Perhaps you’ve considered buying an investment property as a way to expand your investment portfolio. An excellent place to start is to consider an investment property in Muskoka and, more specifically, a cottage.
There are several advantages to buying a cottage as an investment property in Muskoka:
It’s easy to reach from the Greater Toronto Area (GTA)
You can use it for your holidays
You can rent it out when you’re not using it from as early as May to as late as Thanksgiving
If you winterize it, you can rent it out year-round
You can use the income from renting to help pay for the mortgage, property taxes, and upkeep
Before you start looking for an investment property, though, it’s important to think about all of the following:
How expensive of an investment property can you afford?
Do you want to use or rent out the cottage year-round or only in the summer?
How can you maximize the appeal of your cottage so it will be popular with renters?
We have some great suggestions to help you answer all of these questions. When you’re ready, we’re here at Northwest Mortgage to tell you all about your mortgage options for investment properties.
How much can you spend on an investment property?
As with buying your home, you don’t want to spend more on your investment property than you can afford. You must keep in mind that you’ll have to budget for additional items such as furniture, barbecues, and boats. As well, you need to have spare cash for any necessary renovations or repairs.
Consider all of the following when setting your budget for an investment property:
How much flexibility do you have in your budget?
Can you carry your mortgage if you lose your job or have trouble renting out the property?
What locations can you buy an investment property in? Popular lakes like Muskoka or Rosseau are quite expensive to buy property on. You need to consider where you can get the most bang for your buck.
At Northwood Mortgage™, we can give you a pre-approved mortgage test. It’s a free service that enables you to determine how much you are eligible to borrow before you start looking at investment properties.
How often do you want to use or rent out your investment property?
When you’re looking for an investment property, you need to consider how often you want to use or rent it out.
If you only want to use or rent it out in the warmer months, then you don’t need to worry about whether a cottage is winterized or not. However, if you want to use or rent it out all year round, you need to consider a few things:
Is it winterized? That is, does it have a source of heat and insulation, and could you be comfortable in it during the winter?
How do you access it? If your investment property is not available from the main road, is there snow plowing available? How much would it cost, and how reliable is it?
Are you comfortable with people having snowmobiles near your property? Also, would you be liable if renters have an accident snowmobiling on your property? This is something you’d have to discuss with your insurance company.
The advantage of having a cottage that you can rent out year-round is that you can make a lot more money. The disadvantages are that it will likely cost you more to buy a winterized investment property, and you may not find anyone willing to service it in the winter if you run into any issues.
How to Maximize the Appeal of Your Investment Property
If you are buying an investment property, it’s important to maximize its appeal. You want it to be attractive to renters and potential buyers if you decide to sell. There are several factors to consider when maximizing the appeal of your investment property:
Location, location, location. As with all real estate, location is a critical factor in how attractive a property is. Whether you or renters are using it, you’ll want somewhere that’s easy to access, and not too far from essentials, such as grocery stores and amenities like golf courses.
Accessibility. Is your cottage off a public road, a private road, or via water only? If your cottage is off a private road, you may have to help pay for the road’s upkeep, and it may not be plowed in the winter. If your cottage is available via water only, this may seem quaint, but it can also be very inconvenient. You need to keep in mind who is visiting. If it’s very hard to reach the cottage from the water, this may limit the appeal to people planning to include seniors on their cottage vacation.
The view. People go to cottage country to explore “the great outdoors.” Having a deck that looks out onto a beautiful view and gets the sun part of the day—can be a great selling point. Everyone likes to show off their vacation photos, so the better your property and the surrounding area looks, the more popular it will be with renters. As well, if you can find a place that’s directly on the water, then that’s a huge selling point.
How can Northwood Mortgage help you buy an investment property?
We are one of the largest brokerage firms in the GTA. Each year, our teams of experts arrange loans worth over half a billion dollars in commercial, residential, and industrial mortgages.
We have relationships with over 50 financial lending institutions. This means that we can offer some of the lowest mortgage rates around.
We’ll work with you to find the right mortgage for your needs. We offer a variety of options, including fixed or variable rate mortgages, open or closed mortgages, as well as high ratio and prime mortgages.
We Can Get You Started
We would love to see you purchase an investment property, and we can help you through the process! Call us today at 888-492-3690 or contact us online.