How to get a bargain
Whether you are searching for a cabin, a cottage, or a camp, an affordable one is the holy grail of waterfront properties. Yet what’s affordable for one buyer may be beyond the budget of another. You may be prepared to pay more if the property has a beach or other kid-friendly waterfront; someone else may value the deep, cold water—and great fishing—of a lake on the Canadian Shield. A third cottager may care less about being right on the water than being close to a town or other attractions.
When it’s time to search for your dream cottage, keep in mind that a few general tenets hold true:
- Cottages close to larger cities—say, within one-and-a-half-hours’ drive—will cost more than more remote ones.
- A cottage in move-in condition will cost more than a fixer-upper.
- You will pay less for a water-access cottage (i.e., where you have to take a boat to get there) than one with road access (with one exception; see #4).
- A private island will be more expensive than a lot on a shared island. It may even be priced higher than an equivalent road-access property in the same area.
- Winterized cottages command higher prices than seasonal places.
- Cottages on rivers are typically less expensive than those on lakes.
- You will pay less for a cottage on a backlot (i.e., one or two streets away from the water) than for a waterfront property nearby.
What happens if you’ve considered all the options and you’re still short of cash? The good news is that numerous strategies exist for getting around the high cottage price tag. You will find them here, including ways to share a cottage with family members—or your best buds—and still remain on good terms.
Buy a fixer-upper
And while you might think that a reno will save you big money, that isn’t necessarily so. “Renos typically have a cost factor of 1.5 times the cost of new construction,” says McCormack. If you’re renovating 40 per cent of your building, that will still work out to be cheaper than a new build. But if you’re renovating 80 per cent of your cottage, knocking it down and starting over could be more cost-effective and efficient. How do you know if it’s time for the wrecking ball? “If you’re converting an older cottage to a four-season home, and you’re going to be gutting it, putting in new windows, siding, and insulation, the only part of that building you’re saving is the cheapest part of it,” says Andrew Waddell, a contractor and the owner of Waddell Custom Homes in Apsley, Ont. “You’d be better off starting from scratch.” Still, there are disposal costs involved in tearing a structure down, and they can add up quickly, especially if the cottage is water access and barging is required—something you’ll want to factor into your decision.
So when should you opt to renovate? If you love the existing cottage and the changes you want to make are limited—say, a kitchen and bathroom redo, rather than a full-structure rebuild—renovating makes sense, says McCormack. Environmental factors may also come into play—it’s kinder to the planet to reuse than to build new—as can a remote location, where it may be easier to bring in what’s needed to renovate than it is to transport in what you’d need to rebuild.
Of course, in cottage country, there can be another significant advantage to renovating: existing structures may be grandfathered under newer building codes, meaning that your cottage or boathouse may be closer to the water or bigger than you’d be allowed to build if you were building new. Still, there may be restrictions. You may have to add onto the back of the cottage—away from the water—or face limits on adding to the width of the building or to its height with a second storey. Septic-field regulations may also limit the number of bedrooms or bathrooms you can add. (One suggestion from contractor Waddell: consider upgrading your septic system if you’re doing a reno anyway.)
While an escape from the burbs is what draws many cottagers to the country, make sure you play by cottage country’s reno and building rules to ensure that you maximize your enjoyment and minimize headaches now and in the future. —Kim Pittaway
Share a cottage
Nonetheless, more and more people are opting for sharing as a way to get into the cottage real estate market. It may seem obvious, but you really have to consider, before you get too far involved, who it is you’re joining forces with. It may be all laughs and giggles when you have dinner with your good pals once a month, but owning a property with them is an entirely different matter. How are they with finances: bills, mortgage payments, etc.? Are they handy when the inevitable small fix-it tasks come up? Are you certain you can spend a lot of time with them, or are you prepared to tell them that you want to keep your time at the cottage separate from theirs? And are you in agreement about these and countless other matters?
Before you even begin to look for a cottage with another party, you must first explore all the issues that may come up between co-owners. That’s where a sharing agreement comes into play. It’s in everyone’s best interests to agree beforehand on how to use the cottage, on divvying up duties and responsibilities, and on general practices. You can get as detailed as you want with your agreement, and remember to ask as many “what if” questions as you can think of (“what if one of us dies?”, “what if one of us remarries?”, “what if one of us gets transferred across the country?”, etc.).
For more on how to draft a sharing document, read this article by Peter Lillico, a lawyer who specializes in sharing agreements and succession plans. —Blair Eveleigh
Buy a fractional
So, what are the pros and cons of owning a fractional?
