Thinking of buying a cottage? Top 10 things you need to know
As spring hurtles toward summer, many of us are turning our thoughts to that well deserved vacation. However, rather than simply book a lakeside corner of paradise, more and more people are now considering buying a vacation property and truly investing in cottage life. The investment isn’t just for mind, body and soul either. It also makes financial sense, with vacation properties achieving year-on-year increases in value. Indeed, in 2021, recreational properties in Quebec and Ontario surged in price, achieving double digit gains of 15% and 17%, respectively.
The reason for this meteoric rise is two-fold:
- Firstly, the pandemic has shifted work patterns and more and more of us are now able to work from home, avoiding the daily grind of a commute and allowing us to spend time away from the cities. Even with travel restrictions easing, many remain uncertain of travel, so people are more inclined to stay close to home.
- Secondly, online marketplaces such as Airbnb and VRBO have made it easier than ever to manage these properties as rentals and investors are snapping them up. Who hasn’t seen Scott McGillivray’s HGTV show ‘Vacation House Rules’? Yes, investing in and renovating a cottage can be costly, but the return you can achieve will generate a fantastic income. You’ll also have secured a corner of paradise to call your own, whenever you need to escape the rat race.
Given that spring is one of the best times to buy a cottage, if you’re thinking of taking the plunge then now’s the time to start those viewings. But before you graduate from renter to cottage owner, don’t get carried away by the beauty of a rural lakeside idyll. A cottage is a major financial commitment, and there are issues you need to consider before putting in an offer. Here are some of the things you need to consider to ensure you’re making a sound investment:
Location, location, location
Yes, the cottage may be the size you’re looking for and yes, it may be in the most serene setting. But consider the area in which it’s located. Is it easy to get to from your home? What are the local amenities like? Do your research on the neighbourhood and make sure you’ll attract guests, if you’re thinking of renting it out. Are there local stores and tourist attractions? How about medical facilities and eateries? If you just want to get off grid these are less valid issues, of course, but worth considering as you never know when you may want to use the vacation property as a rental.
Other issues to consider are elevation and exposure. It’s great to have a view, but being elevated can make access an issue. Likewise, think about exposure and the amount of sunlight the property will receive. If you’re viewing in the winter, consider what it will be like when the trees are full.
Is it winterized?
Buying a winterized, four-season home is definitely the ideal. Not only in terms of when you can enjoy the property, but also if you plan on using it as a rental. This is because if it’s winterized, you can rent it out year round, returning an impressive passive income.
However, if you plan on buying a cottage and winterizing it yourself, bear in mind that it’s a big undertaking, and the remit is far wider than simply putting in a heating source. You’ll also need to add all-season insulation, upgrade your utilities, install sealed doors and double-pane windows and ensure your pipes are insulated and located within the warm side of insulation. All of which can result in a costly undertaking. So if four-season living is important to you, we recommend buying a cottage that can already be used year round.
Final points to mention here? If you do plan on using the property in the winter, make sure you can access a snow-clearing service, and don’t forget to budget for winter toys (we’re talking snowshoes, cross-country skis and ski-doos!)
Yes, we all yearn to be ‘at one with nature’ when we visit these retreats. But in today’s connected world, we also need internet access. This is especially vital if your cottage is going to be used as a home office or as a rental. Don’t take connectivity for granted though. If it’s important to you, make sure you (a) check whether a cottage has WiFi and (b) the quality of the signal.
You’d actually be amazed how often this critical element is overlooked. According to a Royal Lepage survey, a third of potential homeowners forget to check the quality of the internet connection and cell phone reception in and around a recreational property.
Electricity and hydro bills
Relaxing by candlelight and cooking on an open fire may have been the dream, but the reality is that you’ll need electricity. So make sure you check that the cottage is linked to the grid. Also, ask to see recent Hydro bills. You’ll need these to help predict your monthly outgoings.
Energy is actually a really important factor if you prefer the lakes of Ontario to the mountains of Quebec. This is because the seasonal rate class for Hydro One will cease to exist on 1 January 2023. This will ultimately double the energy bills for even modest Ontario users, and although the increases are being phased in at 10% per year, this could be a deal breaker for that Muskoka log cabin.
Is the water drinkable?
Your cottage may be nestled on the banks of a beautiful freshwater lake, but that doesn’t guarantee the water quality at the property. Even well water isn’t necessarily drinkable throughout the year. So before you put in an offer, check the quality of the water. Make sure there’s a filtration system. If there isn’t, consider installing a good water treatment system. If the water isn’t safe to drink, you’ll need to consider bringing your own clean drinking water, and this will seriously hamper any plans for renting out the property.
While we’re on the subject of treatment systems, another incredibly important utility to consider is whether the septic tank is in good order. Check maintenance reports and ask how old the septic tank is. They typically last for 20-30 years so if it’s reaching the end of its lifespan, you may need to factor this into your offer price.
Is it on the waterfront, or actually waterfront?
This is an important distinction. Many lakeside cottage owners assume they own the land leading down to the water, but that isn’t always the case. If the cottage does include the waterfront, it will come with what’s known as ‘riparian rights’. If not, you won’t be able to build that floating deck or boathouse. Instead, you’ll need to check what access you have, or enquire whether you can purchase the land. According to the Royal Lepage survey, this is actually the second most common factor buyers forget to check before making an offer. So to avoid heartbreak, make sure you check this issue with your realtor.
Also, while we’re talking lakefront, consider the nature of the area you’re looking in. Do you want a party lake with lots of motorized boating or are you looking for a peaceful oasis? These are all points to consider if you’re planning on buying a waterfront property.
Consider your needs
It’s easy to fall in love with a charming cottage, but you’ve got to be practical as well. This is a big investment so consider how it meets your needs for years to come. We’ve already covered the importance of location, utilities and amenities. But when you’re looking at a property, think about the size as well as the location of the property. If it’s to be used as a rental, consider how you can maximize the space for renters, using bunkbeds and sofa beds. Really think about how you want to use the space, and envisage whether it meets your current and future needs. Consider the potential rental income as well, look locally and see what does well and – equally – what’s missing.
Decide whether you really want to renovate
The TV shows make renovations look easy, but getting hold of local tradesmen can be problematic, especially in rural areas, so while you may have a great idea to completely remodel an existing cottage, or build from scratch on an empty lot, really do your homework and consider the costs. Also, depending on the work you have planned, check what restrictions apply and whether you’d need a building permit. Not being there to oversee the project can also be an issue, so renovations shouldn’t be taken too lightly when it comes to buying a cottage.
You’ll not always be at your cottage, so your approach to maintenance and preparing for winter as well as the spring thaw all need to be organized with military precision. Lawn cutting, landscaping, cleaning, snow clearing, annual servicing of gas appliances, are all but a few of the items you’ll need to make sure are taken care of in your absence. It’s worth asking the seller, they may already have contracts in place that you can take over. If not, this requires serious consideration before putting in an offer, especially if you’re purchasing a property that’s in the middle of the wilderness.
If you’re planning on buying a cottage – be that as an investment rental or as somewhere for you and your loved ones to enjoy for years to come – then we wish you the best of luck in your property search! Obviously it’s a competitive seller’s market, so we recommend you get ahead of the curve and contact a local realtor. They’ll not only hear about properties for sale before they hit online selling platforms, putting you ahead of the field, but they’ll also understand the market, the quirks of local bylaws, and be able to put you in touch with a local notary.