A Toronto family bought a cottage in Prince Edward County for $ 685,000. Then they realized what he could bring in the rental market

A Toronto family bought a cottage in Prince Edward County for $ 685,000. Then they realized what he could bring in the rental market

Which: Omar Prashad, 41, executive in a technology company; Andrea Prashad, 39, an executive in a company that operates retirement homes; five-year-old daughter Hudsyn; and their dog Charlee, a 10 year old Vizsla.

The story: In 2010, Omar and Andrea purchased a four-bed, four-bath semi-trailer in High Park for $ 700,000.

Each summer, starting in 2014, they visited Prince Edward County. They enjoyed going to the beach, attending wine tastings, exploring the food scene and visiting the charming boutiques. After the birth of their daughter Hudsyn in 2016, she also accompanied them on their travels.

During these visits, the couple started casually thinking about buying property in PEC and making it a summer getaway. When the virus arrived, that desire grew even stronger.

“Why were we stuck in the city when we had the ability to work remotely and be anywhere? Omar said.

The hunt: In the summer of 2020, after a brief stint at PEC, they visited three properties on their way out of town.

Unsurprisingly perhaps, they realized that the pandemic real estate market was hot, with hordes of city dwellers leaving for surrounding towns. They made an offer on a property in Wellington, but the seller wanted more. The couple moved on.

Omar and Andrea returned to Toronto determined and told their agent to let them know if anything exciting was coming to the market. Just two weeks later, their agent called them about a new property not listed in PEC. Omar jumped into his car and came to see him.

The three-bed, three-bath house, built in 1885, was located right in the heart of Wellington, a 10-minute walk from the town center and the beach. It was on a large property, about 70 feet wide by 200 feet deep.

Outside, the place had an east facing porch, making it a nice, shady place to relax in the afternoon. Inside, at 1,700 square feet over two floors, it had character, with intricate moldings and coffered ceilings.

The property would need some upgrades including replacing the floors and redesigning the bathrooms, but the Prashads were up to the job.

At the back there was a nice inground pool, but next to it the 800 square foot pool house was in poor condition. It had been locked up and neglected over the years, and needed heavy structural repairs.

Despite the need for renovations, previous owners were using the place as a successful Airbnb investment, renting it out for almost $ 500 a night, which portended a strong demand for vacation rentals in the area.

The asking price: $ 689,000. Omar and Andrea calculated the numbers, factoring in about $ 70,000 for renovations, and then came up with the full asking price, subject to an inspection of the home. They wanted to strike a deal quickly.

“Why take the risk of jeopardizing the sale? We just decided to give them what they wanted, ”says Omar.

After the home inspection revealed plumbing and electrical issues, the price dropped to $ 685,000, with a closing date of Nov. 1. The family finally had their secondary property.

The renovations: The Prashad planned to do the renovations over the winter and then prepare the place for spring 2021.

They replaced all the flooring with hardwood made from white oak planks; addition of new counters and appliances in the kitchen; repaired the electricity and replaced most of the plumbing; installed a new security system with exterior cameras; and transformed the pool house into a theater and games room, perfect for rainy days in PEC.

At the beginning of April of this year, the renovations were completed. In total, the costs increased to double their original estimate, reaching approximately $ 150,000.

Here is how it happened:

The result: The family wanted to use the place when they needed a break from the city. Otherwise, they planned to rent it out, using a grandfathered Short Term Accommodation (STA) license that came with the location.

But after talking to a local property manager, the couple realized how much money they could make putting their place in the short-term rental market – around $ 1,000 per night. Apparently all of their renovations made this a top vacation list.

Considering the financial benefit, the Prashads decided to turn the place into a full-time investment property. Now they treat it like a business, with a website and advertise on Airbnb.

They started renting it in June. Despite Covid’s shortened rental season, they expect a gross investment of $ 80,000 in 2021. Next year it could reach $ 120,000.

With the income from their new investment, the Prashads plan to buy another home in PEC and turn it into rental property. They are still interested in finding a secondary property for themselves, but Omar believes they might not be able to resist the temptation to rent it out.

“Well, probably buy it, planning to use it for the family.” But if someone tells us that we can make $ 1,000 a night, it will be hard not to make a business of that as well, ”he says.

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