February 6th, 2019
In this post, we’re going to give you some important tips if you're looking to put any GTA property onto a short-term rental site like Airbnb.
We’ll go over regulations, insurance issues, vacancies and guest-vetting, so let’s get started.
Each municipality is going to have their own regulations on short-term rentals. In the hot markets – those where housing is scarce – advocates may be more adverse to the proliferation of short-term rentals, most of which occupy vital housing that could be used for full-time tenants.
In Toronto, for example, strict legislation is being passed by the city which forces short-term rental hosts to live on property, only offerrng up rooms within their principal residence as guest suites. It's an effort to curb the rental crisis plaguing the city today, and because it is a new response to a relatively new industry, these bylaws aren't necessarily being strictly followed or enforced as of yet.
Liability coverage should be one of the most obvious reasons to insure your short-term rental unit, and landlords insurance might come with specifications on what exactly "a tenant" means, so it's important to review your policy before accepting guests. See if a landlord’s policy will cover you against damage to the property you provide your tenants, whether short-term or long-term.
On the other hand, Airbnb has its own $1 million "Host Guarantee" program that acts as insurance coverage for hosts. If you're listing on another site, it will be essential to review their insurance offerings as well.
In any regard, some insurance companies will provide extended coverage for a house-sharing situation if you do so inquire.
Just because you have a short-term rental posted up to multiple listing sites, it doesn’t mean that you’ll be immune from what every landlord dreads: extended vacancy periods.
In Canada and all of its major cities, there are seasonal periods where rentals and hotels are in less demand. One can logically point to our long winters, where the holiday season(s) may be the only times your short-term rental sees any interest.
Sure, you may be able to snag the odd person travelling to the city in the winter for fun or work, but it may be more work to keep up an empty unit than it’s worth in lost income.
If you have a "ghost hotel" – a nickname given to the thousands of short-term rental properties that often sit in buildings empty, for extended periods of time – you’re paying more in property taxes and your mortgage than you’re bringing in.
Having a secure tenant who is living and paying rent to you full-time can seem like a much smarter option than leaving your unit empty for months, just to cash in during the hot periods.
Having income every month to go towards your mortgage loan carries less risk than the uncertainty that surrounds the short-term rental market. If money is an issue for you, you may want to go the road of less risk.
Take a look at their reviews and ask them what their plans are for their stay each time someone requests a booking. Remember, you don’t know these people, and you sure as heck cannot ask for landlord references as you would a prospective long-term tenant.
A good way to vet these potential guests is to look at reviews on their profile page, because hosts can review their guests too, not just the other way around. Similarly, if someone is in town for business or pleasure, you might be able to predict their plans with your property.
Also, make sure to notice what time of year and which city events will be occurring during the time of the booking. If it’s around Christmas, you can expect some sight-seeing, or perhaps some New Year’s Eve plans. If the booking is taking place in the summer time, how close are you to the festival circuit? Maybe there's a big-name film festival coming to town? Paying attention to city events can help you understand the ups and downs of the short-term rental market.
Make sure your neighbours are aware of how your property is behaving. Having a good relationship with your neighbours is essential to protecting your property, because they can be the first to let you know when the "party" has gone "too far".
If you’re a busy person who doesn’t really spend time at home, but does need to live in it on occasion, it’s easier to justify a short-term rental option to cover some expense when you’re away.
If you’re a full-time landlord with an extra unit, and you're considering turning it into a short-term rental, there are a few, continual expenses to think about. Namely, who will be responsible for cleaning and furnishing the suite on a consistent basis? Sheets and floors will need to be cleaned whenever a guest leaves -- this could be a lot of extra time.
Further, you have to be in communication for any guest concern while on the property, though there are ways to streamline concerns into a handy "guest handbook".
As a landlord, you don't have to clean up after your tenant, help them with directions around the neighbourhood, furnish their place, or change their sheets.
Based on our stated facts, deciding whether to be a short-term or regular landlord is a decision only you’ll be able to make.