Cottage owners expected rental income to cover the mortgage — but hidden fees turned their properties into money pits

When Orysia Sozanski bought the cottage next door to her own waterfront property in Ontario, Canada, she didn't intend to become a landlord. But rising interest rates after closing changed the plan, the Toronto Star reports.

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The renovated 1,200-square-foot cottage now rents for 10 weeks each summer at $3,300 to 3,600 per week, but the income still doesn't fully cover her ownership costs. Her long-term goal remains paying off the property and ending rentals entirely.

Tyler Schwende, who rents a vacation home year-round in another county, averages two- to three-day bookings across 91 nights annually at $813 per night. He either breaks even or sees a small profit, but last year, his cleaning fees alone had cost $20,000.

That $20,000 cleaning bill is a glimpse into the expense structure that catches most new rental owners off guard. According to Maryrose Coleman, realtor and owner of Muskoka District Rentals, owners typically retain about half their gross rental revenue after expenses, and that's before accounting for unexpected repairs.

"For most people, renting isn't paying the mortgage," she told the Star. "It's helping offset the ownership costs — mostly taxes."

Platform fees on booking sites like Airbnb and VRBO range from about 15.5 to 20% of the booking value, Coleman notes. Hiring a property management firm costs between 25% and 35% of revenue. Add in expenses like utilities, property taxes, maintenance, insurance and supplies, and the profits can shrink quickly.

The Asset Protection Council's analysis of short-term rental margins confirms that occupancy and lodging taxes alone can take up 5 to 15% of revenue, and that for a short-term rental (STR) to truly become profitable, owners typically need at least 60 to 70% annual occupancy — a target many seasonal properties can't realistically hit.

Coleman cited an example from her own experience: a rental owner who expected year-round income but didn't understand that their area's rental demand was concentrated almost entirely in July and August.

"I ultimately advised them to sell, as the carrying costs greatly exceeded their potential revenue," she told the Star .

The same seasonal trap hits U.S. vacation rental owners as well. According to AirDNA data cited by Truvi, the average U.S. host earned roughly $2,408 per month in 2025, but that national average masks extreme seasonal variance , and properties in non-resort locations frequently sit empty outside peak periods.

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Short-term rental rules have tightened across North America, as many jurisdictions now require owners to register and obtain annual licenses . In Ontario's cottage country, for example, those fees run $500 to $1,500 per year, according to Coleman.

In the U.S., all rental income must be reported on your tax return and you could also be liable to pay for occupancy or lodging taxes imposed by your state or municipality.

Under IRS rules, STR owners must allocate their expenses between rental and personal use , and losses may be limited to reduce their taxable income. A proportional share of related expenses may be deductible for the rental portion of the property.