Buying a cottage for pleasure may necessitate renting it it our for profit to help cover some of the operating and maintenance costs. Renting your cottage can be financially beneficial if you want to use the income to pay taxes and utilities like hydro and phone. But don’t expect to get rich from the rental income and try to pay a mortgage with it, especially if you plan on using the property too. If done properly you can easily cover your operating expenses for the year.

It’s important to remember with renters comes work. A friend of mine who owns a two bedroom condo in Whistler and rents it out to cover expenses gets calls from irate guests at all hours of the day. One person even called to complain about traffic on the Sea to Sky highway?!!!!

While there is no such thing as easy money, I do believe in using a rental management company, especially if I know I’m not able to respond quickly to renter’s concerns and I don’t live nearby.

When it comes to selecting a rental management agency, Heather Bayer, author of Renting your Recreational Property for Profit, recommends people consider the following:

Types of Agencies

Check first with the agency to determine their renting criteria. For example, some agencies may insist on having the property available for rental for a certain number of weeks, including peak season and other holiday periods. It may not be worth their while to spend money advertising and marketing your cottage if you’re going to be spending a lot of time there yourself. This means you may not be able to pop down on the spur of the moment. The rental management agency’s contract should cover owner occupancy, so make sure you agree on this before signing it.

Agencies have two customers: you the owner, and the renter. The agency representing your property should deal promptly with both parties. If it doesn’t than you won’t get the customers you need to rent your cottage effectively.

Booking Agencies

The upsurge in demand for cottage style vacations has led to an increase in the number of rental agencies in Canada. Many concentrate in a single region, while the larger ones have many properties ranging from basic cabins to luxury high end homes. Most offer booking service only. They will inspect the property, advertise it on their website, process contracts and rental agreements. However, they do not have the facility to manage rental changeovers, check for damage and cleanliness, or respond to any problems that may arise during rental.

Full Service Agencies

Full service agencies will undertake the same tasks as booking-only agencies but will also offer additional services. Examples of these services include: guest care, maintenance or emergency repair, linen rental, cleaning, bicycle and equipment rental. It’s important to determine what you require from an agency.

Travel Industry Regulation

The Travel Industry Council of Ontario (TICO) regulates travel companies in Ontario ensuring compliance with the Ontario Travel Act. All agencies offering vacation homes for rent on behalf of a third-party, should be registered with TICO. The alternative is an agency that has a connection with a realty brokerage and who operates a Trust Accounting system in accordance with provincial real estate regulations. If you list your property with a management agency not regulated in this way, you are putting your rental income at risk.

Ask the Right Questions

When you start looking for an agency, prepare a list of questions to ask. In this way you can be sure you’re asking each agency the same question and can compare answers. Ask for their information package to be sent to you so you can compare their commission rates. You shouldn’t expect an agency to give you an estimate of rental potential without first visiting your property.

A reputable agency will provide information on the following:

• Operating policies
• Where they advertise and market their services
• What experience they’ve had on managing properties
• Testimonials from current owners registered with them
• Their website - you should pay close attention to how it looks and if it promotes year-round rentals

Agency Rates

Commission rates rates vary from 12% to 30%, with a renters booking charge between $25 to $65 per week. Some charge a flat commission rate that is only payable when the cottage is rented.

Viewing

When you contact agencies, they will want to arrange a viewing of your property. Even if you’re inviting several agencies to view, expect them all to take photographs and carefully question the facilities and amenities available, and any restrictions you may want to impose. Make sure the cottage looks its best, as photographs will reflect the way it looks on that day.

Prepare in advance of the booking a detailed sheet listing room dimensions, bed configurations, additional features and kitchen appliances.

Making the Decision

Good agencies will provide you with references from their clients, so look at their websites and property lists and ask for references from cottage owners of your choosing. Select properties in your rental price bracket.

Renting out your property takes time and energy. Some people prefer to save money and do it themselves. Getting a good agency will save you a lot of money and frustration. My friend with the condo in Whistler has slowly come to realize this and is now shopping for a rental management company.

Cheers,

Julie

This entry was posted on Wednesday, April 23rd, 2008 at 10:22 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.