Everyone knows someone who invests in real estate to Airbnb, and sometimes we might feel like we should join the bandwagon too! But have you gone through the pros and cons? The obvious benefits of buying a home to rent on Airbnb are financial gain and profitability. If done correctly, you can generate more income from your short-term rentals on Airbnb than you would from having a long-term tenant.
However, like any business, it has its risks and downsides.
Risks of Renting on Airbnb
What’s great about more and more things going digital, is we can investigate through reviews. Although Airbnb ‘guests’ have profiles and reviews, you can’t vet these guests as you would your long-term tenant. And even that is a lot harder to secure than it would seem.
The more people through the property, the more risk of damage and problems arising. There is also more day-to-day management and communication with guests than you would expect. Every new guest has questions about the city and might ask about your go-to brunch spot or what amenities and activities you recommend nearby. Most guests also have specific requests or requirements; they might need a crib for their young child, extra shampoo during their stay, or want to get the keys early or store their bags after check out so this requires extra communication and coordination.
Managing the Airbnb
There are property management companies that specialize in Airbnb management and will handle all the details for you; everything from cleaning the unit, changing the sheets, replenishing anything that’s needed, communicating with the guests and actioning any emergencies that arise.
It’s like working with a full-service real estate agent, they have the experience to handle all the details, be your best guide and protect your assets.
Just over a year ago, my family decided to venture into the Airbnb world and we did just that. We found the perfect property, secured the license, furnished the unit, and handed over the keys to a property management company to take over and handle the day-to-day.
Get more investing insights with these blogs next:
Location Consideration When Buying a Property to Airbnb
Location is crucial to the potential success of your Airbnb. You should look at properties in neighbourhoods that attract the most visitors to your city. Whether they are visiting for a conference or a hockey game, most travellers to your city consider being near popular tourist attractions, points of interest and access to transportation. It’s also important to note any planned changes in the area that could impact the property value.
License to Airbnb
One of the most important things to consider when looking for a potential Airbnb property is whether the bylaws will even allow for it. The City of Toronto requires a license to operate and has some restrictions and guidelines around short-term rentals. Toronto’s Short-Term Rental Bylaw only allows short-term rentals (28 days or less) if it is your principal residence and if you’re renting the entire home it can only be for a maximum of 180 nights per year.
See here an article where David talks about the debates around our housing crisis and why it might cause even more Airbnb restrictions down the line.
If you look at condos for instance, in recent years many condo corporations in Toronto have banned short-term rentals and specifically Airbnbs from operating in their buildings. However, there are still a handful of condos in the city that explicitly allow for Airbnb and all short-term rentals. Toronto is one of the best cities for Airbnb Investment because we have a steady demand and the city legislation still allows for it. It can be a very profitable venture when done correctly and hiring a real estate agent you can trust that knows the ins and outs of purchasing a home to Airbnb is important.
Are you looking for real estate investing advice you can count on? We’re experts on the matter because we know that investing in real estate is not simply buying real estate. Book a buying/investing consultation today or get in touch directly at 416.642.2660 or email us at admin@torontorealtygroup.com.
Want More Insights From TRG Experts?
Sign up here to receive Insights Magazine delivered to you. This resource is full of market advice and industry intuition from our team and colleagues to keep you up-to-speed on the ever-changing Toronto real estate market.
