Investing in Vacation Properties
Today I want to talk about owning a vacation property as an investment.
When I say vacation property, I really mean owning a short stay investment property. So that includes cottages, and I'm going to throw AirBNB in there as well.
The big advantage, I guess, of owning those properties is you can use them when they're not being occupied. A lot of people buy cottages as investments because what they do is they'll stay in it for a month and they'll rent it out for another month or two months, depending on the area.
I used to own a small cottage in New Brunswick on the coast, and I would rent it out for a couple of months each year. Most of the time I wasn't there. The season for that is the middle of June, July, August, and maybe a couple of weeks in September. If the cottage is winterized, you could also rent it out for the winter months as well, which I did.
The biggest disadvantage of owning those properties is that you need a maid service or you need a cleaning service. The reason is because the turnover is so frequent, meaning you're usually renting them out one week, two weeks, or only three weeks at a time.
What you need is you need somebody to go in there and clean it up. You are also usually providing additional things like sheets, utensils. It's a furnished building. And you want to make sure you furnish it with reasonably good furniture that people are going to enjoy.
Another disadvantage is that there tends to be a bit more damage in those units because people are coming and going. It's not their home. So they're not really too concerned about it, especially in cottages. People are going back and forth, outside, to the beach. There's usually a lot of kids and so they trample through the house.
So, again, the advantages are that you get to use it part of the time. The disadvantages are the overhead, the management, and the upkeep. You've also got to market it more frequently. You've got to interview tenants. You've got a lot of financial transactions. You're constantly collecting deposits and you've got to collect the monies every week.
There are advantages and disadvantages to like in anything else. So, think of those when trying to acquire a vacation property.