Making profit from chalet rental: The Ultimate Guide!

Date: October 6th 2022
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At 23, where it all began...

It all started at the age of 23. As an MBA student, I had only one idea in mind: to share a growing passion. Through this guide, which gathers anecdotes and tips, I take you back a little more than 12 years, in 2011, where it all started.

The guide in a nutshell:

  • At 23, where it all began...

  • Strap yourself in, it's a story worthy of raising some eyebrows

  • Friends: the well-kept secret of success

  • There's no good story without funny facts...

  • Tip #1 | Make a Game Plan

  • Tip #2: Understand the market

  • Tip #3: Tourism Attractions & Seasonality

  • Tip #4 Proximity to Major Cities

  • Tip #5 | Short Term Rental Permit

  • Tip #6 Insurance for Cottage Rentals

  • Tip #7 : To offer a spa or not?

  • Tip #8: Choosing Your Housekeeping Team

  • Tip #9 Expectations: Your Best Indicator

  • Tip #10 : The little extras that make all the difference

  • Tip #11 | Financing Strategies

  • Tip #12 | Know your rental cottage expenses

  • Tip #13 | Rental cottage vs. income property

  • Tip #14 | Choosing the right region

  • Tip #15 | The importance of high and low seasons

  • Tip #16 | More People equals More Income

  • Tip #17 | Determine Your Target Market

  • Tip #18 | Register for the Mr. Cottage Academy

Hold on tight, this is a story worthy of raising the hair of some

Recognizing the many achievements made within the walls of the Faculty of Administration of Laval University, as well as the experiences I have had through countless student jobs and involvements, I was finally ready to take the plunge.

Being financially disciplined, I bought my first piece of land in 2011, located in Petite-Rivière-Saint-François, Charlevoix.

If the neighbours thought that my partner Alexandre Tousignant and I were a couple of thugs, well, they were not entirely wrong...

To start our business, we needed a large enough space. That said, due to a lack of time and financing, my partner and I turned to a much more modest solution.

So, instead of a warehouse, a shipping container was used for the first discussions, decisions and operations that would slowly but surely shape the future of MonsieurChalets.

At the same time as the business was being launched, I was still a student at Laval University. Since every penny of my income was absorbed by the operation of MonsieurChalets, I found myself unable to pay the rent for an apartment while I finished my studies.

Surround yourself well : the well kept secret of success

In order to have a place to sleep during these two precarious years, I resorted to our good friend "Couch Surfing"...

I would like to take this opportunity to thank my precious friends Tommy Lacouture and Samuel Leclerc-Richard who warmly let me sleep on their iconic Lazy Boy dating back to 1984, while I finished my studies.

Just one year after the launch of MonsieurChalets, close to 60 owners had completed the registration of their cottage.

In all humility, I have no hesitation in saying that we got it right.

In order to rent a high-end cottage in Quebec, it was necessary to set up a secure reservation platform that would ensure easy rental, great expertise in the field and a lasting bond of trust.

For those of you who are wondering, our famous shipping container eventually came to an end...

After two years of loyal service, the container was replaced by the Après-Ski chalet, also known as the very first office the company's team ever had.

Near Le Massif de Charlevoix, L'Après-Ski is a coworking and gathering space, in short, a place where the story of MonsieurChalets continues to grow before our eyes.

No story without some funny facts...

You have certainly heard of the reality show Occupation Double?

If not, don't worry, I'll be happy to give you a quick recap of the show, but especially to explain the role of its 2016 edition in the propulsion of MonsieurChalets in a key region: the Laurentians.

In 2016, the big winners of Occupation Double Bali, Adamo and Alexandra, won a chalet designed by Maisons Bonneville, near Mont-Tremblant.

At the end of the winners' short romance, Adamo became the sole owner of the cottage. Already friends with the winner of the show, Alexandre and I quickly seized the opportunity that this cottage represented in the short-term rental market in Quebec.

After some amicable negotiations, we became, myself (Philippe), Alexandre (MonsieurChalets) and Adamo (Occupation Double), the owners of the Occupation Double chalet.

Located a few minutes from Mont-Tremblant, this chalet was a gateway to the Laurentian rental market, in addition to renting like hotcakes.

