What’s in a $$$ in cottage rentals?
How much is a fair price for a month, 14 days, week or weekend for cottage rentals in Ontario ? Should you have a nightly price? Are you in a position to rent out for 3 months? Do you rent the summer season out, and for how much? In this article we will ask these kinds of questions to help both the cottage renters and owners understand some basic principles on what is fair market value for cottage rentals.
1. Location-location-location. Like any rental amount, location is always one of the biggest factors in cottage renting. It’s not just about how far you have to travel, but more specifically, WHERE you are travelling to, and not just how close a spot is to the BIG CITY. If your largest client base is 12 hours away from your location, chances are, your rates will be lower than the more popular destinations: Kawarthas, Muskokas, Collingwood, Wasaga, Bruce Peninsula, Niagara Region…there is a short list for Ontario. The more popular the location, the more you will be paying. Weekly rates could run you anywhere between $875.00 on the low end for a small 1-2 bedrooms, to as high as $3,000.00 for a much larger 4-5 bedrooms on the main strip, in the peak season. How do you know? Check the local hotels and inquire what double occupancy for a single room would be. Ask what is included in the room and what time check-out is.
Example: June, July and August rates on a 3-4 star hotel within a 2 hour radius of the GTA will start at about $135.00 plus HST for double occupancy. (Remember, no kitchen, one night, possibly a basic TV with cable, no BBQ, probably no lakefront) x 7 days => $945.00. You haven’t paid for any meals yet and have to dine out.
2. Lakefront? Privacy? What’s the advantage? Waterfront is always more money because it’s rare. We have a huge province filled with thousands of lakes, BUT, they are not all inhabited with proper dwellings. There is ample camp and trailer parks, public areas to share the lakefront. If you have a cottage rental that has lakefront you are providing a premium. And if it is private, that much better.
Example: campsites in larger private or provincial parks can run you about $35.00 per night in June, July or August. A cottage with lakefront that is on a resort could be as much as $85.00 per night for a week. A privately owned cottage with lakefront could be as much as $150.00 per night. Lakefront with privacy is a premium.
3. Space, amenities, comforts? It all adds up in the end. Value is valued…..simply put. A well cared for, clean, modern and well stocked dwelling provides family with the value they are looking for when trying to get away from stress and relax during their vacation. It doesn’t mean that roughing it is not appreciated; it just means that appliances need hydro and hydro costs. You get what you pay for in the end.
Example: what are your annual hydro, property taxes, water cost, telephone bill, cable/satellite, etc?… Total it all up and divide it up according to your season. This is your basis for operating cost. If your goal is to recoup your costs, you’ll know how to price it out accordingly: start here. REMEMBER to always check your local area market (other cottage rentals, hotels, resorts) to help establish some basis for comparison with your competitive market. You want to be fair and marketable. If you have no services, just a little Bunkie in the bush, you could probably rent it out for half of what a 2-3 bedroom dwelling would offer, with all the comforts of home..maybe even less than that! But if you are trying to build a profit margin that you can grow the business with, you are going to have to find ways to build value into the dwelling to justify charging MORE. Modern amenities, free wifi, satellite, movie selection, dishwasher, hot tub, toys for the water, volume rebate plans…there are a lot of different ways. Do your homework.
Know your market and do your homework. Cost is absolutely the most essential area to properly market your cottage rentals. Too high, and you have a vacant space and no revenue. Too low, and you lose money during the peak season. Above all, don’t be afraid to negotiate with repeat guests and the families that you know will love and respect your cottage rental and your cottage rental community. Those are the best customers!