Real Estate Talk:
Renting your country home
The advantages, the disadvantages and is there a market?
By Joseph Marovitch
Updated May 15, 2019
You have that beautiful lakeside country home up north or in the townships, going to waste because you’re not using it. You’re too busy or you spend most of your vacation time down south.
The question is do you sell it or rent it? If you sell it and it is a secondary home, you must pay income tax on it. It may take time to sell, as a second home is for leisure and not absolutely a necessity.
Renting, on the other hand, can be a great option. Is there a market for nice cottages by the lake? The answer is yes, it appears there is a market for nice country home rentals.
To rent a country home there is an issue that must be verified first. Some municipalities do not allow short-term rentals of country homes; therefore, you must check with your municipality if there is a by-law restricting rentals. If there is not a restriction, you must then apply and obtain a permit to operate a rental vacation property from both the local municipality and Tourism Quebec.
Renting… can be a great option. Is there a market for nice cottages by the lake? The answer is yes, it appears there is a market for nice country home rentals…
Note that when you rent your property, a lease for a 12 month period falls under the jurisdiction of the Régie du logement du Québec, therefore, you do not sign a lease for 12 months or more. Instead you sign a contract agreement for 11 months or less. Country home rentals usually have periods of a weekend, a week, two or three weeks or a period less than 12 months.
There are several advantages and disadvantages to renting a country home.
- Rental income to pay utilities, taxes and upgrades
- You can enjoy the property part of the year
- All expenses are tax deductible
- The property value continues to grow expense free
- Rental property is seasonal
- Risk of property damage
- You must collect and pay taxes
- Insurance can be expensive
Solutions to the disadvantages
Since the demand for a vacation property is seasonal, the lessor can adjust the rent according to the seasons. Summer, Christmas/New Year’s, March break and other holidays are considered high season, therefore the rent should be higher. The rest of the season is considered low season since there is less demand. Therefore, you reduce the rent to compensate and continue a cash flow.
‘Since the demand for a vacation property is seasonal, the lessor can adjust the rent according to the seasons.’
Risk of Property Damage
Insist on a refundable damage deposit large enough to cover unforeseen cost due to damage by the lessee. It should be stated clearly in the signed agreement that should the lessee damage the premises or content, the damage will be deducted from the damage deposit. As well, charge an additional amount to cover the cost of cleaning the property after the lessee departs the premises.
It is advisable to collect a deposit upon the reservation and the balance of payment one or two weeks prior to arrival. This way the lessor does not have to chase the lessee for the rent.
Collection and payment of taxes
All funds should be received prior to possession. The collected taxes should be put aside in a savings account until they are payable in the quarterly tax report/invoice.
Ensure that the amount charged for the rental takes into account insurance costs and is therefore included in the rent.
There are several inexpensive websites to advertise the property on, including:
- VRBO.com (Vacation Rental By Owner)
These sites charge varied amounts to advertise but they do not insist on a percentage from your income unlike Airbnb.com and others.
‘When receiving an inquiry, vet the interested party as thoroughly as possible before agreeing to rent the property.’
Vacation homes are rented furnished. You can offer additional services such as firewood delivery, internet, TV and phone, and charge accordingly.
When receiving an inquiry, vet the interested party as thoroughly as possible before agreeing to rent the property. Families with children and responsible adults are usually not a problem. If the inquiry is from a group of student graduates or a group of men off for the weekend, be wary. You want the property to remain in good condition. If there is damage to the property that is beyond the security deposit amount, you do not want to chase the lessee for the money.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Have a great week!
Next topic: Vacation rental condos
State of the market
Last issue I discussed the increase in real estate investment in Montreal from national and International buyers. This past week, according to the Quebec Professional Association of Real Estate Brokers (QPREB), sales continue to increase for the 50th straight month both in residential homes and condos, as well as land, industrial buildings and income properties. According to Altus Group, which monitors Quebec real estate investment, investors include pension funds and institutional investors as well as foreign interests.
Montreal is still an untapped market on an international scale however, the world is noticing and corporations such as Swedish based Akelius and US based Blackstone Property Partners are buying as much as they can get their hands on, not to mention Asian and European investors who all have an eye on Quebec property.
Montreal real estate is on the rise but it will tap out over the next 10 years as a re-sellers market becomes the only game in town.
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible to, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org