Cottage & Airbnb Investing in Ontario: What New Short-Term Rental Owners Need to Know

Welcome & Introductions

Hey everybody, welcome to another episode here of Ontario Landlord Series, presented by CRESI. Again, CRESI is an acronym for Complete Real Estate Solutions and Investments, and it’s about being your complete solution. Not only can I always be your complete solution, but sometimes we have to bring in experts who deal with their niche.

And that’s what we’re going to be talking about today, with a gentleman named Brad McRae who specializes in cottage and Airbnb rentals. Cottage rentals are something I’ve never done myself, but I am a renter of a cottage — it’s something our family tries to escape to once a year.

We just got back from our little cottage venture, our week away. I think it’s great from our point of view as a renter — we get to go back to the same place, so we feel comfortable with it.

We’ve gotten to know the area, and it’s great to always return. I have a friend who’s done the same thing. But anyway, let’s get into the nuts and bolts of the investment side of being a cottage investor, an Airbnb or short-term rental owner. There are multiple ways to put this together.

Without further ado, Brad McRae, say hi.

Brad’s Background in Cottage Rentals

Hey, thank you so much for having me here, Kevin. As you mentioned, it’s a great solution for both parties. For people who need cottages, there will always be a market for it. That’s kind of where this whole investment strategy came in — Muskoka is a great example.

People have been renting cottages up in Muskoka for years. It’s not like this is a new thing that rolled out with Airbnb over the last seven to ten years — it’s been happening forever. Airbnb just makes it much easier to do.

Before, if you had a cottage and wanted to rent it out, it was really only about who you knew. If you knew someone who knew someone who wanted to rent the cottage, or you went to a travel agent — there wasn’t a streamlined process to rent out your cottage and make that extra income. Now it’s much simpler for what I’ll call the everyday owner of a second or third property.

Why Cottage Ownership is Like Having a Dog

Personally, I look at a cottage like I look at a dog. I love the idea — I think they’re great, but I want you to take care of it, do everything that needs to be done, and I’ll just come by and enjoy it.

It’s a lot of work. And the time, too — if I wanted to get away, our family goes once a year, but other people try to get away four times a year.

If you’re going to get away four times a year, it might make more sense to buy something: use your four weeks yourself and rent it out for the rest of the year, whether that’s winter, summer, or all season. With everything now — Airbnb, and yourself being a property manager for this — it makes it more passive for the investor. More streamlined, easier — because, like I said, I don’t want the headache and stress of everything on an extra cottage: maintenance, everything. So having something more hands-off is a great way to go. Why don’t you start by sharing a little about your history, your experience, and how you help investors?

Yours Truly Hospitality Services Overview

I have a company called Yours Truly Hospitality, where we specialize in furnished vacation rental management for investors and homeowners. The people we cater to most are those who have a property — like we just mentioned, a cottage or second property — that they don’t go to all the time.

They still want to use it once, twice, or five times a year, whatever that is, and we handle the in-between. Our company specializes in a complete hands-off service. When you work with us, it’s as if you have a long-term rental — you don’t have to worry about it at all.

You don’t get phone calls. You don’t have to worry about guest messaging, optimization, payments, or issues — any of that. You give it to us, you get a cheque every month essentially, and that’s all you have to worry about.

That came from my family — we have a small cottage in Prince Edward County, which we’re very fortunate to have. When I was younger, we used it all the time. As I got older, I used it less — I no longer live there.

There are kids and family who still use it, so we started renting out that cottage little by little, and I helped manage that. We then turned our own property — my wife’s and mine — into an Airbnb, a short-term rental.

From there, we’ve just grown. I showed a few people in my sphere who were looking to have their property rented out, whether they had a manager they weren’t happy with, or had tried to do it on their own and realized it was too much of a headache. That’s usually the call we get — someone tries it for six months, a year, two years, and realizes it’s not worth their time dealing with an 11 o’clock “how do I plunge a toilet” call. So we’ve grown from there over the last few years.

Major Challenges for Airbnb Hosts

We do the same thing for long-term rentals — as an investor, it should be positive. You shouldn’t have to worry about these types of things.

We all do what we do in our work lives, and why add to that when we could have more time with family? I always say let the experts be the experts and do what they do. Some great advice there.

You mentioned a small challenge dealing with late-night phone calls and noises, but what are some other major things homeowners or investors face? When you’re looking at renting your place out on Airbnb — and when I say Airbnb, I mean any platform, it’s just the most common term — there’s a proper way to do it, and there’s just getting it up and hoping some money comes in. There’s a big difference between those two approaches.