In fact, as soon as it appeared on the MonsieurChalets website, the chalet then called "Le Chalet d'Adamo" was rented more than a hundred times.

What we predicted turned out to be true: people couldn't get enough of an experience in nature in THE Occupation Double cottage.

If many thought that the decision to purchase this cottage was a roll of the dice, they were wrong. Although a bit impulsive, the choice to acquire the "Chalet d'Adamo" was a calculated one.

We had the necessary resources to evaluate the rental potential of the chalet, but above all the expertise to optimize it.

As you will learn during the training offered by the MonsieurChalets Academy, the purchase and operation of a rental cottage should never be left to chance.

However, Loto-Québec has allowed us to have a little fun...

A few years ago, with the help of a scratch-off ticket, it was possible to win a $10,000 stay, signed MonsieurChalets, in the cottage of your choice.

As MonsieurChalets wove its first strings, my partner and I opted for a strategy of acquisition in various locations.

Starting in the Mauricie region, we then moved on to Charlevoix, the Quebec City suburbs, the Laurentians and the greater Montreal area.

Obviously, these properties were always acquired in order to optimize them until they reached their best rental potential.

All of this has led MonsieurChalets to launch its very first Training Academy. Offering step-by-step advice and guidance towards the purchase and management of a cottage, the MonsieurChalets Training Academy specializes in the cottage rental industry in Quebec.

Since 2020, through the Training Academy, MonsieurChalets has had the opportunity to share its investment secrets with cottage enthusiasts from Quebec.

Here are 18 valuable tips to make your real estate investment profitable in the first year!

Tip #1 | Make a "Game Plan"

I like to use the term "game plan"... It evokes a specific idea while leaving room for change.

The "game plan" is the time to establish what you really want. What motivates you to buy a rental cottage?

Do you want to rent it out full-time or use it as a second home from time to time? To answer these questions, the best solution is to schedule a consultation.

Tip #2 | Understanding the Market

Before buying a rental cottage, it goes without saying to evaluate the market. The evaluation of the market, in relation to the purchase of a rental cottage in Quebec, is based on a few essential questions

Each of these questions is based on an essential point: profitability.

When it comes to buying a property, emotions play a major role.

Disregarding objective data and relying only on your gut feeling can be very costly. So, when you visit, ask the following questions:

  1. Is short-term renting allowed where the cottage is located?

  2. Do similar cottages attract enough vacationers?

  3. What is the average rental price?

Tip #3 | Tourist attractions & the effect of the seasons

It may be obvious to some, but I don't think it's a mistake to point out that proximity to tourist attractions is a major factor in the minds of vacationers.

Whether it is near a ski resort or a swimming lake, your cottage will experience different periods of occupancy.

If your cottage is near a ski resort, it is likely to be in high demand during the winter and more specifically during the long vacations (e.g.: Holiday season, Spring Break, etc.).

While some may believe that buying a ski-in/ski-out chalet is optimal, the opposite is true, as the chalet can only be rented at a high season rate once a year.

However, if you want to have a high season rate twice a year, the ideal option is a chalet that is close to both a ski resort and a swimmable lake.

Tip #4 : Proximity to major cities

You should also consider the location of your rental cottage in terms of its proximity to major cities.

While it's nice to spend a few days in the Saguenay or Gaspé, for most people it's almost impossible to plan. Going on vacation far from the city is not only expensive, but it is only done once a year.

In Quebec, the major cities are Montreal and Quebec City. The regions often requested near these cities are:

Tip #5 | Short-term rental permit

In order to rent a cottage in Quebec for a short period of time (31 nights or less), you must hold a certificate issued by the Corporation de l'industrie touristique du Québec (CITQ).

Anyone operating a rental cottage without a CITQ certificate that complies with the law is liable to a fine of $2500 to $25,000.

Such an attestation authorizes you to rent your cottage and obliges you to respect certain standards that are specific to the CITQ.

Tip #6 | Cottage Rental Insurance

Renting a cottage is an exciting venture that comes with many benefits, as well as new responsibilities.

While we're at it, let's talk about insurance...

