After two seasons of Scott’s Vacation House Rules and multiple vacation property investments, Scott McGillivray knows his way around vacation property investment. Scott shared a boatload of amazing advice and tips to make your vacation property a success. Click through to find out everything from where the next hottest cottage market is to what to do about the Canadian lumber shortage.
Scott’s Vacation House Rules airs Sundays at 9 p.m. ET/PT on HGTV Canada. It is also available on the new Global TV App, and on STACKTV with Amazon Prime Video Channels. HGTV Canada is available through all major TV service providers.
The COVID Factor
There’s no doubt that during COVID, the price of vacation properties went higher than most people expected. “The pandemic expedited everything, right?” says Scott. “People didn’t wait 10 years to buy their cottage. They waited 10 minutes. They realized what was really important in life.” So where does he expect prices to go in the future? “I think the demand is going to pull back, but I think prices are going to sit right where they are or slightly higher for the next few years.”
Additional Rooms and Buildings
As far as trends go, COVID also left its mark on vacation properties. “A trend that we did notice this year is [people] going back to the slightly more compartmentalized living style,” says Scott. People need somewhere quiet to take Zoom calls, although Scott has also seen a move towards constructing additional buildings specifically for yoga, weightlifting or to create a quiet place to read a book.
Where to Look
Scott has some outside-the-box ideas on where to look for an affordable vacation property. “When you’re online, you’re probably looking at residential,” says Scott. “You should try checking commercial once in a while – 90 per cent of the market doesn’t check commercial listings.” A marina could have everything you are looking for, but it could be flying under your radar. The above photo is of a guest house that Scott and his team converted from an art studio.
Another suggestion Scott has for finding an affordable vacation property is to go further. “If you go more than 150 minutes from an urban centre, prices drop significantly,” says Scott. “So if you’re someone who doesn’t mind a two-and-a-half, three-hour drive, you’re going to find all kinds of affordability.” But don’t stop there says Scott. “Start looking at what are called tertiary markets. The people who have been in Muskoka for 40 years – when they’re selling and cashing out to the city buyers, where are they going?”
Knock on Doors
Scott has a tried-and-true method for finding vacation property opportunities. “I’ve done a lot of door knocking,” says Scott. “I’ll go see a property. And then if I love the area and I didn’t get it, I’ll go down the street and look at something that’s similar or that might be available. I talk to people.” You need to be clever in this market, according to Scott. “Anyone sitting around waiting for an opportunity is never going to find it. What you need to do is go out and make an opportunity happen.”
Know Your Financial Limits
When getting into the vacation property market, you need to do your research and know the difference between short-term and long-term rentals. “I often say you need to gauge with a 20 per cent down payment,” says Scott. “Can you cover one month’s worth of expenses, including the mortgage taxes, interest and maintenance? Can you cover one month’s worth of expenses with one week’s worth of rent in the peak season? That’s the threshold. So if you can rent for $5,000 a week and the running expenses on the property are $3,500 a month then obviously, it makes sense. I can rent it for the 12 weeks of the summer. I have enough cash flow. There is enough rental income to cover all my expenses and still put a good profit in my pocket. Anything outside of those 12 weeks is bonus.”
Anyone doing a reno or building a vacation property knows that the price of lumber has sky-rocketed. To avoid the extra costs, Scott has some advice. He’s going with aluminum docks over wood docks. “I might as well go for the upgrade,” says Scott. “It’s almost the same price. It’s basically no maintenance and it’s 100 per cent recyclable.” Another tip he has is to reuse or upcycle. If there is any way to repurpose or paint existing wood to give it new life, that’s the way to go. Those wood planks under the cottage are like gold now.
Paint Your Paneling
Some people cherish the look of a cedar-paneled cottage but Scott says it is time to move on and leave the past in the past. “Paneling is already out of style, you might as well paint it.” And don’t expect it to come back in style. When it comes to trends “history doesn’t repeat itself, it rhymes itself. It’ll be different,” he says. A hard truth, but worth listening to.
Heads in Beds
When spending money, it’s important to pick your projects carefully. “I say the rule is, beds for heads and seats for ease,” says Scott. “That’s what gets you the most rental income. How many people can you accommodate to sleep and eat in this property comfortably?” Keep it simple and functional, and the income will follow. Check out our Bedroom’s section for more inspiration.
Not Too Personal
While the vacation property belongs to you, don’t make it all about you. “Don’t over-personalize it,” says Scott. You want your guest to feel a sense of belonging. Building on generic themes is a great way to make your renters remember you and to stand out on rental sites. “It’s great to have a fishing theme, but you don’t need a million pictures of you fishing in there.”
The Great Outdoors
Another insightful reno tip from Scott is to keep the great outdoors on your radar. “Remember to spend as much money on the outside as you do on the inside,” says Scott. “Make it exciting to arrive.” You want your guests pumped when they get to the property and excited about upcoming adventures. Check out Scott’s Vacation House Rules for more insights and information on creating a successful vacation rental property.