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Is Buying A Cottage Outside Montreal A Good Real Estate Investment?

A look at the (financial) pro's and con's of holiday home ownership.

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Buying a recreational property or holiday home is usually thought of as an emotional purchase – an idyllic escape from city life – rather than a sound financial investment.

That being said, Centris data was recently published by Montreal Times which saw property prices at the base of Mont-Tremblant’s ski station rise by 30% in the first three quarters of 2018 alone. By that account, the recreational rental market may be a serious contender for budget-restricted investors.


TL;DR: In some rural areas of Quebec, appreciation rates are just as high as on Montreal Island. However, chalet ownership comes with its own set of risks and hassles. All in all, recreational homes can be good investments provided you know where to look, and have a realistic understanding of the expected costs and returns.


At $186,000, the average condo in Mont-Tremblant Village comes with a far more affordable price-tag than a Montreal condo, and appreciates at a comparable rate (8% vs 11% in Downtown Montreal).

According to the Montreal Times article, the condominium sector in Quebec’s recreational areas is gaining popularity, as buyers and investors increasingly seek low-cost, low-maintenance properties.

Median home prices have significantly risen for condominiums in Mont-Tremblant, Saint-Sauveur, Morin-Heights and Saint-Faustin/Lac-Carré- all areas in high demand due to their proximity to slopes and hiking trails. 

What about chalet appreciation rates?

We looked into the latest (December 2018) data in popular recreational areas outside Montreal. The areas that recorded the best appreciation rates for detached homes this year were:

Laurentian Mountains:

  • Morin Heights (median price of $313,250, appreciation of 17%)
  • Mont-Tremblant (median price of $324,000, appreciation of 14%)
  • Saint Sauver (median price of $275,000, appreciation of 11%)

Eastern Townships:

  • Stanstead Town (median price of $134,000, appreciation of 34 %)
  • Magog (median price of $282,500, appreciation of 21%)
  • Lennoxville (median price of $205,000, appreciation of 11%)

Other considerations 

So what are the risks of buying a chalet / cottage as a rental investment?

The biggest pitfall will be the “cottage upkeep – ” both in terms of long term renovation costs, and the continual maintenance required from a short term rental.

Certain annual costs will be higher in cottages than in urban homes – such as heating and insulation costs, garden maintenance, pest control, and dock maintenance in the case of waterfront properties.

Vacation homes are also far more illiquid than urban ones – which means that if you need to pull out of the investment, you just might spend years waiting for a buyer.

Renting holiday properties is easier than ever with the rise of home-sharing platforms such as Airbnb. However, investors should do careful research on expected vacancy rates and on the laws surrounding rental permits in the area.

The Verdict

The question of whether buying a holiday home is a smart investment comes down to these questions – which every buyer should ask themselves before taking the leap:

  • Are you tying up the entirety of your savings to buy a cottage? If so, the investment will be a risky one. Chalet maintenance costs are high, and you will need a comfortable cushion for upkeep and unexpected renovations.
  • Are you buying in a desirable area? Be sure to do your market research to find easily accessible areas that are coveted among weekend vacationers. This will determine your vacancy rate, your resale value, and the overall return on your investment.
  • Is the property winterized? A cottage that is only a few steps removed from a wooden shack will become inaccessible in the Quebec winters, and will be harder to rent out or resell.
  • Do you plan on eventually living in it? If so, you can be less worried about resale, appreciation rates and illiquidity.
  • Do you have the time and know-how to upkeep a cottage? Or alternatively, have you factored in the additional costs of a cleaner, handy-man and property manager?

All in all, can you benefit from chalet life and still make a tidy return on your investment? Yes you can. You just need to know how to number-crunch, and where to look.


This article, Is Buying A Cottage Outside Montreal A Good Real Estate Investment?, appeared first on Shupilov News.

 

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