Capitalize on your cottage

When you’re looking to buy recreational property such as a cottage, there are a lot of things to consider — many of them more sentimental than financial. But once you’ve narrowed down the emotional considerations, it pays to also consider the investment potential of a new property.

Here’s a quick checklist of things to consider before making an offer.

Property taxes: Regularly reassessing your overall finances will help give you a sense of whether the property is still within your budget.

Renting: Renting your property out to non-cottage owners and travelers is a great way to generate extra income which can then be put toward covering maintenance costs.

Renovations: Consistent maintenance leads to a better quality cottage that has potential to sell at a higher value.

Fractional ownership: Consider sharing property ownership with other investors. You pay an annual fee that covers the fractional ownership and maintenance, and with the right schedule, can still enjoy the cottage just as often as you likely would have otherwise.

And you have the option of re-investing the money you’ve saved on RRSPs, GICs and other revenue-generating investments.

Travel expenses: If you plan to use the cottage often, think about where it’s located. Will you need to fly, or can you drive? If you plan on visiting often, gas and flight costs can quickly add up.

Asset vs. profit: If you plan on holding the cottage for generations, you may be looking for unique retreats that aren’t necessarily real-estate hot spots. But if you’re investing as a revenue generator in the short term, you’re better off looking for up-and-coming cottage property on the waterfront.

Jacqueline Power is a tax director with Mackenzie Investments.