CHAL£T - Tyrolean

Invest
CASE
I vacation
StUDY:
bDORM.
property
CHAL£T
Collingwood,Ont.
Purchase date: June 2005
Purchase price: $280,000
Rent during
high season: $5,000
Rent during
low season: $2,000
Peter Gountounas, owner and operator of Blue
Mountain Resorts, is an experienced investor, but
it was only four years ago that he began to focus
on vacation property rentals, feeling that this
might be an untapped area with high returns.
"I believe investing in recreational properties
because rents on vacation homes are typically cheaper than
traditional travel accommodations, which is more attractive to
travellers;' he says."But they are high enough to bring in cash to
pay the mortgage and upkeep costs:'
Another bonus he felt would be that because the property
would only be occupied half the year, it would create less wear
and tear, thus requiring less maintenance. Additionally, he'd be
able to use the property for his own quick getaway.
In June 2005, Gountounas purchased a six-bedroom, twobathroom 3,000 sq. ft. cottage in Collingwood, Onto (minutes from
Wasaga Beach and Blue Mountain Ski Resort) for $280,000. The
cottage spans three levels and has a sauna and patio deck.
"During high season the cottage is fully booked and the rate
Shediac Bay, N.B.
Average price
Waterfront
Water access
$137,000
$130,000 - $300,000
Source: Royal LePage
T
he economy in Moncton and the
nearby Shediac Bay is performing
better than expected due to its
diversity. The area is not associated
with anyone industry or employer and
the workforce is varied, thus helping
to lessen the impact from negative
economic times. This f.1ctor coupled
with affordability is boosting activity in
the recreational property market.
"The Moncton paper recently
reported that New Brunswick is out
of the recession," says Carla Bouchard,
local Realtor at Royal LePage Metro.
"Be that as it may, our economy, like our
real estate market, is more conservative
than in larger urban areas, and we
experience neither the excessive highs
nor the devastating lows that can happen
in Ontario and the western provinces."
Off to a slow start earlier in the
year due to a severe and long winter,
the recreational property market is
24
of return varies with each rental.
During the low season the cottage
is booked only half the time:'
In the winter and summer
months, the property has a rental
revenue of about $5,000 per month
and in the off-season it drops to
about $2,000 per month. However,
this is still enough to cover the
mortgage and additional costs.
"Once all expenses are paid, the cash
flow of this one unit is equivalent to
the yearly salary of a general labourer:'
The most common issue he'sfaced is dealing with problem
visitors. "From time to time there are issueswith unruly renters and
damages to the cottage that are beyond your control," he says,
adding that it's a good idea to do routine checks on a property
whenever a tourist checks out and before another checks in.
Gountounas prefers to manage the property himself instead
of hiring a property manager because it can save up to half of the
rental revenue, he says.While advertising on third-party websites
is one way to go, he advises those investors with several vacation
rentals to set up a personal website. Gountounas' own website,
vacationsatbluemountain.com was created with this in mind, and
he says it has helped him establish his business.
performing slightly better than last year.
"Low interest rates are a motivator in
that buyers believe that now is a good
time to buy and that rates may increase
in the near future," adds Bouchard.
"There is also a reasonably good variety
of property from which to choose."
Additionally, the Greater Moncton
area has put itself on the map by hosting
a variety of functions, including the
Canada-wide National Car Show,
concerts by top performers and the
Acadian Festival. Such events bring
many tourists to the area, some of
whom will choose to rent a cottage and
stay for a few weeks.
Because New Brunswick and the
Moncton area have a high percentage of
bilingual people, tourists from Quebec
feel particularly comfortable in the
area. High season is roughly from May
to September.
Recreational property areas are primarily
outside the city including Shediac Bay,
which continues to be a desirable area
for buyers and visitors alike. Over time,
the area has expanded to include Grande
Digue, Barachois and Cap Pcle.
"This area is probably the most popular
for rentals, as it is close to the city and has
very impressive beaches," says Bourchard.
"Others areas that are a bit further away
from the city, but are still near enough for
daily commuting, include Bouctouche,
Rexton and Richibucto."
Generally, tourists look for cottages
on the water, or that have access to
water, or a water view. Another draw is
being close to activities that the entire
f:lmily can el~oy, she says.
The average price of th is type of
property varies from low to highend, between $100,000 and $500,000.
Currently there is a three-bedroom
cottage for $230,000 in Shediac Bay on
Parlee Beach that could rent between
$1,200 and $1,500 per week during
high season. A 20 per cent down
payment of $46,000, interest rate at
four per cent and 35-year amortization
would afford a monthly mortgage
payment of $811.
A similar property further out in
the Bouctouche or Richibucto area
would cost about $180,000 and produce
rental income from $675 to $800 per
week during high season. The monthly
mortgage payment on this example
would be $635, if the investor pms 20 per
cent down and interest is at four per cent.
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