From cottage owner to landlord: 10 things to know before renting out your summer place

Thinking of renting out the family cottage? With so much demand for recreational homes from Canadians looking to escape the city this summer, opening your cottage to renters can be a great way to bring in some extra cash. “Cottage owners are seeing there’s a revenue stream they can tap into, and it does help them cover costs like insurance, taxes and maintenance,” said Kevin Byles, a second-generation cottage owner and Royal LePage agent with Glenhome Real Estate in Toronto. “Or in some cases they just need the income, maybe because their own personal income has declined because of the pandemic.” Given the significant values of today’s recreational properties and the potential liabilities associated with being a cottage landlord, it’s important to make sure you have all the necessary components in place to provide a great stay for renters while protecting your own property and interests. Read: Higher cottage values bring greater responsibilities Have adequate insurance in place Don’t assume your current cottage insurance policy will be adequate once you start renting out your property. Matt Hands, director of insurance at RateHub.ca, said it’s important to let your insurance provider know you plan to open your cottage to renters and to provide as many details as possible. “You need to be honest and tell the insurer if you’re planning to rent out for the entire season or only for so many weeks, and how many guests you intend to accommodate at any given time,” he said. A number of insurers won’t provide coverage to a secondary property unless they’re already insuring your primary residence, so it’s best to start with your current provider, said Hands. Once you have a potential policy in front of you, review it carefully to make sure all provisions—such as the amount and scope of coverage and the number of days you’re allowed to rent—meet your needs. Clarify anything you could potentially misunderstand, such as coverage for loss of income. “A lot of people assume they can get loss of income coverage if they can’t find guests to rent their property,” said Hands. “But this coverage is more for situations like your place burns down and you’re not able to rent for the season.” Take care of all the legal stuff A written rental contract is critical, said Byles. His own rental agreement specifies check-in and check-out dates, pricing—he explicitly states what’s included, such as taxes—the maximum number of people allowed, and potential additional charges for things like use of the cottage landline for long distance calls. His contract also includes an indemnification clause intended to protect him from liability should renters engage in activities harmful to them or to others. A security deposit to cover potential damage is also important, said Byles. For his cottage he asks for $1,000 deposit. While some renters might find this steep, there have been a few cases where it wasn’t quite enough to cover damage to his property, such as the time when racoons tore through the veranda screens after renters left food in the area overnight. In addition to ensuring renters review and sign off on the contract, Byles asks for documents such as government identification—a driver’s licence or passport—and, if applicable, a copy of the renter’s own home insurance policy. He also asks for the names of all the guests. Read: Cottaging this weekend? Here are 8 tips for sharing the family cottage Choose the right listing service While some owners like to rent through word-of-mouth, a growing number are listing their cottages through services such as Vrbo or Airbnb. To choose a listing service, do a side-by-side comparison of what’s provided to landlords. Byles said this includes things like liability coverage—Vrbo, for example, provides $1m liability—support and guest vetting procedures. The service you choose could also affect your ability to get insurance and the premiums you pay, said Hands. “A lot of insurers will want you to list with Airbnb or Vrbo,” he said. “Find out which services they work with or are willing to accept. You don’t want to find out down the line that your insurer isn’t working with the service you’re listing with.” Got all that paperwork done? Time to prep the property Renters should be able to move in easily and feel right at home, said Byles. As a starting point, make sure closets and drawers are emptied to make room for your paying guests’ clothes and personal items. “You’d be surprised,” said Byles. “I’ve been to two cottages renting for $10,000 a week and the owners left their closets full—they hadn’t made accommodations for renters.” As a courtesy, provide a starter supply of amenities such as coffee, tea, bottled water, toilet paper, paper towels and detergents for dishes and clothes. This will be especially appreciated by renters arriving late in the day when nearby shops have closed. While some owners ask renters to bring their own bed linens and towels, Byles has chosen to provide all these, with extra sets thrown in. He uses a service that gets the cottage ready for check-in and comes to clean up after check-out. “We’re like a hotel,” he said. “We provide little soap bars, shampoo, extra bed sheets and towels, and even toilet paper folded at the edges like they would do in a hotel. Our service does all that.” Read: The Old Man and the Lake Letting the renters use your cottage toys? Do this first If use of watercraft and recreational toys such as pontoon boats, kayaks, paddleboards or canoes are part of your rental package, you’ll need to ensure you have all these loaded with the appropriate safety equipment, said Byles. Think lifejackets, whistles, buckets, flashlights and an anchor for a boat. “For example, a paddleboard with no life jacket is a liability,” he said. “If your renter gets pulled over, that’s a liability concern not just for them but for you.” Stress the need for renters to check for up-to-date municipal rules Provide the website and contact information for the municipality so your renters can get the latest updates on rules around fires, water conditions and noise control. “Depending on current conditions, there may be a fire ban in place which means they can’t use the fire pit or make a campfire,” said Byles. “It’s really important that they check this, before and upon arrival and throughout the duration of their stay. We also them to be respectful by turning their music down by 10pm, which the law in our area.” As part of fire safety, it’s important to always have a fire extinguisher and a bucket of water near fire pits, he added. Read: The retirement gig Provide a manual and to-do checklist For his cottage, Byles has compiled a manual that includes everything renters need to know about his cottage and its systems, appliances and amenities. There are clear instructions about the toilet, septic tank, where and how to dispose of garbage and recyclables, fire extinguishers and the backup generator. There’s also a to-do list that includes reminders of what renters need to do in certain situations, such as bringing umbrellas inside if it looks like rain, and keeping doors closed. And yes, no leaving food outside—even on the screened veranda. Byles also includes the results of the latest water test—which he gets done weekly—to assure guests his cottage water is safe to drink and use. Make sure you and your family are safe too Personal security is something cottage landlords should never take for granted, said Byles. He stressed the importance of putting away personal photographs and any other objects that might reveal personal or family information. If you’re leaving sensitive items behind, such as medications, lock them away. This protects you from liability in case renters decide to help themselves to your sleeping pills and ensures nobody tampers with your medications. Read: Live longer, retire longer Let’s talk money: How much should you charge? Whether you’re a seller or renter, cottages are hot. As a cottage landlord, you can pretty much set your rates, sit back and watch the inquiries and bookings roll in. But if you’re going to charge premium rates, make sure you deliver a premium experience, said Byles. This is especially important if you want repeat business from the right renters—people who’ll appreciate and take care of your property. Potential renters may try to negotiate for a discount if they’re renting longer-term, but Byles said multi-week rentals don’t necessarily equate to economies of scale for him because he still sends in cleaning crew once a week. “We do insist the place is cleaned once a week to make sure the place is well kept,” he said. He has also resisted offers for long-term rentals if it means turning away good returning guests who come each year for a week-long stay. “Even if I haven’t meet these people I feel I know them for our exchanges and I would rather host them again then risk losing them for a one-time long rental,” said Byles. And if you’re thinking of renting for the winter months . . . Make sure your cottage remains accessible by keeping roadways and drives clear. Check that your heating system is in good working condition, with the ability to maintain stable temperatures, said Byles. “Also, provide sufficient firewood and kindling for the fireplace,” he said. At his cottage, he has installed polycarbonate screens to keep snow and freezing rain from coming in. During the winter months, he also reduces access to the cottage from five to two doors. “This year, for the first time we’re renting our cottage out for Christmas and New Year,” he said. “We know that will require a few more considerations, and we’ll be working with our maintenance team to make sure we take care of all the important details.” Read: Six hundred weekends

From cottage owner to landlord: 10 things to know before renting out your summer place

Register for free access or login.

Related Topics