When it comes to buying a cottage, the most rational of human beings seem to lose it. We see the lake, imagine ourselves barbecuing on the deck, our children jumping off the dock, and it’s game over. What should be a rational decision quickly becomes an emotive one. One of the key selling points of our cottage was a little frog game my son discovered in one of the bedrooms. The bunk beds were another. I honestly didn’t realize that our cottage was “off the grid” and what kind of lifestyle that would entail until after we bought it. It didn’t matter. It was love at first sight.

Chris Winney, a real estate agent with Royal LePage, in the Land O Lakes area in south eastern Ontario, and who lives year-round at her cottage, has developed “PAWLOST.” She uses this tool to help her clients evaluate a property’s true value. “Buying a cottage should be an emotional experience. People are buying these properties to make family memories,” says Winney. “PAWLOST describes what buyers are looking for.” She finds it helps her clients stay grounded, so they can find the right property and make a good investment.

PAWLOST Evaluating a Property’s Value

• P - Privacy - It’s nice to have neighbors, but not close enough to have to interact with them. Check for trees, if the leaves are in full bloom and you can’t see them then it’s OK.
• A - Access - Is the property accessible for all four season; can you get to it in the winter; is it accessible by road not boat? Generally, if a property is difficult to get to, it should be reflected in the asking price.
• W - Waterfront - Incredible privacy, level or gently sloping lot, sandy beaches, no weeds, and gorgeous for swimming, this is the first best choice according to Winney. “You want to be able to walk down to a level sandy beach and have the water deep enough off so you can dive in off the dock.” Steps that go down to the waterfront reduce a property’s value. One thing buyers need to be aware of is, who owns the waterfront. In southern Ontario, some townships own the 66 foot shoreline allowance. Cottagers can buy their allowance, and will have to do so if they are seeking a mortgage. Buyers should budget an additional $35oo plus recommends Winney.
• L- Lake - Generally the larger the lake, the better the return. “You can do more things on a larger lake,” Winney explains. Make sure there are no boating restrictions by checking with the lake’s association rules.
• O - Other - These can positively or negatively affect a property’s value. Some examples include: does the cottage back onto a highway; is it situated beside crown land; is it located in a busy part of the lake, is high boat traffic? Winney recommends visiting the property many times before you buy it; go when it’s busy i.e. on weekends and holidays. It’s important to do your research.
• T - Travel Time - Most people have a number in mind when they come to see her. People coming from Toronto are usually looking for something that’s 3 to 3 1/2 hours a way, while Ottawa folks want a 2 hour commute. Winney notes that people will add 1 1/4 to their travel time, if they find the perfect property.

After reviewing Winney’s list, I am relieved to discover I have not made a bad investment, while we do have to take a boat, actually a ferry to get to our cottage, the four hour commute passes quickly. I think people in the west are prepared to make a longer commute to get to water.

For prospective cottage buyers, Winney recommends working with a local agent. They often own cottages themselves and are very knowledgeable about the lake. They can take your emotive decision and make it a practical one.

Cheers,

Julie

Warning
What happens when out-of-towners go into cottage country, buy up all the prime waterfront properties, drive up the price of real estate and don’t live there year-round? As a cottager have I ever stopped to consider the impact I have my seasonal community?

No. In fact, I complain. I scan my tax bill and think, ‘Why am I paying school taxes? My kids don’t even go to school here.’ I actually think the town must love people like me. I seldom use its facilities and they get a huge tax grant.

If I had a cottage on Wasa Lake, I would be dead wrong. Considered one of the warmest lakes in the Rocky Mountains, Wasa is a quiet cottage community tucked in the Kootenay River Valley. The town of Wasa is based around this small lake. In the past 5 years, the permanent residents, who now only comprise 38% of the town’s population, have witnessed their property values approach $1 million.

Are they happy with what’s happening to their town? Not according to Susanne Ashmore, chair of the Wasa Lake Land Improvement District. The influx of Alberta dollars have radically changed their social and environmental landscape, and not for the better.

Five years ago, they have lost their school. Young families, considered gold to small communities like Wasa, cannot afford the premium to live there. Both their restaurants have closed; unable to make it on eight weeks of business. Only a threadbare gas station remains. The town would like a volunteer fire department, but with the majority of it’s residents over the age of 50, Ashmore, one of the youngest at 51, says it just isn’t possible. “We have become road kill for the demand,” she states.

When asked if the town is benefiting from the increased tax base, Ashmore answers, “Property taxes are the gift that keeps giving…to the provincial government.” She is actually working very hard to get the government to fund water stewardship. “Last year did water tests on the lake, but not this year,” she explains.

Ashmore has reconciled that cottagers are not going away. The future of Wasa hangs in a precarious balance. Alberta residents now comprise 43% of the town’s population. But they are not allowed to vote in BC, nor do they have a say in the town’s planning process. They are becoming the majority in a village they only live in eight weeks of the year. She has hope for the emergent community and has begun seeking input from the cottagers association as to what their interests are. On Thanksgiving weekend, the cottagers were asked to participate in a shoreline cleanup. “Only 12 people showed up, but it’s a start,” Ashmore concludes.

