Cottages, Cabins and Chalets
Summer is here!!! and for some its time to think about vacation properties.
There are many names for vacation homes in Canada. They are sometimes referred to as Cottages, Cabins, Chalets or vacation or recreational properties. In Ontario, many can be found in Algonquin Highlands, Parry Sound, Haliburton Highlands, Bracebridge, Huntsville, Kawarthas, Muskoka and Georgian Bay.

They are usually the second largest financial investment after a people’s primary property and home. Since there is a lot of money on the line, its important to know as much as possible and do some homework before purchasing.

Its more likely as the Baby Boomer generation gets closer to retirement, that some might sell their principal residence and move into cottage country.

Location
Its good to do research regarding what are the current hot spots and best areas to live in cottage country. How much are the taxes in the area. Where are the hospitals located, community centers, library, stores and shopping. Do they have water and swear works, and good roads with adequate road clearing in the winter.

Is it really necessary to be right on the water? Perhaps a home that is close to a marina where a boat can be docked is sufficient. Or if you like to ski, perhaps being close to a ski resort is the right spot for your cottage.

Are there any environmental concerns in the area. Perhaps the near by lake suffering from algey proliferation, foreign plants and fish that are affecting the habitat. How much does the water level rise or drop that could affect my property. Is there something being done, a community or municipal initiative to help keep the environment clean.

Are there many cottages that are now full blown homes, where they only have a septic system that may leach into the local water source or lake?

How close can a cottage be developed beside a lake? Perhaps its 100-150 or even more to avoid waste water contamination of the water.

Is the part of the lake or water way that my property is on, a busy boat traffic lane, or perhaps a popular fishing spot where fisherman park their boat all day or is it a private and very quiet area that is very naturistic and beautiful?

Expenses
A good question to ask is … are you your own department of wastewater treatment, sewage treatment, road maintenance and snow clearing or is it the municipality? Can the cottage be accessed in the winter months, it the cottage winterized and thus can be used in the winter? What about road access? If there is only one back road servicing many cottages, perhaps these cross private property. So it’s good to ask if the road is accessible and can be used. Also, where are the property boundaries and limits. Perhaps some of the property that looks to be part of the cottages land actually is owned by someone else or vice versa. So its good to have a land survey to determine any encroachment.

Its important to review zoning and building codes, is the cottage meeting the current zoning and building codes, or did the cottage exist before these came into affect? Perhaps the zoning and codes have been grandfathered for that property and home, thus any new additions or renovations, will require bringing the property and building up to the new standards. This could add major cost to any renovation or building project for the property. If an addition is planned to the cottage, some municipalities have rules, regarding square footage in relation to the size of septic tank required and septic tank size limits.

If you look at the cottage on the property as a tear down and rebuild, you shouldn’t look to what the next door cottage looks like, since it could have been built before the current zoning and other municipal rules took affect. It could be a grandfathered property and thus may give and inaccurate building view. Since every lot is different is important to have a specialist help you.

Taxes
Some good questions to find out are how much are the taxes in the area? Some municipalities are changing their taxing structures and reassessing properties. There will be a big difference in the amount of tax on just a piece of land, compared to the same land with a cottage will all the services activated. Some who only visit their cottage on weekends or only in the summer will feel that they shouldn’t pay the same as someone who lives in a cottage as a permanent resident. That they are not using all the services all the time. Whereas, a permanent resident might feel that the temporary residence, benefit from their tax money, in terms of roads, garbage pickup, hospitals etc. So it’s good to find out about the tax structures and how much the tax for the property will be.


Financing
Since obtaining a mortgage for a cottage may be a second financial investment the financing may be different. The financing company will look at all the risks involved to provide financing for this property, such as will the cottage stand empty for long periods of time, risk of fire, robbery etc. Does it have all season road access or only seasonal access? Is the property on an island? How accessible is it? If the bank forecloses and takes over the property, how long will it take them to sell? If it forecloses in the autumn, will they have to hold the property until the spring or summer to resell? Also the financing company may want paperwork for the property or cottage, such as a certificate of a reliable water source or a land survey.

Mortgage companies are getting more and more competitive with each other, this things are always change regarding interest rates and how much is required to put down. Before it was required to put 25-30% down, however today, mortgage companies are much more competitive.

Research
In some areas, they have community web sites and newsletters. Why not do some reading and research as to what is going on in the area you are thinking to move to. This could provide some answers regarding tax issues, environmental issues, future development in the area, water cleanliness, problems but also improvements and new municipal initiatives in the area.

Who can help
It’s best not to assume things but ask a specialist and find out. They can help you determine total cost of ownership and stress the importance of having a land survey and home inspection.

Buying or Selling a Cottage – Call Leif Kalaas today – he can help.