Here’s how Scott McGillivray says you can turn your cottage into rental income

Cottage season is approaching — meaning it’s the perfect time to make those much-needed renovations while you can. Whether you’re looking to upgrade your recreational property to increase value or you’re harbouring dreams of additional rental income, Scott McGillivray, real estate investor and star of the upcoming new season of Scott’s Vacation House Rules, has all the tips and tricks you need to make your renos a success. 

What should cottage buyers look for this year when it comes to future rental potential? 

You want to look at the things that are always going to be valuable, which is, number one, waterfront. In most cases, you’re going to want to look at the distance to a major city or urban centre — anything over two hours, the income potential drops significantly. And consider the opportunity for what I call a double peak rental season or at least extended rental seasons — so a property that’s on the water and close to a ski resort, so you can get your peak summer rental rates, and then you get a nice little extra boost in the winter.

If you can’t afford waterfront, what’s the next best thing?

 The next best option is to go off water, but with water access. If it’s a big beach or a very well-known vacation town, you might be a block away from the water, which is still very rentable. 

What’s a more lucrative bet: a complete fixer-upper or turnkey property? 

Doing the work yourself is typically a better return on your investment. A property that is distressed and unrentable holds less value than a turnkey property, but I look at it as a blank canvas. You can turn it into any theme; you can go low-budget, high-budget or mid-budget; you can take your time. A property that’s completely turnkey, you’re pretty much stuck with what they have. And I always say, if somebody is selling a turnkey, cash-flowing rental property, there’s something wrong with it because nobody sells a perfectly good cash-flowing property. 

In the new season of your show, you help a family transform their family cottage into a rental property. With the new capital gains tax, might this be a more popular option for parents passing down a property?

For sure — the capital gains tax is going to deter the average individual from making investments for the future in this capacity. For folks who are already in this space — they’ve had a cottage in their family for 40 or 50 years, and it’s getting passed down to the next generation — there’s a little bit of protection, if it is under $250,000, but some of these cottages are now worth a million. You still have a tremendous amount of exposure as a tax burden. So you’ll either have to sell it or rent it out. Renting might be the only way to keep it. 

For a complete newbie to the vacation property reno game, what are your top three pieces of advice? 

Do your research — find out what the attractions are to the cottage area, what the rental rates are going to be, how much your renovation is going to cost. You have to do some math. You want to be able to cover all of the expenses within 10 weeks of rental income. Next, plan your design — what’s your theme and colour? Marketing? What’s your brand? You want people to be invested in the experience before they even get there. And then the last piece of advice is to be your guest — put yourself in the guest’s shoes: is this a great experience? Or am I cutting corners?