Cheers,

Julie

PS Today’s photo comes from Bed and Breakfast Inns in Wasa Lake

With soaring property prices and a limited supply of waterfront cottages, the dream of owning a vacation home is becoming increasingly difficult to attain. And then there are the costs of ownership: taxes, maintenance, boat, insurance and renovations. In a recent blog, Renting versus Buying, I estimated the cost of maintaining a cabin to be roughly $12,000 a year. This figure does not include mortgage payments.

How then do people afford the dream? Some will rent out their cabins over the summer to recoup their expenses, but there are other ways to make ownership affordable.

Co-ownership

People have mixed emotions when it comes to co-owning a property. It’s not for everyone. Compatibility is likely the hardest hurdle to overcome. The issue of how the property is to be used is another. One family might want to rent it; the other may prefer to keep it open for last minute get-aways. Deciding on who gets to use it, when and how, all have to be agreed upon. Any of these issues can be deal breakers, but in reality, they are actually qualifiers. If the both parties are unable to come to terms on these items, then they are probably not suited to enter into this type of arrangement.

The first test is actually buying the property. This is a great opportunity to see how other people react under pressure. It’s during this phase that discussions around occupancy, renovations, and budget should be discussed. It’s important to put everything on the table in the beginning and make sure everyone has an opportunity to voice their concerns and expectations. This is also the best time to walk away from the deal before anyone has invested anything.

Once the property has been chosen and the offer accepted, an “Agreement of Use” should be drawn up and verified by a lawyer. Think of this as a prenup. This document will provide the foundation for conflict resolution. If the partnership works well it may never be used, but if it fails, it will make the dissolution process much easier.

When drafting an Agreement of Use, it should include the following:

• Budget – agreement on expenditures: capital and operational

• Selling the property – how to get out

• Divorce/New spouse

• Death

• Inheritance – children’s ownership

• Non-payment of fees - dealing with deadbeats

• Calender – who uses it and when

• Mediation – can a co-owner be forced out

• Liens on the property

• Rental income

An Agreement of Use will cover the big things, but sometimes it’s the little things that can sour a relationship. Things like: bad housekeeping, dirty lines, no linens, failing to stock up i.e. empty propane tanks or no toilet paper. Being considerate will go a long way to keeping the partnership intact.

A bank account should also be opened to pay bills and track expenditures. It’s healthy for both parties to understand each other’s strengths and use them. For example, if someone is a detailed numbers person then have them manage the finances.

Finding the right partner or family can save a lot of money and help both parties realize their dream of ownership.

If there are any co-owners out there, I would love to hear about your experiences and any tips you might have.

Cheers,

Julie

PS Next week we will take a look at fractional ownership.

Walking into the condo, I can feel my heart sinking. The old blue carpet is worn and frayed around the edges. The white walls are scuffed and gouged. Entering the living room, my eyes are immediately drawn to the bright pink flowers covering the circa 80’s blue couch. As I gaze around the room, I quickly note the cheap brass picture frames unevenly doting the walls. The white laminate kitchen table and chairs match the kitchen cupboards. Its hard to focus on the room’s spaciousness and the incredible views when all I can think about is, ‘how could you make this place look better?’

Regardless of whether I am buying a vacation property or a home, I like properties that have been fixed up. The nicer the renovation, the more I like it. According to Glen Mishaw, a real estate agent in Whistler, I’m not alone. He notes that painting the walls and putting down new flooring will show a property better and sell it faster. When I ask him for a dollar figure he declines to comment.

So how much is a renovation worth to a buyer and how much can it increase a property’s value? That’s going to depend on the market and the property. A unit we are currently considering buying, if it was renovated would likely list for $40,000 to $50,000 higher than the current asking price.

Getting a property ready to sell is a time consuming process. Aside from painting and new flooring, here are five easy ways to make your property more saleable:

1. Pictures - take them down or hang them properly, especially if they are uneven and mismatched. It’s better to leave the walls bare.
2. New bedding - most big box stores sell “bed in a bag” combo sets. Get rid of the ratty comforters and go with neutral shades.  Throw cushions are great for adding splashes of colour but use sparingly.
3. Lighting - get rid of those brass lamps from the coffee table and the night table. Ikea is a great place to go for inexpensive modern lights.
4. Clear off your counters - get rid of candles and holders made prior to 2000. Burn any flowers or plants that are synthetic or dried. This includes all swags, silk ivy plants, wreaths. Old wine bottles belong in the recycling bin not on top of kitchen cupboards. Store family photos in a rubber maid container along with the other stuff from your closets.
5. Window treatments - balloon valances, hanging blinds and cheap plastic blinds detract from the view. Ikea, Target, Walmart and even Home Depot, all sell neutral window treatments and wrought iron rods. Curtains can neutralize a room and create a clean modern look.

A lipstick renovation is all about painting the walls, putting down new flooring and following steps one through five. It’s important to remember, most women make the decisions and we love lipstick.

