Would-be buyers in the hot recreational property market in and around Calgary may want to consider renting out their unit to offset costs, but there are a few things to consider before offering up the space to strangers.
Whether opting to find interested parties oneself, or tossing a recreational property share into a pool, the experts say renting out your digs is worth looking into.
Taking the plunge into a rental pool offers a variety of options — and some are better than others, says Barry Kozmyk, a Canmore condo owner who also rents his home away from home out when he’s not using it.
“The one I like is dependent on how a building does (in terms of rental revenue), not just individual suites. I like it because I can use my unit as much as I want.”
But Kozmyk, who is also a realtor with Royal LePage Rocky Mountain Realty and is currently selling the recreational property, Silver Creek Lodge, says buyers should be prepared to wait a few years before seeing any real bang for their buck in rental profit.
“The first year it is harder to maximize your revenue because you don’t have the huge referral business and they may also have incentives in place to generate interest in people staying there,” says Kozmyk.
He estimates money made from renting out his suite covers condo fees and taxes, as well as a portion of the mortgage. While not a true reflection on what owners take home, the going nightly rate paid for a one-bedroom condo ranges from $150 to $250, with two-bedrooms fetching in the $200 to $400 range during peak times. Higher-end, luxury spots can net even loftier amounts and Kozmyk says there is a market for those investments.
That Canmore is becoming a tourist draw figured into Kozmyk’s decision to buy, he says, citing a trend in recreational property ownership by Calgarians, as well as residents from elsewhere in Western Canada, and a growing number from the U.S. and overseas.
“It is just an hour away (from Calgary) and 75 minutes from the Calgary International Airport,” he says. “It is a year-round playground and I think that’s key — a lot of people think we peak here in the winter but it’s actually the summer. It’s a lifestyle choice — not only can you golf, but you can also hike, ski, mountain bike and fish.”
Personal use of a revenue property requires some advance planning. And that could mean opting to hang your own toque there only during slower, “shoulder” seasons and giving the rental pool administration three to six months notice of when you intend to use it.
“If you are in a rental pool and you intend to use is personally in the summer, you should realize you are giving up the highest room rate of the year,” says Kozmyk.
Anyone eyeing the prospect of a buying a condo to put into a rental pool should know a couple of things in advance, he says. Firstly, because it is not a primary residence and will be leased out, it is considered commercial property and is subject to the full GST.
And cleaning is always a concern when not using a rental pool, says Kozmyk, adding that even when owners use the unit themselves, maid service is included in pool fees. “You usually just get invoiced on your monthly bill,” he says, adding this can add to the convenience of owners and add to the appeal for tourists, who net the benefits of hotel living along with their rental pool perks.
Buyers also have the option to rent out units themselves, but that may translate to more legwork and less return. It’s a matter of weighing the pros and cons.
“There are property management companies that specialize in the rental of single-family homes and condominiums and they certainly then have access to all the tenants out there through their marketing,” suggests Lauretta Kaechele (CPM, CMOC), vice-president of the Canadian Condominium Institute and vice-president of Emerald Management.
Kaechele also cites local newspapers and websites as venues to advertise condos for rent, but notes there are no guarantees the place won’t remain vacant or that your cherished Moose antler lamp will be in tact when you return.
While enlisting a management company can not only save owners on time and inconveniences like 3 a.m. phone calls, dollars doled out also add up to more peace of mind in knowing things are handled professionally, she says.
“You are basically hiring a company with systems in place to deal with tenants, and everyone’s time is valuable these days.”
Should owners undertake renting out digs on their own, Kaechele advises doing a credit check, having both parties sign a lease, and making sure tenants get a copy of the rules of the condominium — including bylaws which may be unique — to avoid upsetting the neighbours and other condo owners.
“Often people renting a condo never even get a copy of the bylaws, and have no idea what they are,” says Kaechele, adding it may also be required of owners to get permission from their condo boards before offering up their space to non-owners.
For more hints and tips about buying and owning a condominium in Calgary, watch Shaw TVís Condo Living with Barb Mitchell, every Wednesday, Saturday and Sunday.
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