Purchased for relaxation, weekends with family or friends, or rest in the countryside, the cottage is significantly less for real estate investment. Yet, under certain conditions, it can be a very profitable source of income.
If prices have increased significantly in recent years, the cottage should remain a profitable investment for many years. Indeed, baby boomers, who want to settle in the countryside after retirement, increase demand (especially for waterfront properties).
Why invest in a cottage?
These buyers have acquired, over the years, a capital allowing them to arrive on the market with high means. We are also seeing more and more retirees selling their homes in the city to settle in the countryside. By their means, they should continue to increase the price of the cottage market. In addition, compare to other investments, the cottage generally offers a ratio income / purchase price of 12 which is very interesting compared to the ratio between 13 and 20 of income properties in Montreal. Finally, there are still lots at very competitive prices. Building a wooden house on virgin land can be an interesting option.
We therefore have one property that offers attractive rental income and whose value should increase. For an investor, it is therefore a profitable choice if he pays attention to certain points that we will see in our second part.
Some things to consider
In the long run, the cottage can pay big money . However, it can generate certain costs which, if they are not well planned, may be difficult to support:
- Property taxes can be quite heavy for a cottage because a second home is more expensive in taxes. It is therefore necessary to predict these taxes in the annual budget so as not to have a bad surprise.
- The maintenance of a cottage is relatively expensive, and if you neglect this aspect, your property may lose a lot of value. The rental still makes it easy to cover maintenance expenses.
- If you want to invest near a lake, in an area that rises, but you do not have sufficient means, shared ownership can be a solution. It allows you to invest in several, allowing you to buy in areas that are already expensive, but that will continue to climb, such as lake borders. In addition, this will allow you to enjoy it for a fraction of the normal cost of ownership.
Investment to be attractive for both renting and resale
Stay close to major cities. It is advisable to buy in areas located less than an hour and a half drive. Indeed, transportation costs play a lot for sales and rentals. Even though cottages far from cities can reach really low prices, you will probably struggle to get enough occupancy.
The chalet is therefore, for the investor who is ready to put some of his time, a profitable investment and safer than real estate in the city right now. This option should be considered for anyone who wants to invest his money in the long term.