In Quebec, the law requires that any owner who wishes to rent out a property on a short-term basis must carry at least $2 million in liability insurance.

However, it doesn't stop there. While it is a good idea to carry liability insurance, it is not enough. Liability insurance covers you, your spouse, and then your children living in your home.

Liability insurance coverage is included in your home insurance by default. That said, not all home insurance policies cover short-term rentals, so it's important to find one that suits your needs.

As a reminder, short-term rentals involve hosting strangers in your home. If most tenants and vacationers are respectful, there are sometimes exceptions that strike the imagination...

To avoid unpleasant surprises, before renting your cottage, make sure you take out home insurance that includes :

  1. Coverage for property damage caused by short-term renters or their guests;

  2. Coverage for theft or attempted theft by short-term renters or their guests;

  3. Liability insurance for short-term rentals

Tip #7 - To have or not to have a Jacuzzi?

To have or not to have a jacuzzi in your rental cottage, that is the question...

Choosing to add a spa to your rental cottage is a decision worth considering. To avoid getting into trouble, let's take a look at the elements to consider before making the purchase.

Frankly, over 40% of users add the filter "with spa" to their search.

While installing a spa is linked to more bookings, it also comes with some significant costs.

First of all, the median price of a new spa is about $10,000. To avoid any problems and to comply with the Q2.R39 regulation, it is required that the spa be serviced monthly.

Professionally done, spa maintenance costs approximately $200 per month. In terms of energy, running a spa at full power costs approximately $100 per month.

Tip #8 | Choosing Your Housekeeping Team

The popularity of cottage rentals has only increased in recent years. More and more vacationers are turning to cottage rentals instead of booking a hotel room.

The only problem is that since cottage rentals are a new market, consumer expectations for housekeeping are set by the hotel industry. To meet these standards, it is best to rely on a qualified housekeeping team.

When choosing your housekeeping team, it is tempting to choose the least expensive. But take my word for it, in this industry, it's better to store around for good service than a better price...

In the end, it will cost you much more to compensate dissatisfied customers for poor-quality cleaning than to pay a professional cleaning team that follows industry standards.

Tip #9 | Expectations: Your Best Indicator

There are few indicators that can distinguish a satisfactory experience from one that exceeds expectations.

A satisfactory experience is based on pre-established standards and principles, while an experience that exceeds expectations is based on real facts and expectations.

Providing an experience that exceeds expectations requires empathy and observation.

Try it out, stop reading, and then make a list of your expectations first when you travel.

Another good practice is to check out reviews from well-known booking sites; they are a gold mine!

Tip #10 | The Extra Details Make The Difference

In keeping with the theme of exceeding expectations, I want to talk about those extra details make the difference.

While some clients are satisfied with their cottage experience, others remain loyal because of what I like to call extra features.

In my opinion, extra features take three distinct forms. The first is tangible attributes, the second is intangible attributes and the third is flexibility.

Tangible attributes enhance your customer's experience and highlight your cottage. Since they are not found in the home, these items add an extra touch to your client's cottage experience.

Tangible attributes include a foosball table, a pool table, a spa, a pool, or a video game console...

Intangible attributes, rather than focusing on your cottage, focus on your customer. Keep in mind that we are all human.

There are several ways to put the emphasis on your client:

  • Prior to the stay, review your reservation, then plan something special to accommodate your guests (e.g., extra blanket, bottle of wine, welcome message, etc.).

  • During the stay, let the guests know that you are available for any questions;

  • After the stay, make a courtesy call to thank your guests and then ask them what could be improved.

The final attribute is flexibility. Like you, your clients have busy lives. Give them the gift of early arrival or late departure to accommodate them.

Tip #11 | Financing Strategies

"To buy a cottage, you have to be rich, or you have to have inherited..."

Like you, I've heard this phrase more than once.

While the resort rental industry is full of relevant information and qualified professionals, it is still impervious to myths and malicious people.

Let's face it, buying a rental cottage is not exclusively for the wealthy. If this were the case, more than 8,000 cottages would not be available for short-term rental in Quebec today.

From balance of sale, to risk sharing, to passive investment, many financing strategies are available to purchase a cottage without even having the necessary down payment.

A few financing strategies...

