In Parts 1, 2 and 3 of this series, we’ve looked at the things you need to consider when buying a condominium for both personal use with income potential: 
• Will you be renting it out seasonally or for short time periods under 30 days?
• Do you wish to be part of a managed rental pool or, are you going to self-manage your unit?
• If you are opting for a managed program, are you more comfortable with a rental pool or a rental program and, what are the rules and policies governing each?
• Will you have to invest extra to upgrade a unit in order to enter or stay in a rental program?
• Additional costs when buying including Blue Mountain Village Association fees and, GST/HST
The next things you should consider are the realistic income and expenses associated with different programs and units. In most cases, the rental property manager will be able to give you an idea of the annual gross income for units in a particular development. These will vary if they are not in a rental pool or, if you use your own unit frequently thereby taking it out of the pool or program. When you find a unit that holds particular interest for you, we’ll ask for an actual financial statement for it.
The costs vary quite a bit from one type of program to another and, they are subject to change, which all have, since their inception.
Out of any gross income you generate on a unit that is part of the Blue Mountain rental program, you will have deductions from that for things such as travel agency commissions, credit card fees, call centre fees, maintenance, cleaning and of course the management fees. In addition, you will generally pay for an annual or semi-annual deep clean of your unit and may have some expenses for furnishing repairs or upgrades. If you are an out-of-country property owner, withholding taxes are also captured at this point. About once a month, you will receive a statement itemizing these and showing your net income.
From that net income, you will then need to pay for your municipal realty taxes, monthly condominium fees, annual insurance costs and if applicable, Village Association dues, Also, depending on the development, utilities, cable and phone may or may not be paid separately or included in your fees.
As you can imagine, it doesn’t take long to eat into the gross income of a unit especially if you are using it frequently yourself and during prime rental periods.
All of this may sound complicated and really, it is at first however, the rewards can be worthwhile if your expectations are realistic. In most cases, the rental income will offset all of the annual operating costs (except for any financing costs you may have) allowing you to enjoy luxury accommodations at a reduced cost while having ownership in a highly desirable area.
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Tags: Condos in Blue Mountain
Thank you for you great article.
One question i have, if I got this right, the rental income from the condo does not cover all of the expenses such as mortgage .. Are there any properties that are self supporting and offer cash flow?
Thank you.
DK
Thanks for your comment DK. It is very rare to find anything that cash flows after debt service in this area and certainly not in the Blue Mountain condos. Most will generate income sufficient to cover all or most operating expenses and some may even have a bit extra but rarely enough to cover any debt servicing unless it is very small. Having said that, I myself own a condo in town – not a recreational one, that I rent out on a monthly basis and the income covers almost all expenses including debt servicing. I love the leveraging involved in income properties which is where the true benefit comes in.
If I purchased a property in the village and it was not on the rental program; would I be able to decorate it and add my own funiture?
A unit can only exit the rental program by giving notice on June 1st each year and,only if rental pool participation is 80% or higher. In regard to doing your own furnishings, this could compromise you down the line when you go to sell your unit as the vast majority of buyers would want to be in the rental program and the cost to bring it in accordance could be quite high. There is also an annual Non-Participating Homeowners Fee that would need to be paid.
If you are looking for a condominium where you can enjoy village life without the restrictions of the rental program, there are several other options in the immediate vicinity including the older units such as Cachet Crossing, Mountainwalk and so on.
Thanks for visiting my blog.
Is it still the case that the property will most likely not cover a mortgage (20% down) and no cash flow? Considering the low interest rates that can be obtained now and the cost of the unit. Does the owner have to pay any fees per day to stay in their own unit? A very informative article. Thank you.
Generally speaking, that is still the case. Although mortgage rates are low, they have been generally low for the last decade and the more recent lowering hasn’t had enough of an impact to change that. Owners generally do pay fees to stay in their own unit depending on where it is located and which rental program you are or are not in. For anyone thinking of buying a condo at Blue, it has to be taken on a case by case basis as there are so many variations from one development or program to another and an experienced REALTOR is key. Thanks for your comment sr.