In Parts 1, 2 and 3 of this series, we’ve looked at the things you need to consider when buying a condominium for both personal use with income potential:
• Will you be renting it out seasonally or for short time periods under 30 days?
• Do you wish to be part of a managed rental pool or, are you going to self-manage your unit?
• If you are opting for a managed program, are you more comfortable with a rental pool or a rental program and, what are the rules and policies governing each?
• Will you have to invest extra to upgrade a unit in order to enter or stay in a rental program?
• Additional costs when buying including Blue Mountain Village Association fees and, GST/HST
The next things you should consider are the realistic income and expenses associated with different programs and units. In most cases, the rental property manager will be able to give you an idea of the annual gross income for units in a particular development. These will vary if they are not in a rental pool or, if you use your own unit frequently thereby taking it out of the pool or program. When you find a unit that holds particular interest for you, we’ll ask for an actual financial statement for it.
The costs vary quite a bit from one type of program to another and, they are subject to change, which all have, since their inception.
Out of any gross income you generate on a unit that is part of the Blue Mountain rental program, you will have deductions from that for things such as travel agency commissions, credit card fees, call centre fees, maintenance, cleaning and of course the management fees. In addition, you will generally pay for an annual or semi-annual deep clean of your unit and may have some expenses for furnishing repairs or upgrades. If you are an out-of-country property owner, withholding taxes are also captured at this point. About once a month, you will receive a statement itemizing these and showing your net income.
From that net income, you will then need to pay for your municipal realty taxes, monthly condominium fees, annual insurance costs and if applicable, Village Association dues, Also, depending on the development, utilities, cable and phone may or may not be paid separately or included in your fees.
As you can imagine, it doesn’t take long to eat into the gross income of a unit especially if you are using it frequently yourself and during prime rental periods.
All of this may sound complicated and really, it is at first however, the rewards can be worthwhile if your expectations are realistic. In most cases, the rental income will offset all of the annual operating costs (except for any financing costs you may have) allowing you to enjoy luxury accommodations at a reduced cost while having ownership in a highly desirable area.
Marg Scheben-Edey is a Broker with RE/MAX four seasons realty limited, Brokerage in beautiful Collingwood, ON. With three decades of experience, Marg is a leader in the local real estate marketplace and is ready to help guide both Buyers and Sellers in achieving their real estate goals. Email Marg