Название: Renting Your Recreational Property for Profit
Автор: Heather Bayer
Издательство: Ingram
Жанр: Дом и Семья: прочее
Серия: Reference Series
isbn: 9781770408982
isbn:
What Are the Tax and Insurance Implications of Renting?
This is a question to ask your accountant and your insurance broker, and one to consider early on in the planning process. There are implications not only in terms of personal taxation, but also in the status of the property should you come to sell it in the future. Insurance companies view vacation rentals differently than single-occupancy residences, and you may find that your current provider will not cover a second home for vacation rental. Some insurers will have stipulations that you may find unworkable, so it is important for you to tackle this issue well before you get set up for renting.
How Will This Affect My Family?
Do your grown-up children see the cottage in the same way as you do — as an investment rather than a place to go to with friends at a moment’s notice? If not, this may be a major issue to sort out. Will your family help in “the business” or be an obstacle to it? Are they prepared to answer the phone as it constantly rings in the winter when potential renters vie to book prime dates? Is everyone prepared for strangers using their beds, sound systems, etc.? Family “buy-in” may well be a deal breaker, so bring family members in on the discussion early on, or you’ll find the problems arising when you least want them to — right in the middle of a rental season.
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Setting Goals
“The sooner you start getting some of what you really want, the more energy you’ll have to go for the rest of it.”
— Barbara Sher, Wishcraft — How to Get What You Really Want
If you are going to treat renting your recreational home as a business, think like a business owner would. No company expecting to make a profit would dream of moving into a new venture without a lot of planning. This planning consists of focusing on the current situation, having a clear vision of how things should look in the future, and then making decisions on what has to be done to move toward that goal.
Meaningful goals should meet two basic rules:
1. A goal is concrete. It will have a factual outcome, an amount, and a time, and it is grounded in reality. It is not an emotional issue.
2. A goal is what you really want. Take some time to imagine what it will be like when you have achieved your goal. Check whether you are comfortable with that, or whether your decision raises any more questions. This emotional side of your goal-setting exercise is an essential part of it, even if you have bought your cottage as an investment and don’t see renting as having particular emotional significance.
Your Vision
Start by thinking about what is currently happening with your recreational property. Maybe it’s been in the family for years and you have just decided to rent, or you’ve just bought it and have a lot of expenses to manage. You might have been renting it for some time but feel that you could make more income from it. Whatever your situation, just take a moment and make some notes on where you are now, where you want to be, and how you plan on getting there. Sample 1 shows how this simple exercise works.
Sample 1: Creating a Vision
First, set your goals, then write them down! This is the first part of what will become your rental plan — a miniature business plan — and subsequently your marketing plan. Don’t lose sight of the fact that you have decided to do this seriously and, with that in mind, you need to begin with a firm foundation.
When you’ve set your goals, remember to keep them at the forefront of your mind. Doubts may set in occasionally — you will perhaps ask yourself whether you are really doing the right thing, and you’ll need to revisit your original motives to reaffirm your commitment to renting. Skipping this part of the planning process would be a bit like setting sail in a boat without a rudder — directionless.
Financial Goals
The majority of vacation home owners rent their properties to gain additional income, so setting clear financial goals from the outset makes a lot of sense.
Take some time to consider how much you want to make annually from renting your property. Don’t constrain yourself at the moment by trying to work out if this is feasible. This exercise is more to establish some parameters for you to work with. For example, if you want to make enough money to cover your mortgage payment, that is straightforward to calculate. If you want to fund other expenses, such as winter-proofing the property, adding an additional sleeping cabin, or making major improvements, estimate the costs and then add them all up to give a total. This provides a useful starting point for what follows.
Pete and Anna have a three-bedroom lakefront cottage on Catchacoma Lake in the Kawartha region of Southern Ontario. They bought it partly as an investment, but also to spend the occasional out-of-season weekend there. They plan to rent the cottage for four to five years to raise enough money to build an extension with an additional bedroom and bathroom, rebuild the deck, and replace the roof. They see rental income as the way to achieve their aim of retiring to their cottage while also being able to enjoy time in it before they retire. Taking their plan very seriously, they wrote their financial goals within their strategic plan, setting out short-, intermediate-, and long-term objectives. With these figures they were able to develop a marketing plan that would achieve their goals.
Forecasting Expenses
Financial forecasting consists of identifying your fixed expenses — expenditures you have regardless of whether the property is occupied. These are expenses such as property taxes, telephone rental, insurance, mortgage payments, satellite TV subscription, etc. Some of these costs you will already know — taxes, mortgage payments; others you’ll need to think about and make some educated guesses. If you already employ someone to do general maintenance and yard work, include that cost in your fixed expense figure.
Variable costs are those that change dependent on whether the vacation home is occupied or not. For example, cleaning expenses, heating, electricity, and long-distance telephone expenses are variable. By using a spreadsheet program, you can adjust the anticipated expenditures to match your forecast occupancy.
Capital expenditures
Capital expenditures are one-off costs that may arise during the year. If you have just bought a vacation home there will be expenses to furnish and prepare it (see Chapter 5, Getting Ready for Renting). If your cottage is established, you may need to upgrade it to fit a higher rental category. Chapter 5 also gives some ideas on how to add value to your property for this purpose. Ask yourself what you need to set aside for major purchases through the year, and input this figure on the spreadsheet in the month СКАЧАТЬ