Life gets busy. Sometimes you just aren’t able to get up to your cottage as much as you would like. And then there is the off-season – you have a property that is sitting there being completely unused. You could rent out the cottage for a week or a weekend at a time and have it make you money when you aren’t using it – but you do have to get a few ducks in a row first.
- Determine if your cottage can be rented
Renters expect a home-like experience at a cottage these days. If it doesn’t have wi-fi (and we’re talking wi-fi that can stream Netflix), the prospect of renting it out is usually dead in the water. Bedrooms, bathrooms and the kitchen should be in good repair; if any appliances need a bump in a special spot to work, you’ll have to replace them if you want to rent out your retreat. While you can list it as a rustic spot with limited Internet, at the very least all appliances, water systems, and sewage handling should function without a page-long list of instructions.
- Talk to your insurance company
If you plan on renting out your cottage, you’ll need to clear it with your insurance company or broker and likely take out additional insurance. If any extensive damages happen to your property while you have renters in there, it may not be covered by your insurance company under your current cottage insurance plan.
- Line up local contractors
If you are in Toronto and your renters are in Muskoka Lakes, you probably don’t have the time to drive up there and fix a toilet. Line up local contractors who can preferably be contacted on weekends who can take care of fixes for you. Better yet, see if local realtors can refer you to a good property management company in the area. Be sure to line up your contractors and other services well in advance of your renter’s arrival date; cottage country isn’t like the GTA in terms of availability and they could have shuttered their business even if it’s still in the Yellow Pages.
- Take care of yourself legally
Go to a real estate lawyer and have them draw up a cottage rental contract. Be sure to talk to your insurance company first as they may have stipulations that have to go into the contract. Have the renters sign it before they get the keys. Determine how much you should take for a security deposit – standard practice is $250 or 10% of the rental fee, whichever is greater. Since this amount needs to be returned, determine if you want to charge cleaning fees or make the cleaning fee part of the rental fee itself. To determine your rental fee, look at what similarly sized cottages are renting for in your area on cottage rental websites.
Even if the tenants leave it sparkling clean, you’ll probably need to get someone to check in on the property before the next tenants arrive, so a local cleaning service may be a good idea for cleaning in-between renters. They will also be able to alert you to any damages to the property. Most cottage renters expect to pay the full amount of the rental before they get the keys, and to have their security deposit refunded within two weeks of their last day. If there are damages above and beyond the security deposit, your contract can demand that they be paid, but the matter will likely end up in a small claims court if there is a dispute.
To avoid disputes, it is best practice to get timestamped photos of each room, and particularly the kitchen and bathroom, before the keys are handed over. This will help your case if a tenant tries to claim damage was there when they got there.
- Vet your renters right
AirBNB is easy to use – but it doesn’t let you properly vet your renters before you hand over the keys. There are a number of cottage rental websites – including cottagerental.com – that allow you direct contact with your renters. If you have the time, it is better to meet them in person than it is to deal with them over email. But since this isn’t a long-term rental situation, you are usually safe as long as you get the rental fees and security deposit in advance.
- Don’t do long-term rentals if you can avoid it
Renting out your cottage for a week or weekend at a time isn’t a big deal. Renting it out for a matter of months to a year puts you squarely in landlord territory, which means that the Residential Tenancy Act applies and you are on the hook for repairs, complaints, and much more. If you want to seriously pursue renting your cottage long-term, contact a property management company local to your cottage to discuss it with them. A long-term rental will also incur additional insurance costs, so you should also contact your insurance company if you are considering this to get a quote.
If you’re looking into a rental or investment property in the Toronto area, contact Highgate Property Investments. We’re both Realtors and a property management company, so we’ll help you find the best income-generating property for your needs – both commercial and residential.