When you do it the proper way, your pricing is right, you’re optimized online — most people have heard of search engine optimization, SEO — to make sure it’s presented in the best way possible. Some of the first challenges are people not getting bookings. Six years ago, you could have a tent in your backyard and make thousands of dollars because there was no inventory online and almost anybody could make money.

Now everyone has seen the potential income, so the standard has increased significantly. If someone goes to rent their property without understanding the standard in their area — the photos, the number of bedrooms, the appliances, the amenities — they can get no bookings even with a beautiful place, because it’s not presented properly. Similarly, in real estate, if a listing only has one photo of the bathroom, the chance of getting showings is minimal even for a beautiful home. I’m in a lot of groups with other management companies, and there will be individuals who say, “I’ve gotten no bookings in eight months — what’s my problem?” That’s becoming more and more common.

There are multiple things that could account for that — pricing being off, photos not presenting the property well, not having the right amenities, or some mix of those things.

Marketing & Photography Secrets

That’s huge — marketing, how you get out there and showcase the right things, and a great comparison to a real estate listing. When we’re looking online, photos show us whether we like it or not, and how we take the next step. They’re very, very important. You mentioned Muskoka —

Muskoka, when I think about it, cottages up there are all millions of dollars — very expensive to get into. But you mentioned Prince Edward County. I’m assuming cottages out there are cheaper, more affordable, different price points.

Where we were, we were up in the Kawarthas. I know there’s stuff down by Grand Bend, and cottage areas outside Windsor that my brother mentioned. Really, there are cottage areas all across the province.

So this makes sense in all different types of markets and price points for that investor — they don’t just have to think about the traditional Highway 400 route into Muskoka: Bracebridge, Huntsville, Parry Sound, and so on.

Ontario Cottage Market Breakdown

Exactly — it’s really anywhere. That’s one of the wonderful things about Airbnb and all these platforms — you’re able to rent your cottage somewhere that may not be as familiar to most people, because you can just search “waterfront” and it’ll show you everything within your budget, everywhere.

So anywhere with waterfront — though when I say cottage, I think of waterfront, some are just water-adjacent — Prince Edward County has a bunch of properties, but Prince Edward County also brings up something else a potential investor wants to think about: licensing.

Not every township, city, or area has licensing requirements, but Prince Edward County is one that does. In each township in Prince Edward County, there’s a maximum allowable number of short-term rental licenses. You can’t just go in, buy something, and put it on Airbnb without a license, and they’re not issuing new licenses anymore.

So the only way to actually buy a short-term rental in Prince Edward County is to buy one that already exists and already holds a license. I actually just had a phone call recently with someone who bought a property intending to Airbnb it in Prince Edward County, and no one told them they weren’t able to. You really have to do your due diligence about buying in the right spot, because it’s no longer just “I want to do it, I can do it” — it’s really cracked down.

But anywhere with water, you can put a property up, as long as you meet whatever the licensing requirements are.

Professional Management Benefits

That’s another example of working with professionals — because of the knowledge you’re not going to carry yourself. On our side, on the management side, a lot of different things make landlords’ lives easier. What is it that you guys do, primarily, to make the difference for a cottage investor?

These are all things an owner should do, and then we handle all of it. I never want to pretend that someone can’t do it, but there are a lot of steps. So the first thing is doing the research on pricing — we use a pricing tool that’s manually set, and we check our competitors, usually about 10 competitor properties in the area, three times a week.

Prices change every day, just like a hotel — if you go to book a hotel, tomorrow’s price will be different than four days from now, or a flight depending on when you purchase it. We always want to make sure we’re cheaper than the nicer properties around us, but more expensive than the ones that are not as nice as us. So pricing optimization is a big one; we handle that. A lot of people set one price for the whole week — you can do that, there’s nothing wrong with it, but you’re probably leaving money on the table if you’re not checking it consistently.

The second thing is handling the actual setup — photos and optimization of the property. You buy a property you’ve never lived in, you have to furnish it completely. There’s a difference between furnishing it for yourself to stay in versus furnishing it to be presentable on Airbnb — you can select something like 60 different amenities you want listed.

Do you want a blender? Wi-Fi? Laundry? Every additional amenity you can check off increases your search optimization within the Airbnb platform.

Making sure it’s presented in the best light possible, down to the title — the title of your Airbnb makes a big difference, and the first five photos matter too. That’s all about getting it ready to be put online.

Then there’s handling the day-to-day of the property. I joke with people that it seems pretty easy — it’s easy until it’s not. You can have a property going really well, guests can be easy and not need anything because you’ve set up automated messages for check-in, check-out, and checking in halfway through their stay. But all of a sudden there’s a hole in the roof, and now you have to deal with that, and it can take up your whole day.