The balance of sale

This is the loan from the seller of the amount needed to complete the real estate transaction.

Once the seller has loaned the money, you (the buyer) have 5 years to pay it back.

Line of Mortgage

This is the use of the available balance of your line of mortgage as leverage for the purchase of a rental cottage

This little known strategy requires a good knowledge of the mortgage and real estate market in order to be used effectively.

Passive investment

Consists in finding a co-owner who is able to assume the down payment in your place.

Such a scenario is perceived as less risky by the banks, at the time of the loan. In addition, the division of operational tasks related to the cottage is much more efficient.

The above strategies are explored in greater depth, and others are introduced during the MonsieurChalets Academy.

Tip #12 | Know the expenses of a rental cottage

Although it pays to operate a rental cottage, there are expenses associated with it. To make the calculation easier, let's take a look at the current expenses that are to be expected when purchasing a rental cottage.

On average, the annual income from a rental cottage is estimated at $55,000. As for expenses, the data shows that operating a rental cottage is associated with annual expenses of approximately $31,000.

When purchasing a rental cottage, several expenses must be taken into consideration. These expenses are grouped into 4 categories:

Variable costs

These are related to the volume of your cottage rental. They include housekeeping, spa maintenance, transaction fees, and other fees.

Semi-variable expenses

These are the result of unforeseeable events, such as a breakdown or the purchase of items essential to the operation of a rental cottage. To cover these costs, a contingency fund should be considered.

Exceptional expenses

These are for unforeseeable events, such as dammage or the purchase of items essential to the operation of a rental cottage.

Fixed costs

These are related to the very existence of your cottage. Among these costs are the mortgage, municipal taxes, school taxes, home insurance, etc.

Tip #13 | Rental Cottage VS Income Property

"Is it better to buy a rental cottage or an income property?

While this question is on everyone's lips, few seem able to answer it. Just like an apartment building, some rental cottages are profitable, while others are not.

To get the facts straight, let's look at an income property and a rental cottage, both of which are profitable.

First, let's talk about zoning regulations. These regulations govern the length of time you are allowed to rent your property.

Before making any real estate transaction, be aware of the zoning in which your cottage is located.

If you do the opposite, you may run into a short-term rental ban. It can be very unfortunate to purchase a cottage that is zoned for short-term rental if that was your original intention.

It is also crucial to understand the financial implications of short-term rentals and long-term rentals before making a move.

Short-term leases are more rewarding, but have more expenses. Long-term leases require less day-to-day management and promise more stable, recurring income each month.

If your goal is to acquire real estate, the best option is to purchase an income property.

Why would you do that? Because financial statements showing stable revenues are linked to better credibility with the banks, those who will finance your future project.

My verdict is as follows: to generate substantial income, it is better to opt for the rental cottage, then to generate stable and recurring income, it is better to opt for the apartment building.

Now let's talk about tenant management. Of course, in order to generate income, whether it's a rental cottage or an apartment building, you need tenants. In short term rentals and long term rentals, tenant management is quite different.

You may have heard a landlord complain about the tenants in their building. From simple neglect of the unit, to unpaid rent, to completely inappropriate use of the premises, some stories are chilling.

Unfortunately, to remedy this type of situation, the landlord has very little leeway. In fact, any penalty decisions against the tenant are made, not by the owner of the building, but by the Housing Administrative Tribunal (HAT).

Rarely in favour of the landlord, the TAL's verdict is the result of a lengthy process that can take months or even years.

In the rental cottage effect, there are few occasions when you will have to deal with disrespectful or negligent tenants.

Because the intent of a cottage rental is different from that of an apartment, you will often find that families come to your cottage for a few days to spend some quality time together.

If cottage tenants are sometimes disrespectful, you have every right to impose your own rules, to justify the cost of breakage with a security deposit, or to not welcome them in the future.

Now let's deal with an interesting concept, that of value appreciation. Although a building increases in value due to the rapidly rising costs of construction, the main factor in the increase in value of a property is the land on which it stands.

This is why a building located in the heart of a city is likely to have a much higher value appreciation curve than a rental cottage, where new land for construction appears every year.

