PEI is a vacation paradise. Beautiful beaches, warm water, friendly people and many activities. You can attend a ceildh, a maritime concert or variety show, go deep-sea fishing, swim, sunbathe, catch a play, partake of lobster at a lobster super, walk along the boardwalks, cycle the Confederation Trail, the bed of the old rail line that goes clear across the island and the list is endless. There are excursions of every interest and you need never be bored.
Many people come to PEI for the summer. From a short holiday to all summer residents, these visitors swell the population of PEI from 140,000 full-time residents to a population in the summer of over a million. All these visitors must stay somewhere while enjoying PEI and you could be one of those providing that accommodation with an investment in a PEI luxury home for summer rental to vacationers.
While you could certainly purchase an existing Bed & Breakfast or buy a large home to convert for the purpose, this might be a little bit too much work for the casual investor and we have another suggestion.
You can purchase a luxury PEI summer home and rent this one unit to vacationers from the cities of Canada and the US at prices up to a possible $4000 per week. You would be looking for a home with water frontage and the best returns would be garnered from a larger home with luxury features as your potential guests will be used to the best in their everyday lives and this is not a "roughing-it" experience for them. Basically they want accommodations as good as their home in a place like PEI, free from the hurried dynamic of their homes and lives.
You could look for a home to purchase in a waterfront estate such as Granville on the Water or Sunbury Cove Estates but wherever you purchase you will require a larger home, full featured chef kitchen or similar, all household necessities must be included (or purchased) from knives, plates to towels, tablecloths, you get it everything for gracious living as well as special attention should be placed on the bathrooms. They must meet the highest expectations including Jacuzzi tubs and possibly sauna. Outdoors you want shore frontage, perhaps a small dock, a swimming pool is an excellent feature, and certainly a children's' play area with jungle gym etc.
PEI properties of this type may run as high as $500,000, however it is possible to buy a suitable PEI home for luxury summer rental as low as $300,000. Generally, as this is not your primary home, you will require 25% down which is between $75,000 and $125,000 depending on your price range. This means that you will be mortgaging from $225,000 to $375,000. In round figures your monthly payment will be from $1000 to $1700 per month based on best rate of 2.65%. Add property taxes, insurance etc and you are looking at a monthly cost of approx $2000 to $2500.
As there are 12 prime weeks to rent in the PEI summer home rental season and there are 12 monthly mortgage payments to be made this means that the cost of one week's rental is equivalent to one months debt service and costs. So if you can rent the two example properties, the $500,000 property at $4000 per week and the $300,000 property at $3000 per week you have cleared $1500 and $1000 per week respectively. This does not of course take into consideration that you can rent these PEI homes the other 9 months of the year, at a lower monthly rent of course, nor does it take into consideration equity potential gains as these PEI properties appreciate in value.
You may think that $4000 per week is a lot of money and would anyone pay that for a PEI rental home and holiday. Just divide this amount by 7 days. $571 per night for a PEI vacation home that is in all ways luxurious, that has facilities that allow the user to create their own meals if they wish, and that would accommodate 2 families easily, is not a lot when compared with the cost of hotels in larger centers which may be the alternative holiday that your guests would plan. You are providing an amazing get-away and a complete change of lifestyle for the harried executive from Toronto or Boston. PEI is a safe haven that they can bring their families to and not worry about what their children are up to.
So think about becoming a summer home investor in PEI. Remember that you do not have to be here during the summer, although obviously you would want to take your own holidays here and can even offset some of your profit for a long vacation stay on the island. The management of your property can be safely and confidently assigned to one of the PEI property management firms and we can help you engage such a service. Some of these companies even undertake to rent your property for you. They will keep your property safe in the winter and provide cleaning, gardening and maintenance service throughout the season.
Give us a call today and we can discuss your next big adventure!