A Toronto family bought a cottage in Prince Edward County for $685,000. Then they realized what it could fetch on the rental market
Who: Omar Prashad, 41, an executive at a technology company; Andrea Prashad, 39, an executive at a company that operates senior living facilities; five-year-old daughter Hudsyn; and their dog Charlee, a 10-year-old Vizsla.
The history: In 2010, Omar and Andrea bought a four-bed, four-bath semi in High Park for $700,000.
Every 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 shops. After their daughter Hudsyn was born, in 2016, she accompanied them on the trips, too.
During those visits, the couple began casually thinking about buying a property in PEC and turning it into a summer escape. 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?” says Omar.
The hunt: In the summer of 2020, after a brief stay in PEC, they visited three properties on their way out of town.
Perhaps unsurprisingly, they realized the mid-pandemic real estate market was red hot, with hordes of city slickers departing 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, feeling determined, telling their agent to let them know if something exciting hit the market. Just two weeks later, their agent called them about a new unlisted property in PEC. Omar hopped in his car and drove up to see it.
The three-bed, three-bath home, built in 1885, was located right in the heart of Wellington, within a 10-minute walk of both downtown and the beach. It sat on a big property, about 70 feet wide by 200 feet deep.
On the outside, the place had an east-facing front porch, making it a nice and shady spot to hang out in the afternoon. Inside, at 1,700 square feet across two-storeys, it had some character, with intricate moulding and coffered ceilings.
The property would require some upgrades, including replacing the floors and redoing the bathrooms, but the Prashads were willing to do the work.
Out back, there was a sweet in-ground pool, but beside it, the 800-square-foot pool house was in rough shape. It had been locked up and neglected over the years, and required heavy structural repairs.
Despite the need for renovations, the previous owners had been using the place as a successful Airbnb investment, renting it for close to $500 a night, which hinted at the high demand for vacation rentals in the area.
The asking price: $689,000. Omar and Andrea crunched the numbers, factoring in an estimated $70,000 for renovations, then offered full asking price, conditional on a home inspection. They wanted to get a deal done 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 some issues with the plumbing and electrical, the price dropped to $685,000, with a November 1 closing date. The family finally had their secondary property.
The renos: The Prashads planned to do the renovations over the winter, then have the place ready for the spring of 2021.
They replaced all over the flooring with white oak plank hardwood; added new countertops and appliances in the kitchen; fixed the electrical and replaced most of the plumbing; installed a new security system with exterior cameras; and turned the pool house into a theatre and games room, perfect for rainy days in PEC.
By the beginning of April of this year, the renos were complete. All told, the costs climbed to double their original estimate, reaching roughly $150,000.
Here’s how it turned out:
The outcome: 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, which came with the place.
But after talking to a local property manager, the couple realized how much money they could make putting their place on the short-term rental market—an estimated $1,000 a night. Apparently, all of their renovations made it a prime vacation listing.
Considering the financial upside, the Prashads decided to turn the place into a full-time investment property. Now, they’re treating it like a business, with a website and listing on Airbnb.
They started renting it out in June. Despite the Covid-shortened rental season, they expect to gross $80,000 from the investment in 2021. Next year, it could rise to $120,000.
With the income from their new investment, the Prashads plan to purchase another place in PEC and transform it into a rental property. They’re still interested in finding a secondary property for themselves, but Omar thinks they might not be able to resist the temptation of renting it out.
“Well probably buy it, planning to use it for the family. But if someone tells us we can make $1,000 a night, it’ll be hard not to turn it into a business as well,” he says.
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