Anxious cottage buyers getting desperate
By Gordon Powers, Sympatico / MSN Finance
Canadians are willing to make big sacrifices to own a cottage, and more want to use their oasis year-round as a recreational property or even as their primary residence, according to recent research by Royal LePage.
To pursue their dream of buying a recreational property, most would be willing to do just about anything. That includes purchasing a property with family or friends, renting it out to make ends meet, making it their primary residence, buying a handyman special, or downsizing their city home in the hopes of building up equity somewhere on the water.
What didn’t make the list though were fractional cottages, which is surprising since they seem to popping up all over, particularly in Ontario and B.C.
Fractional ownership is somewhat similar to purchasing a timeshare, but with important differences: You purchase one or more shares in a cottage, often part of a larger development, and are assigned proportional weeks of usage called intervals. Normally, you’d have access to your cottage five weeks per year, one week in every season, plus an additional week. The cottage remains empty a couple weeks each year for maintenance and repairs.
Since setups like these are available to the owner for more of the year than a timeshare, they’re often easier easy to rent out when unoccupied. And many fractional properties are linked with larger vacation-exchange networks like Resort Condominiums International.
What’s the catch? Well, it’s not your own place so you can’t leave your photos lying around and there are generally lots of rules. In some developments, for instance, you can’t hang bathing suits out to dry or barbecue just anywhere. Nor can you make any changes to your decor or furnishings without your co-owners' approval. And only some are pet friendly.
Still, for as little as $50,000 and $150-200 a month in homeowners association fees to cover maintenance, power, and property taxes, this kind of shared ownership can be an attractive option for some.But you're definitely paying a premium, depending on the location and the level of amenities.
Would it work for you?
Posted by: Trepidum | Jun 19, 2021 8:32:11 AM
I have enough work to do keeping my own house clean and in order without having to bother about another property where I wouldn't spend too much time. For those who love cottages and that kind of lifestyle I guess this would be attractive.
Posted by: Lori | Jun 19, 2021 9:21:31 AM
Why would anyone BUY time at a cottage for $50,000.00 when you could just rent one for a week for much less and invest your money into something that is worthy of investment. I am not sure why anyone would make such a bad decision.
Posted by: jojo | Jun 19, 2021 10:28:47 AM
these people need to give their head a shake, cottages are extremely overpriced to begin with..a cottage is deffinately something you RENT not buy...have your fun for a week and leave, let the owner deal with the rest of the headache.
Posted by: Ian Munro | Jun 19, 2021 10:33:26 AM
We used to own a cottage which was expensive to maintain and always lots of work instead of relaxation & enjoymnet. We then tried renting which was expensive for only a week or two and which had things broken or not working when we arrived while we still had to deal with cleaning before we left . We now have purchased a fractional which seems like a reasonable investment, is maintained by a staff and we simply have to show up and enjoy ourselves for five weeks a year. Works for us !
Posted by: carolyn | Jun 19, 2021 11:22:22 AM
We bought our cottage 2 years ago. It was a handy special that has needed a new roof, new flooring and general clean up. We might put as much as 50000.00 eventually in to it, but that can wait untill we live there year round. What we have done so far makes it more than livable as a cottage. North of TO is beautiful but out of the question. Our kids live in Kitchener and we knew the drive would kill everybody. So we went south. Our cottage is on Rondeau Bay. It's less than a 2 hour drive for our kids. There are many nice spots this direction, it simply depends on your wants and needs. If we need the money we will rent the cottage for a month every summer. We will retire here for sure. Fractional might be the answer for some but for us spending the time and energy to make it our own has been more fun than not.
Posted by: Accter | Jun 19, 2021 11:29:51 AM
I have a ski condo I bought about 3 years ago now and have watched the rise of fractional ownership with interest. Where I am at they have most commonly sold 1/4 shares. It is the price that is the main issue. Spending 50K on 5 weeks might seem like a deal to people (as 50K is pretty easy to get into) but is that property really worth 520K? Where we were at I paid 150K for a nice older 2 bedroom condo. Now they sell 1/4 share ownership at 100K each (400K total) across the street. The interesting thing about this is that there are similar total ownership condos in town for 300K so there is a fairly large price premium (give or take about 30%) over traditional ownership. With the much lower price they attract a larger buying group but it also allows for the increase of the price.
I can see with cottages how it might be advantageous to have somebody else maintain it (I have done the multiple house thing and it isn't always easy) but with condos this doesn't really apply as they are low maintenance. All in all I personally don't see an advantage to the fractional ownership because you are paying too much of a premium over traditional real estate.
P.S. A recreational property is great as there is nothing better in life than jumping in the SUV Friday night and going out to the mountains and having another home to crash at with all of the amentities and gear you need.
Posted by: Aurie | Jun 19, 2021 1:25:44 PM
we own timeshare in Mexico where we spend some time in the winter and also a mobile home in a park on Lake Huron ( water front with plenty of beach ) . We paid 40 k for a brand new 40ft park model with plenty of room for a family of 6 and pay a seasonal rate of 1400.00 !! no work just drive and play !!! Trailers are a definate option for many ....
