I love rental cottages! In my experience, they're cute and clean and pet-friendly and great value for the money. I have stayed in them in Nagano, the Tama area, and now Izu.
Happy days is a really cute rental cottage in Jogasaki, Ito City, on the east coast of the Izu Peninsula. The rental includes a two story 2LDK, fully furnished, with a full kitchen stocked with dishes and cooking paraphernalia. The bedrooms are tatami, and come with closets stuffed with futons and bedding. Pets are allowed, and there is a separate shared onsen in addition to the bath and toilet in the apartment. It's about 12,000 yen for the whole shebang, and you could easily fit four, six, or even more people in there if you're feeling friendly. It's near the beautiful suspension bridge (つり橋) and cliffs at Jogasaki.
Rental cottages and other similar DIY lodging like Happy Days can be found commercially, but are also available dirt cheap through most city governments. For example, Machida City (my city) owns several cabins in Nagano prefecture. Residents of the city get first dibs in renting them; neighboring cities get next call. They usually come with full kitchens and bedding and lovely natural surroundings; barbecuing tools are also often provided. This place, for example, charges 5,000 yen for a cabin that can hold up to five people. It's a really great way to go on a retreat to the boonies with a big group of friends; cook, drink, hike, hang out.