Buying a Rental Cottage
Thursday Jul 13th, 2017Share
During the cold winter months or the hot summer days, where being stuck in the city can be almost unbearable, most people head up to their cottages for a reprieve from all the noise. Some of these people rent out their cottages for additional income on the side. If you are wondering whether buying a cottage is worth it, here are some facts to let you know what it means to buy a rental cottage.
There are two types of cottages:
- Type A: a cottage with access year-round, and is winterized (has a permanent heat source and running water)
- Type B: a seasonal access cottage with no permanent heat source, but has running water.
With buying a rental cottage you must be aware of the finances (how will you finance it, how much income will it generate and how much are maintenance fees). Keep in mind that there must be a down payment of at least 20% of the purchase price when you are buying a property that is not your primary home.
There are several things you must know:
- If the cottage has been used as a rental property before. If so, try to obtain records that show how often and how much it was rented out for
- How accessible is the cottage?
- The local real estate and rent market
- The rights and responsibilities as a landlord
- Future tenants: do a screening on each one
- Property management companies vs. upkeeping yourself
In the long run, buying a rental cottage can be a good return on your investment. Whether your thinking small lake or big lake let me show you the cashflow potential.