Buying a home is a great accomplishment for many, but buying a cottage can feel like a dream come true. With aspirations of kicking back next to the lake and enjoying the solitude that comes with cottage life, residents in Ontario are now more than ever eager to find their own slice of paradise. While the luxury of this second property may offer an excellent way to break from the hustle and bustle of city life and enjoy some solitude, it is also an ample opportunity to earn income or to begin investing in Real Estate. But before you begin hours of globetrotting in search of the getaway home of your dreams, be sure to consider everything that owning a cottage entails; Speak with your REALTOR® for any advice they may have, tips on where to look, what to steer clear of, or for help with purchasing in another province. These are all big decisions to be made, and you should wait until you have the knowledge and information needed to get the most out of your property so that you can enjoy it for years to come. In the meantime, here are some considerations that should be made when looking to purchase your first cottage.
What is your Goal?
Prior to your search, ensure that you understand your goal in owning a cottage: Are you looking for a summer getaway spot, or a 4 season cottage to visit year round; Do you desire solitude or is a community with neighbouring properties something that peaks your interest; Is water access a need, or does swimming and other water activities rank low on your list of must haves; and finally, is this property for personal enjoyment, retirement plans, an investment opportunity, or as a means to earn steady income. Once you know exactly what you want, you have a better idea of what it is that you should be looking for.
Costs
It is important to understand that the costs of operating a cottage differ from that of your primary residence. For instance, insurance alone can have higher rates due to the fact you are not there as often to check up on the home, and often have additional stipulations such as checking the property regularly in order to maintain the validity of the insurance policy. Other costs to consider when purchasing a cottage include hydro rates which may be delivered at a higher rate in rural areas, seasonal maintenance, property taxes, garbage disposal and recycling services, and the cost or availability of internet.
Access
Some cottages are very remote, making for unique factors in terms of accessibility. Before purchasing your cottage, it would be important to evaluate how you access the property throughout different seasons or any obstacles that may prevent you from enjoying your experience as a cottage owner to the fullest. Some potential hindrances include whether or not the property is accessible by land, the proximity in which you can park your car, the landscape surrounding the cottage, and whether or not you will have to climb stairs for water access.
Water and Septic Systems
As most cottages are located in rural areas, water systems and septic tanks usually coincide with ownership. Before purchasing your piece of paradise, be sure to understand whether or not the water available is safe for drinking, or if you need to bring your own supply each time you visit; If your cottage water supply runs from a well, you will need to incorporate in your expenses the cost to have the water tested regularly. If there is a septic system that the cottage uses, you should ensure that it is in good working condition and consider the costs that come alongside any regular maintenance; In addition, it would be good to receive proof of previous maintenance, inspections and approval reports obtained by the previous owners.
Amenities
Amenities are usually a big check on every homeowners list of requirements, but can often be prematurely dismissed when on the hunt for a cottage. Cross reference the importance of amenities alongside your list of goals in cottage ownership. If you are looking for a place to retire, you may want to have the essentials within a short drive; If you plan to rent your cottage out for vacations, certain amenities may increase the demand of your property allowing you to charge a higher rate than cottages without.
Rentability
If you are looking to rent out your cottage to others as a means of income through websites such as AirBnB, ensuring your space meets the needs of cottage goers is essential to your success. What would you be looking for when renting out a cottage for your vacation? Things like waterfront access, availability of clean drinking water, accessibility, direction, amenities, and internet access are commonly sought out by renters when planning their vacation. Be sure to take these into consideration when searching for your rural getaway attraction.
Local Laws and Property Restrictions
Once you have purchased your cottage, you may have big dreams to build docks, workshops, or expand and upgrade the dwelling to meet more modern demands. Unfortunately, with building restrictions, by-laws, crown patent and waterfront issues this is not always the easiest process to initiate. In some cases, despite having waterfront access right off of your property, you may not have exclusive rights to the shoreline. Look to your Real Estate professional or Lawyer for help navigating and understanding your rights as an owner in respect to cottage and lake associations, local legislations, and any other official plans or restrictions.
Mortgage requirements
Typically, those who are looking to invest in a cottage already own a primary residence. If this is the case, it is good to understand that you will need a minimum payment of 20% as your down payment on a second property. If your cottage does not have year round access, a larger down payment may be requested among other requirements in order to obtain financing from a lender. Securing a mortgage for a second property will depend largely on the type of property you are looking for, and your income to debt ratio. Be sure to speak with your bank or lender, or ask your REALTOR ® for help with obtaining information on how to be approved for your second mortgage.