By Jennifer Lynn Walker
More and more people are turning to Airbnb for rental income. Some are creating a full-time or part-time side-business while others use it as a way to cover housing or condo costs while away on vacation. The potential income can outweigh a traditional lease by double or even triple in a month. The short-term rental industry is so hot right now that there are property management companies who specialize in this type of real estate.
There are other websites that offer short-term home rentals but Airbnb is the largest with 150 million users and 4 million hosts, making it a $31 billion business recognized and trusted around the globe.
Before embarking on this real estate niche, there are some facts you will want to know.
Some seasons busier than others
Depending on where you live, Airbnb could be seasonal. David Yifi, an Airbnb property manager, who specializes in renting rooms and apartments for tenants in Montreal, says that he only offers his services in the spring, summer, and fall. Business drops off drastically in the winter. The closer your rental is to tourist attractions, hospitals, and metros, the longer your rental season will be.
Condo associations may prohibit short-term rentals
Many condo associations have made it part of their by-laws that short-term rentals are prohibited. Some have even gone so far as to implement a fine — as high as $1,000 per day. More and more buildings are adopting this rule. They take it quite seriously because there is a possibility building insurance will not cover short-term rentals.
Smaller buildings more likely to accommodate an Airbnb business
Smaller buildings (six doors or less) where there aren’t any common hallways are much more likely to allow short-term rentals. Before you purchase a property, read over all of the agreements carefully and examine the insurance policy. If you buy your own multi-door building, you can be assured control. It’s not unusual to see a mix of short-term and long-term rentals in one building.
Cities are starting to crack down
As of 2018, the City of Montreal is trying to change its by-laws on how many short-term rentals are permitted in the heart of downtown, creating restrictions for certain areas. The City is also trying to pass by-laws to ensure Airbnb-type rentals are farther than 150 metres apart. It’s best to find out about zoning laws and business licensing beforehand.
According to the laws of Tourisme Québec and the Régie du logement, rentals that are less than a month and don’t have a traditional lease are considered a bed and breakfast and proprietors must obtain a permit. This also obliges you to undergo inspections, pay taxes, get special insurance, and conform to certain fire code regulations.
Insurance companies are also cracking down
Insurance companies can also pose a threat to a short-term rental business. Before starting up, make sure your insurance company is aware of your plans. If your insurance agreement forbids short-term rentals, the company will probably not cover damages if something goes wrong.
Do your research
Even though short-term rentals take more of your time, the return on investment is exciting for beginner investors who are getting their feet wet. Following the rules will allow you to have peace of mind and build a strong business.
It’s in your best interest to do as much research as possible. The Corporation de l’industrie touristique du Quebec and the Régie du logement are two great places to start. Consulting a tax professional and your insurance company should be on your list as well.
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