Even with a combined income of over $ 200,000, a Toronto couple couldn’t afford a spot in the city. So they bought a $ 900,000 cottage in Bracebridge instead.
Who: Peter Machalek, 34, commercial director of TREC Brands Inc., a cannabis company; Sara McAlpine, 31, Hudson’s Bay Brand Manager
The story: Peter and Sara met in 2017 during an “Elven Exploration”, a holiday pub crawl for a children’s charity. They started dating a few months later.
In 2019, they moved into a 1,000 square foot two story rental in Harbord Village. It was a renovated shed with a boudoir, a bathroom and a large master bedroom. They paid $ 2,900 per month.
The couple had their eye on homeownership. But what they wanted, a detached house in Little Italy, the Annexe or Roncesvalles, with a large backyard and two or three bedrooms, would cost them over $ 1.5 million.
Even with their combined income of over $ 200,000, saving for a down payment would be difficult and eventually leave them homeless.
Over the next year, they waited, hoping there might be an adjustment or correction in house prices, and continue to save for a down payment. But the longer they waited, the more they feared being excluded from the market.
When Covid hit, Peter and Sarah started working from home. They also had to cancel a two-week summer vacation in Italy and Switzerland due to flight restrictions. Instead, the couple found cottages to rent on Airbnb and VRBO.
By the summer, lockdown restrictions had been lifted on touring cottage country, so they stayed in Haliburton, Muskoka, Simcoe and Prince Edward County, typically for a week at a time. Sometimes they would pool their money with friends or family to rent a larger cabin.
Peter complained that the kitchen had substandard cookware and utensils, like dull knives or not enough pans to cook a meal for a group. The decor was often old-fashioned and stuffy. So Sara and Peter started to think about how they could prepare a cottage rental if they had their own.
At the end of the summer, Peter met a friend who had recently bought a cabin in Huntsville. The friend said the demand for cottage rentals was so high that he was able to rent his accommodation during the summer and earn enough money to pay for the cost of owning his primary residence for the whole year.
Since Peter and Sara were both working from home for the foreseeable future, they figured they could buy a cottage up north and live there most of the year. During the summer when the cottage was rented, they would stay somewhere else with family and friends, keep a rental apartment in town or Airbnb somewhere downtown.
That way the couple could get more space than in town and pay a lot less. Plus, the pandemic had allowed them to stay and save money, putting 80% of their paychecks in savings for a down payment. The low interest rates have also made the purchase more affordable.
The hunt: Sara and Peter loved the Muskoka, so they focused their research in the area. To make this an attractive rental, they wanted a waterfront cottage that could accommodate 10 to 12 people.
There must have been a large kitchen, as Peter loves to cook, as well as a large living and dining room, where several families with children could relax. They wanted to spend less than $ 1,000,000, with a budget of $ 100,000 to any renovation needed.
By the end of October, they had contacted a Muskoka real estate agent. On November 1, they drove 600 kilometers in one day, visiting eight cottages for sale.
One of the properties they saw was a four bed, two bath cottage on the Muskoka River, priced at $ 950,000. It was minutes from downtown Bracebridge, where there were restaurants, cafes and shops. The property was on a double lot with half an acre of land and lots of trees so it felt private and had a cottage feel.
On the ground floor, there were two bedrooms, an office, a bathroom and an open kitchen, dining room and living room with gas fireplace and access to a wooden veranda.
The lower level had an entertainment room with another gas fireplace, two bedrooms, a bathroom and a laundry room with access to the backyard.
Right next to the main chalet there was a detached bunkie that could accommodate a queen bed and futon, as well as a detached garage. The back yard had a fire pit and there was a private dock directly on the river.
The place also had connections to natural gas and municipal water and sewers. Not worrying about the maintenance of a septic tank during rental periods was another great feature.
In contrast, the place would require a ton of interior upgrades, like new restrooms, a new kitchen, and new flooring on the lower level. The bunkie would also need to be wintered. But the couple really liked the place and figured they could do the upgrades for around $ 90,000, which they budgeted for.
A few days after visiting the property, on November 3, Sara and Peter made an offer of $ 850,000, based on comparable properties in the area. They went back and forth in the negotiations.
The couple wanted late possession to get as close to the summer rental season as possible, and there were legal issues regarding the waterfront property that needed to be addressed by the seller. But on November 13, the two sides agreed to a price tag of $ 897,000, fitting Sara and Peter’s budget perfectly, with a closing date of February 26.
The result: Peter and Sara immediately moved into the chalet to begin the renovations. To generate income, they sublet the rental of their shed. It was difficult to find a tenant during the pandemic, so they rented it out for less than what they paid – $ 2,200 per month until July 1, 2021, when they wanted their new chalet ready to be listed on Airbnb.
From March to June, they planned to redo most of the ground floor, convert an office into a bedroom, update the bathrooms, put new flooring in the basement, repaint the whole house, turn the garage into a playroom and renovate the bunkie into a bedroom for the winter. AT saving money, they planned to do everything themselves, in addition to their daily work.
Sara followed interior design accounts on Instagram and Pinterest and created moodboards for the chalet.
But in December, Peter broke his leg on a ski trip to Washington. help from family and friends who came on weekends.
In June, as the planned completion date approached, they brought in a contractor to take over the renovation of the bunkie. This pushed their total renovation cost to around $ 120,000.
As the couple completed the last of their renovations, in mid-June they listed the property on Airbnb as the Muskoka Paddle House, charging $ 950 a night during peak summer season in July and August.
Within days, they were full until mid-September. They’ve since started taking reservations through Instagram DM for 2022. This made them feel confident about their decision to buy.
Once their first Airbnb rental begins on July 1, they will return to their accommodation in Harbord Village. By the end of the summer, they will decide whether to give up the rental of their shed for good or to keep it as their home port in town.
They plan to use Airbnb’s profits towards their mortgage and annual postage. They are also saving for other upgrades to make the property more attractive for winter rentals, like a hot tub and sauna.
If the vacation rental market slows, Sara and Peter can return to their cabin full time. Peter would have to return to town a few days a month for meetings, while Sara could continue to work remotely. In the long run, they can imagine starting a family at the chalet, as there are good schools nearby.
Although they haven’t had much time to enjoy cottage life between renovations, Sara and Peter are enjoying their peaceful surroundings.
They have their morning coffee on the dock or on the patio, overlooking the water. Some days after work, they canoe or paddle down the river or jump into the water to cool off.
Their neighbors, who are a mix of retirees and people in their 30s and 40s, are friendly and will stop by to see if they need help with any renovations.
Just the other day when Peter and Sara were canoeing on the Muskoka River, they met another young couple a few houses down the river. The couple were originally from Toronto, but a few weeks earlier they had left town and bought a cabin.
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