Posted by: Mike P. | Jun 19, 2021 1:43:50 PM
Regardless of the option being considered, potential buyers would benefit from doing their homework. That homework would include an honest assessment of whether such ownership aligns with lifestyle in the city, long term goals/potential, degree to which you object to doing periodic maintenance and regular cleanup, opportunity costs of pursuing competing investments.
Posted by: Domenic | Jun 19, 2021 2:23:33 PM
I have found owning a cottage has been rewarding. Yes you do have to maintain it but if your going to spend the money and the time it is well worth it. We rent out the weeks that we are not there and it covers my payments for the year. It has gone so well that I purchased the property next door still have both rented out. I will continue renting and eventually have a place where we can build our retirement home . All thanks to renters and our hard work.
Posted by: Todd W | Jun 19, 2021 2:36:44 PM
We own a cottage on leased land at Sauble Beach. A great location with a lease that is around the same price as property taxes anywhere else. We paid a fraction of the price of an equivalent cottage elsewhere. Beautiful beach right out our back door.The sunsets on lake Huron are spectacular. Walking down the white sand beach reminds me of Florida. Most of these cottages come with everything included (beds,furniture,etc) The only problem is that you cannot get a mortgage for leased land cottage. They do have rules like no renting but people do rent to family and friends. This was the best purchase that we could have made.
Posted by: Not a cottager | Jun 19, 2021 2:38:57 PM
I really don't get the cottage mentality. Work all week, cut the grass at home & then hop in the car, fight traffic to cook & clean & cut the grass again! Then fight traffic home again, not to mention the relatives who visit! If you live in a condo or apartment in the big city, maybe. Alot of people don't see the sense in buying your primary residence, I just don't see the sense in sinking alot of money in a place you only use weekends & the occasional week or two. Rent a place, if the area isn't suitable or becomes too crowded, you can easily move on.
Posted by: TJ | Jun 19, 2021 2:44:52 PM
Bought in '94. Value increased nearly 400% since then...... Not too bad considering what a compounding GIC might produce in the same time frame. Stocks performed better but didn't come close to water front real estate. Location, price and personal comfort with maintenance are all factors to consider.
Not likely to ever get the keys away from my wife. The lake is her sanctuary.
Posted by: Bob | Jun 19, 2021 2:52:30 PM
Fractional ownerhsip is a marketing dream as is the come on in the original post. They are essentially selling you the same cottage but at a multiple of the orignal. Plus your 4 to 5 weeks a year are not all in July or August. You are luck to get your one week in that period since their are 10 other owners.
Posted by: Bruce H. | Jun 19, 2021 3:13:51 PM
From a financial point of view fractional ownership is a liability, not an investment or asset. You and ten others pay a large sum of money, often twice the fair markey value of the property for the right to use it for five weeks a year; then pay a maintenance fee that you have no control over and is outrageously expensive for value received. These projects are run by entrepreneurs looking for a large return on investiment. Look at the time share market. Owner often walk away or try to sell their share for as little as ten cent on the dollar.
Posted by: Brian Landers | Jun 19, 2021 4:23:36 PM
I don't how there can be such a market for "cottages" is BC because we don't have any here.
We have cabins at the lake on on an island but we don't have cottages.
That's an eastern thing.
We have enough eastern things here as it is.
Posted by: Tyler | Jun 19, 2021 4:24:28 PM
I live in Manitoba where the real estate market is extremely affordable, city and vacation. And yes, we have beautiful lakes, no smog, or traffic, only an hour from the city.
50k for a piece of someones action........that's just plain dumb. Do your homework!
Unless its lakefront with no neighbors and you are on a quiet lake, it aint worth it....
who has convinced all you smart educated Ontarians that its worth the $$$?
Barrie? Orillia? Not impressed.... whats this rat race nonsense going to and from the cabin?
It must only be in Ontario.
Wake up!!! Get out now while you still have something to hold on to....
Posted by: Angela Clarke | Jun 19, 2021 4:25:03 PM
I purchsed a cottage (my dream home) in haliburton four years ago and its is the best thing I've ever done, especially from an investment standpoint and own a condo in Mississauga. For the most part, I go there on Friday and back in the city on Sunday, but without my cottage, I probably would have a nervous breakdown. It is where I am happiest and it gets me ready to come back week after week for the stresses of my job. I started renting it out last summer and it is truly worth it from a financial standpoint. I hope I never have to live without my cottage.
Posted by: Joe | Jun 19, 2021 4:33:32 PM
Stop posting articules designed to drum up th ereal estate market.... with the baby boomer cycle in full retierment mode alot of cotages are being bought up but the when the boomers start heading back into the cities because of age or illness you will see a flood of recreational properties on the market.
Posted by: Ken | Jun 19, 2021 5:12:30 PM
I dreamed of owning a cottage for years and the end result was to drain my talents. I can go out into my back yard and camp out. I can put up a pool. I can harvest products and make wine. I can buy a time share in a cottage by providing wine for the occasion. The average person needs to smarten up and think in terms of years ahead. the cottages will be a dime a dozen and the baby boomers will be hawking their rotting properties for pennies on the dollar. Think cost effective and things will fall into place.
Posted by: cottager | Jun 19, 2021 6:11:05 PM
We dont expect everybody to understand the "cottage mentality". Some buy for the beauty, some for the memories and some for an investment. There not making anymore lakes but they are making lots of financial advisors. Take your pick and be happy with your choice.