3 things to think about before buying a cottage

We all dream of having a cottage where we can spend our weekends. But before becoming the owner of a holiday home, it’s best to do your homework. Most importantly, never buy on impulse! Purchasing a cottage requires as much forethought and preparation as buying a home. Here are three key points to consider before making the leap.

“Think about the activities you’d enjoy doing at the cottage, the distance you’re prepared to travel to get there, and your budget,” advises Martin Desfossés, real estate coach at DuProprio. “Then, all you have to do is find the secondary residence that fits your criteria.”

Contents:

• Take time to decide what you need
• Choose your ideal location
• Find out about the expenses involved
• Gather all the facts before buying a cottage

1. Take time to decide what you need

The first step is to list the reasons you want to own a cottage. How will you use it exactly? Taking into account what you really need will make your search more targeted and your decision simpler.

• Does it have to be accessible and functional all year (four-season)?
• Will you be doing winter sports there, summer sports, water sports?
• Do you want a large lot? Wooded or cleared? Near a lake? In the mountains?
• Will you be hosting several people at a time there?
• Will you work from there? Do you need office space and a fast Internet connection?
• Are you prepared to renovate or you want something ready to use?
• Do you plan to offer short-term rentals?

Desjardins tips

Useful tips before renting out your cottage

If you rent out your second home when you're not using it, you could generate additional income to cover some of your expenses.

Here are 3 things to keep in mind before you start renting it out:

1. Check if there are local regulations for how long and how often cottages can be rented out
2. Remember that your rental income—net of deductible expenses— is taxable and you must declare it
3. Tell your insurer that you intend to rent out your property
   • Any rental must be mentioned in the Coverage Summary of your insurance policy. It's important to inform your insurer, especially if a claim arises from your cottage rental.

If you're renting out your cottage on a rental platform, check what the insurance program covers.  Find out what you need to consider if you're getting ready to buy a cottage. 

If you can answer all these questions, you’re on the right track. There are sure to be several properties on the market that tick all your boxes.

2. Choose your ideal location

The second big aspect to decide on is location. Most owners of a second residence want to get closer to nature, be it in a modern condo, a rustic cabin or a green home.

• Will it serve as your refuge every weekend, or do you just plan to go for summer vacation?
• Is it important to have access to services and commodities (power, drinking water, septic tank)?
• What is the maximum distance you’re willing to travel to get there? Will traffic discourage you from going to the cottage?
• Does your current car allow you to access the property, regardless of weather conditions?

Naturally, the selling price will be directly influenced by the cottage’s location and the services around it. For instance, if you want to be on the water or near a resort, such as Mont-Tremblant, you’ll definitely need a higher budget.

“Normally, the demand is much higher for a cottage located within about 200 km of a big city,” explains Martin Desfossés. “Something in an isolated area is generally less expensive.”

Desjardins tips

Home insurance and water damage

Flood coverage is an optional coverage that you can add to your insurance policy under certain conditions. If your cottage is in a flood zone, the cost of this coverage may be higher or you may not be eligible. Contact your insurer to see if you're eligible for this coverage.

Learn more about the optional water damage coverages.

3. Find out about the expenses involved

The third thing to consider is the budget. Given your financial situation, is your dream of owning a second home feasible? Remember that owning a cottage basically involves all the same expenses as your primary residence. And keep in mind that you’ll have two properties to upkeep.

Calculate how much the home insurance, municipal and school taxes, hot water and heating will cost you. And don’t forget the notary fees, welcome tax and transfer fee to be paid out at time of purchase. And finally, there will be occasional costs involved in maintaining the property.

Desjardins tips

How much does cottage insurance cost?

Your insurance premium for a secondary residence can vary depending on several factors, including building characteristics, whether it's rented out to other people, and the coverage options you've selected.

Regardless of the type of secondary residence you have, cottage insurance includes liability insurance. This insurance covers you for bodily injury or property damage that you may have unintentionally caused to a person who doesn't live with you. This could happen if someone gets hurt on your property or if your campfire spreads to a neighbouring property.

Learn more about cottage insurance.

Financing for second homes

You should also be aware that lenders take a different approach to financing a second home. The mortgage could include more restrictions than the one for your primary residence. Ask a financial advisor about the best way to proceed.

Gather all the facts before buying a cottage

To really enjoy cottage life, it’s important to plan ahead. As a homeowner, you have the advantage of being familiar with the process of searching for and buying a property: visits, making an offer to purchase, inspections, seeing the notary… you’ve done all that!

Before officially buying a cottage, pay close attention to the municipal by-laws in the area, particularly those relating to urban planning and property rental. If you make an offer, make it a condition to have a satisfactory inspection of the property by a building expert. And don’t forget to take out home insurance that’s adapted to your new cottage, so you can rest easy.

By knowing your needs, your ideal location and your budget, you have the foundations to make your dream cottage a reality.

Are you rather looking for advice on selling your cottage or second home? Benefit from DuProprio’s support and save the commission by selling agent-free. Watch our webinar to find out more about our services.