It’s cheaper. Each share is usually under $150,000, some as low as $40,000, making it much more accessible to buyers, especially in premium areas.
It comes with perks. Some include access to resort-type amenities, such as a pool, boats, golf carts, a spa, and a fitness centre.
You own it. Unlike some timeshares where you buy the use of a property, your shares come with a deed and you own the actual real estate. “The fractional owner’s interest can be freely bought, sold, bequeathed, gifted, and foreclosed on, all without affecting the other owners,” says Jon Zwickel, the president and CEO of the Canadian Vacation Ownership Association, the industry group for vacation ownership like timeshares and fractionals. It may also be possible to exchange weeks with other owners—at your property, at another development, or even internationally.
It’s no-maintenance. Just show up with your clothes, food, beer, books, and board games.
And it’s low commitment. “We didn’t want to feel tied down,” says one owner, referring to the pressure many cottagers feel to use a property at every opportunity. “We would have felt guilty if it was lying empty most of the year.”
On the other hand…
It’s structured. Want to take an extra-long weekend, or spend your birthday at the cottage? The bottom line is you can’t use the place whenever you want.
It’s not mortgage friendly. “Financing can be very difficult. Traditional lenders have convinced themselves that the asset is risky because of the shared ownership,” notes Zwickel. “Many people finance through a personal line of credit.” Also, remember that the annual fees can easily go up, depending on maintenance issues, property tax increases, utility costs, and the like.
It’s not your place once you leave. You have to clear out your stuff at the end of your week, as you would with a rental property. (Some developments have storage lockers.) You can even be fined if it takes the housekeeping crew longer than a designated time to clean up.
It comes with rules. Read the homeowners’ association bylaws before you buy. There will be restrictions on smoking. Some fractionals are pet-free. No redecorating, no repainting, and no marking the kids’ heights on the door frame.
If you decide a fractional is the right option for you, you still have to do your due diligence. Use a real estate lawyer who has experience in this field, have a title search done, and have a clear understanding of the paperwork. —Bonnie Schiedel
If you are province-hopping, you may want to keep your home address under your hat so that sellers don’t assume that you’ve got bags of out-of-province loot in the trunk of your car. As well, don’t assume that every property is a bargain just because it would be more expensive closer to home: take the time to research areas and prices so that your offer is in line with local property values. —Kim Pittaway
Buy at a tax sale
That’s the theory, anyway. In practice, the property list usually dwindles by the sale date, as owners face the music and pay their back taxes. It’s not uncommon for a list to drop from 300 properties to 11 in the four-month notice period. Other pitfalls: neither the bureaucrats nor potential buyers can gain access to inspect the property before the sale. Even after the sale, in Nova Scotia, for example (similar rules may apply in other parts of the country), if taxes have been in arrears for less than six years, the original property owner has six months to pay the outstanding taxes and redeem the property. (Winning tax sale bidders do get their money back plus interest.) And, if there are tenants in the premises, evicting them is not allowed. Sometimes, if it’s a “redeemable” property (that is, the owner still has the option of paying off the outstanding taxes), the owner can occupy the property until the closing date—so you can’t be sure what condition it will be in if and when it does close. “It’s very rare that tax sales complete,” says Ozzie Jurock, a Vancouver-based real estate advisor. “But as long as you go in knowing this, and you have patience to play the game, there are deals to be had. —Josey Vogels
Look in fall
There are reasons besides price to look in fall, though, says Haliburton broker Anthony vanLieshout of Royal LePage Lakes of Haliburton. “I’ve always felt that fall’s the best time to buy,” he says. Many of the lakes in his area are reservoir lakes, where water levels drop two to nine feet in the fall. “You’ll get to see the shoreline at its most visible, and see what the low water level is like. And with the foliage coming off the trees, you’ll see the cottage’s privacy level when it’s at its worst.”
Land O’ Lakes broker Chris Winney of Royal LePage ProAlliance Realty tips towards spring. “It’s wet,” she says. “In my experience, water is one of the worst enemies of a cottage, and in spring, you’ll get a good sense of how dry the cottage stays.” You’ll also see how water-laden the ground itself gets.
And what about winter bargain hunters? “I get nervous when people buy in winter,” says Winney. “You can’t see the shoreline, and unless you or the agent knows the property or has good photos of the shoreline, it’s hard to know what you’re getting. —Kim Pittaway
Illustrations by Ray Fenwick