase over time? Will the rental of your cottage cover the expenses of the mortgage, maintenance and insurance? These are good questions to ask. Many factors will influence the answers such as location, municipal regulations regarding cottage rentals, management fees and others. However, if you make an informed choice, your cottage can undoubtedly be a profitable real estate investment.

Your cottage as an investment property: an increase in value

Some people make a real estate investment with the intention of selling at a profit a few years later. Escalation rates vary depending on market trends, the economy, location, type of property, etc. They are usually higher in larger cities than in smaller ones. They are usually higher in urban areas than in rural areas. Therefore, cottage appreciation rates are highly dependent on location. For example, property prices around Mont Tremblant have increased dramatically over the past year with the market in this area being more than exceptional since the pandemic began. So if you are looking to buy a chalet as an investment property, location is crucial. An analysis of the market is a wise choice in order to choose your location.

Your cottage as an investment property: renting

Many people buy a cottage with the intention of renting it out, since renting can provide a good additional income. However, you must first be well informed:

• Renting: If you intend to buy a cottage as an investment property, once again, location is crucial. Waterfront properties are the most desirable. Proximity to ski resorts is also favourable. In addition, being less than two hours away from a major city is also a plus.
• Amenities: A modern, fully equipped chalet will attract more interest. Vacationers are looking for a chalet with internet access, cable TV, a fully equipped kitchen, cleaning services, etc.
• Management: Renting a cottage requires management and maintenance tasks such as cleaning, snow removal, lawn mowing, reservation management, etc. But don’t worry, some sites, such as Kanata Tremblant, offer rental management services. We can take care of these tasks, as well as the rental ads and reservations. So you can rest easy knowing that experienced professionals are looking after your cottage.   
• Associated costs: Renting out your cottage will incur certain costs such as website advertisements, maintenance, repairs, not to mention insurance. Keep in mind that rental income is also taxable. Fortunately, you can deduct many of the costs associated with the rental from your taxes.
• Regulations: Before buying a cottage for rent, make sure that provincial and municipal laws allow you to do so. For example, in Quebec, tourist rentals of less than 31 days require an official classification certificate. Find out more about the regulations in effect. By signing up with Kanata Tremblant, you can be sure that you meet all the requirements to rent out your cottage legally and without hassle.

In conclusion

Validate all the options and make a wise choice to increase the return on your investment. Using your cottage for your own pleasure is worth its weight in gold. However, should your situation change, you will have peace of mind knowing that you have the option to rent it out. You could use the professional management service, if needed. Also, if you are planning to purchase a cottage for retirement, buying to rent is a good way to generate income until you retire. Be sure to consider all your options before you buy so you can make an informed decision. To learn more about the cottages for sale at the beautiful Kanata Tremblant resort, contact us today.