As many of you know my wife and I purchased a cottage at the beginning of the spring with the intent of both using it and renting it out. We spent a great deal of time and money and learned a great a lot about the process in general and I wanted to share that with everyone.
First off one of the key criteria for us when we were looking for a cottage was the potential for renting for part of the summer in order to help offset the cost of the mortgage. We picked a larger starter cottage on a small lake. There is a thriving market for cottage rentals in the area and our real estate agent was able to confirm that there would be a lot of interest for this cottage.
What we did!
Well needless to say this cottage was not rent-able on day one of our taking possession. While the cottage didn’t have anything actually wrong with it, it did require some TLC; OK a whole lot of TLC. We painted virtually the whole house inside with the exception of the main living room and the bathroom. Outside we needed to clean up and paint the two decks with some minor updates needing to be done to one of them to bring it up to code.
We also furnished the place; normally when you purchase a cottage a portion of the furnishings are included. In this case if we didn’t have it written down in the contract it was gone when we got there (including a few light fixtures). The place now looks very nice and we’re very proud and happy with it.
When it came to getting renters we decided that it wasn’t worth it taking the risk this year and attempt to find renters on our own. We found a local agency that we took on to find us renters. They don’t charge any money up front they only take a percentage when they rent the cottage out. The percentage seems pretty high at 20% but well worth not having to deal with the hassles tied to finding and dealing with renters. This company also offers additional services such as cleaning and some maintenance but we were able to find some people on our own for this.
So far using the agency has been working well; we’re onto our second renters (so the august mortgage is covered!!) and they are working on finding us some long term renters for the winter which would be great. I’m happy with the setup even if they are getting a substantial percentage; I think its worth it.
As i mentioned we are hoping to keep this cottage rented throughout the winter months which would really help with covering the mortgage the the whole year and ideally could mean we don’t pay for the mortgage. We are also looking into getting the bathroom renovated because quite frankly someone built it in the 60’s and it needs some attention and updating. But we’re only starting to investigate this as its an expense we’ll have to factor in.
We can afford this cottage without having the rental income but it becomes a true investment the moment that rental income starts flowing in. Having someone else pay for your mortgage means you can pay it off that much sooner (assuming you continue to contribute as well). I’m excited about this and really hope it continues to work out.