With a long-term tenant — maybe a hole in the roof is a bad example — but if the oven isn’t working properly, you’ll get someone there as soon as you can, but it usually doesn’t have to be today. Most tenants understand someone won’t be there today as long as it’s within a couple of days. With an Airbnb or furnished cottage rental, a guest might only be there two or three days, and every hour their amenity isn’t working is a huge deal.

You really need to get on it right away, and your whole day can be gone dealing with that one problem. One of the reasons we take on these cottages is that we have a team set up to handle these messages, because you have a career, a job, family time, and you don’t want to spend your whole day worrying about an oven — even for the money you can potentially bring in. And then the last thing I’d say is that things go wrong.

It’s unfortunate, but things can go wrong — an accidental break, or someone trashing your place. Airbnb and VRBO both have insurance, but you used to be able to — I’ll say this lightly — get away with a lot. You could say a pillow was broken, and they’d give you 100% of whatever you asked for.

They’re cracking down now — you have to have time-stamped photos shown from your phone, receipts, and there’s a certain way to present the claim to get the money back. If you don’t know how to do that, they’re going to walk all over you, because it’s not a normal insurance company — if you don’t give them what they ask for, they’ll say no.

Insurance & Damage Claims Process

You’ve got to prove it wasn’t broken before that visit — and I mean right before, like 10 minutes before check-in, not four or six days before. You need photo evidence from the day of check-in, which is a big thing we do with our cleaners. Anyone renting out a property should be doing this — taking photos of everything after every checkout and before every check-in.

Short-term is way different from long-term, right? We have our walk-ins and walk-outs too, similar issues to deal with. It sounds like you guys take care of 98% of everything, and the 2% you need from clients is approvals for something that needs to get done, and getting paid for what’s done.

That’s exactly it. I like that. Our clients should be able to be as hands-off as they choose. Some people say don’t bother me for anything except X — they have their pain points where they want to be engaged, and otherwise they want us to just handle it.

I’m going to switch gears — say I’m a homeowner right now looking to buy an investment property, and I’m weighing my options between a long-term rental in the city versus a cottage short-term rental. Other than getting to use it myself as well as rent it out, what would be your pitch for why a cottage is a better investment than something long-term?

Investment Strategy: Lifestyle vs Pure ROI

My first question would always be: why are you thinking cottage? Is it purely investment, with no intention of using it yourself? Or do you also want it because you’ll use it?

Those are two totally different scenarios, because I can find you cottages that will make significantly more money than a long-term rental in the city — but it might not be an area you actually want to go to, because it’s too far away. Smaller markets, like the Bancroft area, for example — that’s a three-ish-hour drive from Toronto, and not many people want to go that far; most want to stay within two, maybe three hours for cottages.

If I can find you a cottage that’s four or five hours away but makes you a lot of money, is that something you’d want, versus something you’d also use part-time? Is it a lifestyle investment, or an investment investment? You’ve got to do what you want. If I’m going to be using it, there are certain things I’ll want; if I’m never going to use it, I really don’t care — it just becomes about the money.

I sort of agree with that. So really, it comes down to those two questions — do you want to make money, or do you want to pay your bills and maybe break even while you use it?

Furnishing Budget Reality Check

One final thing — a lot of the conversations I have recently are about how to get a property up for the least amount of money. For a vacation rental, unfortunately that’s not the right way to do it. Whether you have a professional manager or not, you need to look at what’s around you — what are comparable properties spending?

If everyone is spending $90,000 on furnishings and amenities and you spend $50,000, it’s not that you’ll get a little less money — you’ll get significantly less money, to the point of not breaking even. Do your homework: it’s not just about buying the property, it’s about making sure you have the amount of money you need to invest to compete, or you’re going to be dead in the water these days. That’s definitely back to knowledge — making sure you’re getting the proper information so you can make the best decision for your specific situation.

Exactly — we’re as individual as our fingerprints, I say that all the time. Thanks so much, Brad, I appreciate your time today. We will definitely talk again.

And everybody out there, thanks so much for listening.

Final Thoughts & Resources

Please remember, while we are professionals, this podcast is for informational and entertainment purposes only. The advice shared may not apply to your unique situation. Always seek personalized advice from a qualified professional before making any investment decisions.

Hey everybody, thanks so much for joining us this week. I hope you enjoyed the episode. If you’re finding it informative and useful, make sure to like, subscribe, share with a friend so that we can keep getting the information out there to Ontario landlords, and keep on joining us. We’ll see you next time.