Real Estate
Home›Real Estate›Residential›Short-term cottage rentals often fail to cover ownersh…
Short-term cottage rentals often fail to cover ownership costs
Hidden costs like booking-platform fees and cleaning bills can erase rental income, with STR profitability typically requiring 60% to 70% annual occupancy.
Recreational cottage owners in Canada who bought properties expecting rental income to cover mortgage payments are finding the economics can be much harder, according to analysis and reporting summarized by Yahoo Finance and the Toronto Star.
One example is an Ontario cottage owner whose renovated 1,200-square-foot property rents for 10 weeks each summer at $3,300 to $3,600 per week, yet the revenue still does not fully cover ownership costs, and she aims eventually to pay off the property and end rentals.
Another vacation-home renter averages short stays across 91 nights annually at $813 per night, but last year cleaning fees alone totaled $20,000, highlighting how expense categories can quickly outweigh gross booking revenue.
Realtor Maryrose Coleman, cited in the coverage, said owners typically retain about half of gross rental revenue after expenses, and that figure can be pressured further by taxes and unexpected repairs. Coleman also pointed to booking-site platform fees of about 15.5% to 20% and property management costs of 25% to 35% of revenue, while the Asset Protection Council analysis found occupancy and lodging taxes alone can take up 5% to 15% of revenue and profitability generally requires 60% to 70% annual occupancy.