Buying another cottage wasn’t on the radar at all. In fact, after five on the go at one time a few years back, I did that ‘never again’ thing, and one by one we sold them until just Osprey Cottage was left. So, for a few years we motored along renting Osprey very successfully until last fall when we realized that we’d nearly reached the limits of income from it. It rented every weekend throughout the winter and early spring, and was maxed out through the rest of spring, summer and fall with weekly rentals. It was our accountant who suggested buying another might be a good way of dealing with some tax issues, and I didn’t need any more encouragement than that. I was off and running.
This series is about how we went from buying the place to having it fully booked for the summer, in 6 weeks. I’ll cover the choice of property; setting criteria; renovation decisions; setting it up for rental; cost management and marketing plans. In the course of buying seven properties in the last ten years the blueprint for doing this hasn’t failed yet, and in fact just gets more cemented as a success strategy.
The search begins with a decision on motivation to buy; the choice of a property to rent based on the desire for a holiday home for your family may be dramatically different than if it will be primarily an income property that will have some personal use. For investment purposes the key is to remove the emotional element from the search and look at it from a completely objective viewpoint.
I viewed a lot of cottages – there was the one that fit all the interior criteria, but there wasn’t enough privacy from other properties; the delightfully located cute place right on the water without a deck and no way of adding one, and the perfect spot that I fell in love with but the price was above our break even limit. Sticking very closely to the must-haves, and keeping focus on the purpose of the purchase was tough but worth it in the end.
When I saw the MLS listing for Kingfisher Cottage I was excited. The price was very right and the location perfect which was one of the factors that kept the price low. It’s on a river which is not the most popular choice for families looking for their dream cottage since most buyers are looking for the big lake view. However, for rental purposes it was ideal with a beautiful outlook on a navigable river – just a kilometer by boat into a lake. Since plans for resale would include all rental history, the location popularity didn’t impact the decision too much. The interior needed some work and some updating but the budget allowed for that and best of all, the selling agent gave the impression any offer would be considered so we low-balled it and it was accepted on the spot.
· Do thorough research before starting a search
· Set a budget including all costs relating to setting up for rental
· Forecast conservatively for the first year of rental income
· Be objective and establish criteria based on rental potential not personal preference
· Have a realistic time-frame for potential renovation/upgrades
· Be prepared to lose the property if the criteria/budget can’t be met
Part Two of this series will focus on cost and budgeting. Spending can get out of hand if not planned realistically so it’s important to get the projections as accurate as possible. I’m also testing a new product from www.myvr.com so will be presenting a review of how that goes too.