Cottage Investment Properties

by www.theaspiringmillionaire.tumblr.com
(Canada)

We recently bought a cottage lot and are not sure what to do with it.

If we build a new home on the lot we need to do septic, well etc.

And a new home would bring us up to $450,000 investment in the property.

In this economy we are worried it wouldn't sell. It is on a lake. We actually have a double lot and are wondering if we should build as everyone on our street is converting their cottages to year around homes (baby boomers) or split the lot and put another cottage on the other one and sell it for 180,000 profit and we could sell the other one as well.

We are worried about spliting the lot as that is why most people like the property becuase it has a double lot.

Most cottages go for around $200,000 on the lake which are a lot smaller properties then ours (1/2 size) what would you suggest?

Build a dream home or split the lots and build another cottage?

Follow my decision and renos etc. at: www.theaspiringmillionaire.tumblr.com

Comments for Cottage Investment Properties

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Jan 20, 2010
RE: Cottage & The Aspiring Millionaire
by: Tom Karadza

Hello Aspiring Millionaire!

Thanks for the question.

And I would have to come back to you with a question. What was your goal when you bought the property?

Long term appreciation?
Immediate cash flow?
Quickly force up your equity position and sell?
Do you need/want to sell quickly and get out of the situation?

It sound like you want to sell and are looking for the right strategy.

You'll need a decent amount of cash to get through any re-zoning, new construction and carrying costs of a build. You'll also have to deal with contractors and turn yourself into a mini general contractor to oversee the project. None of that is bad, just be aware of it.

If you're looking to sell quickly doing a build may not be the best option.

I would talk to an experienced Realtor in the area and ask him/her for comparables of your property "as is", "split into two", and with a "dream home" on it. Once you have that information I would imagine it will help guide your decision.

I realize I'm not helping very much here! Reply with more detail around your goals for this and I'll add more!

Tom.

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