I'm at Cottage Fest this weekend. This is the first cottage show of the season at the Markham Fairgrounds and is always a good way to spend a snowy weekend in February. As it falls on our new Ontario long weekend, it also a good opportunity to get out with the family and for a few blissful hours, think of nothing but summer and the cottage!
Even after the first day, I'm noticing a theme. Many of the cottage owners I spoke to yesterday are just beginning to think about renting, as a way of helping pay taxes or to fund some renovations or new projects. Most had never considered the idea before but are seeing neighbors who rent, and who appear to be achieving significant income. The big question seemed to be, ‘I'd like to do this but don't know how to start'. If this is you, here are a few things to think about.
Rental Agency vs By Owner Rentals
There's a big decision to make at the very outset – whether to use an agency or go it alone. An agency will take up to 25% of your rental income depending on the services they offer, but they will get your property listed promptly, and if it is a desirable rental property, will have your available summer weeks rented very quickly. They will use their expertise to screen potential renters, advise you how to set up and prepare for your first rental groups, and ‘hand hold' you through the process. Going the do-it-yourself route is the other option and I'd recommend this only if you have done significant research on marketing and have a booking system already in place that includes a legally binding rental agreement.
Recommendation #1 – Talk to a reputable agency – preferably one that is registered with the Travel Industry Council of Ontario (TICO) – and discuss how they can market your property for you. You may be surprised at how much money this can save you in your own marketing and set up costs in the first year.
Set Up Costs
Regardless of whether you use a cottage rental agency or not, you will need to prepare the property to meet the demands of the rental market. Renter expectations are rising and people who part with significant money to rent a week or two in a vacation property quite rightly expect high standards. You may have to replace old and worn mattresses, kitchen appliances, and furniture that has seen better days. That ratty couch might have been at the cottage for thirty years and have sentimental value, but quite honestly, it's not acceptable for a rental property.
Recommendation #2 – Do a complete cottage audit. Check all the items on the list and plan on making changes to upgrade and improve. This will be well worth the time and expense since you'll be able to achieve a higher rental rate (which should cover your costs over time) and you won't open yourself up to the risk of complaint from unsatisfied renters.
Set a Competetive Rental Rate
‘My neighbor's charging $3000 a week, and my cottage is better than his'. I hear you and appreciate it's very tempting to take this figure at face value and decide this is the benchmark rate for your cottage. And there is nothing to stop you doing this. However, if you've decided to rent with an agency, it is definitely worthwhile listening to what they have to say. Most agencies have been in operation for years and are highly experienced in setting competitive rental rates to attract the type of renters who will look after and respect your cottage.
Recommendation #3 – If you are going it alone, do a lot of research on other properties in the area and what they are charging. Look at all the angles, for example, if your neighbor allows 16 people into his 3-bedroom property, he may well be asking a high rental rate, but he is also risking damage and high wear and tear costs.
Make sure you've made plans for checking the property between guests. Most cottage owners expect their rental guests to leave the property in the same state in which it was found, but standards can vary widely, and it is so important to have someone do that check after your renters leave. Decide early on if you are going to drive up and do it yourself, or if you plan on hiring someone. Good maintenance and cleaning people get booked up very early and if Saturday is your changeover day, they may be a challenge to find.
Recommendation #4 – It may be less challenging to find a cleaner who can give you four hours on a Saturday afternoon at a decent rate than expect to find someone to pop in for an hour to do a quick changeover. This is what I have in place in my cottage this summer, and I have added the cleaning charge to my rental rate. My guests are expected to leave the cottage in a tidy condition but they don't have to clean or vacuum. Take a look at my post on Who Cleans the Cottage.