Cheers,

Julie

Cottage n. N Amer. a two story winterized dwelling complete with master bedroom, ensuite bath, spacious living and dining area, finished basement with home theatre system, used for vacation purposes, usu. located in a rural area near a lake or river (also attrib: cottage country).

I recently wrote an article for Cottage Magazine, Retiring to the Cottage. Conducting my research, one thing became very apparent - nobody is retiring to the “cottage” anymore. They are actually retiring to either a brand new custom built home or an extensively renovated property situated on a lake or ocean.

And it’s not just the retirees. On my own lake, Horne Lake, located on Vancouver Island, B.C., old cottages are being torn down and replaced with large homes.

David Foote predicted this trend in 1996, in his book, Boom Bust & Echo. It’s not the boomers, but their kids who, back then, were demanding more space. Eleven years ago it meant bigger homes, but it has transcended to second homes by the water or condos near the ski slopes. Regardless of where we go for our escape, we want a spacious living area and we want it nice.

Even the rental market for cottages has changed. Gone are the days when we would take our cast-off furniture from home, where, if it still works it goes to the cottage - don’t bother. According to Heather Bayer, author of Renting Your Recreational Property for Profit, today’s renters want clean contemporary vacation properties.

Once gentleman I spoke to at the cottage show described how all the old cottages on his bay had been torn down and replaced with year-round properties.

This past summer I spent a week at my brother’s waterfront home, complete with jacuzzi soaker tub, dishwasher, washer/ dryer and finished basement with big screen T.V. I came home suffering from cottage envy. It was nice having all those amenities.

Do more luxurious cottages take away from our experiences at the lake or enhance them? I’ll let you answer that one.

Cheers,

Julie

When it comes to vacation properties we all seem to fall into the same trap. We’re on holidays; we’re having a great time; the weather is awesome, and we start to think, ‘wouldn’t it be great to own a property here?’ So we casually check out the listings. We might even attend a few open houses just to get an “idea” of what things cost.

Before you know it, you start the discussions with your spouse. Actually in my case, it was a well rehearsed, premeditated sales pitch. Picture Bambi caught in the headlights with a Hummer barreling down on him, and you an idea our conversation went.

My husband is the voice of reason, whereas I am the voice of emotion. I know from personal experience that cottages are an emotive purchase. We seldom buy these properties for their investment potential; we buy them for their fun potential.

Could we have the same enjoyment from a rented cottage? Arguably yes. Lots of my friends rent waterfront homes throughout the Gulf Islands every summer and have a great time. A one week rental at on a Gulf Island, depending on the condition of the cabin, will start at $900 and go up to $2,400. A three bedroom cottage in Ontario with all the amenities  will range from $1,200 - $1,500. If you want the cottage for the whole season i.e. July and August, you can expect to pay $10,000 - $12,000.

If you factor in a mortgage, it’s cheaper to rent. So why do we own? There are close to 3 million cottagers out there and another 2.9 million who want to purchase one in the next three years. Roughly 18% of the Canadian population own or want to own a cottage. Did they do the math? I know I didn’t.

Running Car who commented on yesterday’s blog, “How Much Does a Cottage Cost,” summed it up best when he wrote,

“What value do you put on decreased stress or the 5 pound Walleye you just landed? I really don’t want to know what my cottage costs a year. I really don’t want to know what my gas bill is at the lake. All I really want to know about is the fun everyone is having there. That makes it all worth while.”

I’d love to hear how you “sold” your cottage to your spouse.

Cheers,

Julie

Have you ever sat down and calculated how much your cabin costs? I don’t mean how much it would cost to buy a cabin, but how much it actually costs to own a cabin.

Our cottage costs us $11,044 annually to operate (this does not include mortgage payments). When I totaled our expenses from this past summer, I was surprised to discover our biggest expenditures were not taxes and insurance, but gas and food. It seems we eat a lot more at the cabin and we burn a lot more fuel. Boat maintenance accounted for 20% of our total budget.

I then decided to calculate how much that works out to a day. I estimated we spent 45 days at the cabin last summer. That works out to about $245 dollars a day.

Well there you have it. Owning a cabin is not cheap, but as a cabin owner, I already knew that.

When it comes to dollars and sense (pun intended), a cottage is not a good investment. Now I know a lot of people, including myself, have realized significant capital gains on our waterfront properties. Ours has more than doubled in value since we bought it three years ago. But capital gains are not putting any money in my bank account. In fact, rising property values only increases my tax bill. Besides, I have no intention of ever selling my cabin.

Owning a cottage was a lifelong dream of mine. Hopefully, I will be able to pass this dream onto my children. That’s how it is with cottages; we buy them purely for emotional reasons. Douglas Hunter, author of The Cottage Ownership Guide, states, “Owning a cottage is an affair of the heart.”

This week at CottageDaily.com we will explore the costs of ownership and ways to minimize your expenses. We will look at what you should be doing now to offset your capital gains, if and when you decide to cash out, or hand the cabin down to your children.

Taxes: $1,284

Insurance: $ 932

Strata Fees: $828

Food, Gas & Repairs: $8,000

Memories: Priceless

Cheers,

Julie