Finally, let's talk about enjoyment. Unlike an income property, the rental cottage has two purposes.

That of return, obviously, but also that of pleasure. Without talking out of turn, I don't think it's possible to enjoy an aperitif with a view of the river from your multiplex in Montreal...

Tip #14 | Choosing the Right Location

In Quebec, we have a temperate climate. This type of climate is characterized by extreme temperature variations. In fact, in the space of four seasons, we are likely to encounter temperatures as polar as they are tropical.

As you can probably see, choosing the right region for your rental cottage is closely linked to seasonal demand. Let's take a concrete example: a cottage near Lake Tremblant.

From the point of view of seasonal demand, the location of this cottage is ideal.

In the summer, your tenants will be able to enjoy Tremblant's water and summer activities, and in the winter, because the chalet is close to a ski mountain, they will be able to enjoy winter activities.

But ultimately, what impact does the location of a rental chalet have on your annual rental income?

With a chalet like Mont Tremblant, you'll be able to price in the high season at least twice a year, unlike a ski-in/ski-out chalet, which has only one high-demand period during the year.

The most popular regions for renters are the Laurentians and Charlevoix. What do these two regions have in common? Well, they are both located near major centers, respectively Montreal and Quebec City, and offer tourist and outdoor activities during 3 seasons of the year.

Tip #15 | The Importance of High and Low Seasons

As simple as it may sound, a high season is a time of year when your cottage will receive more reservation requests. In the low season, the reverse is true.

There are several factors that can be used to identify high and low seasons in advance, but the most encompassing are supply and demand. Based on this basic economic theory, you can make many decisions, including those related to price and promotions.

We discussed location earlier, but in addition to year-round activities, there are other factors that directly influence the demand for your cottage.

The school calendar allows you to target several vacations such as Labor Day, Thanksgiving, Spring Break, Easter, Christmas and New Year's.

Tip #16 | More People = More Income?

When buying a rental cottage, you will be faced with several choices. One of them is the size of the cottage, but mainly its capacity.

A large cottage with several rooms will necessarily be more expensive. That said, the larger the cottage's capacity, the more interesting its rental income will be.

The data collected reveals that a cottage with 5 rooms or more is likely to have an annual occupancy rate of about 20%. Conversely, a cottage with 4 bedrooms or fewer is likely to have an annual occupancy rate of 80%.

Few travellers rent a cottage alone. Renting a cottage is a family or group activity. Therefore, the idea is to target a three-bedroom cottage. Depending on the size of the rooms, you can put in several beds, or you can save space by putting in bunk beds.

If it is more expensive to buy a large cottage for groups of 8 to 30 people, one thing is certain, you will quickly be compensated by your rental income. That being said, each option has its disadvantages... A large cottage can provide you with a high rental income in the high season but can be expensive to operate in the low season when it generates fewer reservations.

Tip #17 | Determine your Target Audience

Who is your target audience? Or in other words, what type of tenant do you want to have in your cottage rental?

Cottage rentals in Quebec are becoming increasingly popular. While this is good news, it requires extra vigilance.

MonsieurChalets, the company I founded, features high-end cottages from Quebec. With luxurious products necessarily come customers with higher expectations and standards: that's the clientele I was targeting.

Tip #18 | Register for the MonsieurChalets Academy

A really effective way to learn more about the cottage rental industry in Quebec is to participate in the webinar offered by the MonsieurChalets Academy.

The training, offered entirely online, uses a pedagogical approach that aims to develop 4 skills: prospecting, financing, purchasing and operating a rental cottage.

Available in several formulas, the online training can be adapted to all learning needs.

For personalized coaching, you can register for one of our private consultations. 

Move your project forward quickly and efficiently with these 3 private consultations:

This private consultation is for anyone planning to invest in a rental cottage. During this session, you will learn about a wide variety of topics: buying a lot, buying a cottage, inspecting a cottage, choosing furniture, renovating a cottage, choosing materials, market legislation, signage strategy, concierge services, etc.

This private consultation is for anyone interested in learning more about data collection, your income and expenses, and then adaptive mapping.

This private consultation is for owners and managers of rental properties who want to learn more about sales optimization, schedule synchronization and process automation.