Many people enjoy escaping to a cottage over the summer. These rural retreats offer a break from our daily routines, and they can be as laid back or adventurous as you want. Now, what if you could be a cottage owner, instead of just renting? Are cottages good investments for the summer?

Buying a cottage is an appealing idea for many reasons. However, it also comes with risks you need to consider. Here’s what you need to know about Ontario’s cottage country, and the pros and cons to help you decide whether a cottage is worth the investment!

Cottage country in Ontario

Ontario folks are huge lovers of cottage season, largely due to how many prime cottage country locations exist here. Kawartha Lakes, Parry Sound, Muskoka, Sauble Beach, and Grand Bend are all popular spots for cottage goers year-round. Summer is obviously the most popular season for renting cottages, but there are also those who love a weekend getaway in the fall, or even some brave souls who like cottages in the winter. 

Many cottages have become full-sized second homes, and as the market has remained hot, cottage prices have increased as well. Cottages can be minimalistic or super luxurious, but either way, they are popular properties. This became the case even more last year as most international travel was banned, prompting Canadians to enjoy what their own province offered. Royal LePage reported an estimated 17% increase in housing prices in cottage country in 2021 compared to 2020. 

What makes cottages good investments?

Passive income

Owning a second property gives you the potential to rent it out and earn extra money. Of course, much of that rent will be used to cover mortgage expenses and utilities. However, you can slowly start to earn a profit if you pay off your debts and keep renters coming. The possibility of passive income is one of the top factors that make cottages good investments. Cottages have skyrocketed in popularity since the pandemic began, and many renters are willing to pay quite a lot of money for a cottage getaway. Depending on the location, size, and amenities of the property, you might be sitting on a small fortune. Properties right on the water, for example, are generally worth more as they are the most desirable locations. 

Travel restrictions are slowly being lifted as we make our way through the summer, which might make you wonder if cottages will still be popular once we can travel internationally. However, even pre-COVID, cottages were busy vacation spots, so the demand is likely to remain high.

A summer escape

No matter where you live, sometimes you just want to get away from your home for a few days. This is especially true if you live in a big city, or have been working from home for the past year. Spending some time in a quieter location with a different atmosphere can be heaven. Cottages provide a nice change from our daily lives, and you can enjoy them without travelling too far. A vacation home like a cottage gives you an extra place to relax and spend time with family and friends. This change in pace and scenery is enough for many people to consider cottages as good investments. It doesn’t have to be all about making money – if you plan on enjoying your cottage to the fullest, then it’s worth it!

Potential in developing areas

Well-established cottage areas in Ontario constantly appreciate in value, like Muskoka and Kawartha Lakes. Buying a property in these spots gives you a good chance it will be worth more down the line if you decide to sell. However, these regions can be pricey, which is why it’s also smart to consider up-and-coming areas. Spots like Haliburton and Bancroft are rising in popularity, but property prices aren’t quite as high in these locations yet. Odds are, most properties in any established or developing cottage area will appreciate in value over time. This will give you a nice return on investment if you eventually decide to sell.

What are the risks of buying a cottage?

More maintenance and higher costs

Since most cottages are in rural locations, issues such as animal infestations or intense storms are common and can cause some serious damage. It’s not rare to find wildlife living in a cottage if you leave it for the winter, or for a giant tree to fall during a storm. Insurance is also a slightly different game with cottages and other vacation properties. You may need to pay more for home insurance, and you also need to remember insurance for things like septic issues, which may not have crossed your mind if you live in a city. You are also maintaining a second property on top of your own, which means you’re responsible for fixing any damages. 

Less access to amenities

Are cottages good investments even if they’re far away from amenities? Given the rural location of many cottages, you can expect to have a harder time finding everything you need. For example, you might have to travel to find a grocery or hardware store. Of course, some locations are more isolated than others. Many cottages are close to towns, but it’s something to keep in mind before you invest. While it’s nice to feel removed from the bustle of daily life, most people don’t want to be completely cut off from the outside world. 

If your area is super remote, it might not even be accessible in the winter. Open country roads are often closed during the winter due to blowing snow and dangerous driving conditions. If that’s the case, you need to be prepared to close your cottage down at the end of the summer and do a full reopening in the spring. 

Rising prices

Cottage prices have been on the rise for some time, especially since COVID-19 hit. People have been travelling their own countries more and enjoying the ability to work from home in a less densely populated area. This demand has put some pressure on the cottage market, making properties more desirable and competitive to buy. Apart from the cottage itself, you’re also paying the price for a second set of utilities, amenities, appliances, dishes, and literally every other essential. 

Even though cottages don’t tend to depreciate in value, and often even appreciate, vacation homes can take longer to sell. Mortgage rates can also be a bit higher for cottages, since they are generally considered vacation or seasonal properties. These costs all mean you will be paying a lot to own your cottage.

So, are cottages good investments? Buying a cottage can be a great move for many reasons. It can also be a mistake if you’re not fully prepared. It’s essential to understand the costs and work associated with buying a second property as well as the benefits it offers. It’s also important to get in touch with a broker before you buy! Brokers are a huge part of the mortgage process and can make your real estate experience easier. 

If you have any questions about buying a home or a second property, feel free to get in touch with me here!