So, I showed a gorgeous lakefront property on Canada Day (yes, I do work on statutory holidays) with amazing lake views. My Buyer was looking for a weekend getaway/retirement home. The conversation came up about Airbnb rentals, as she’s toying with the idea of renting it out until she’s ready to move in upon retiring. Makes sense, since if you buy an investment property, you hope it will generate some monthly income and help pay for itself. I have to admit, when she first said Airbnb, I inadvertently cringed. There is so much conflicting info both pro and against short-term rentals, that I have to admit I’m a touched biased. Proponents spin tales of easy money, while opponents weave dire stories of wild parties that trash homes and result in thousands of dollars in damage. The truth is that asked ten years ago, my Buyer wouldn’t even have considered it and would have immediately tried to find a long-term tenant after the deal closed. But there’s certainly a lot of talk about Airbnb, and everyone and his uncle either knows someone or has heard of someone making a ton of money from leasing short-term, so she’s seriously considering it.
So, in case you’re toying with the same idea, here are some of the pros and cons of leasing a property through Airbnb or similar type service:
1) Income– The truth is that short-term rentals do indeed generate more revenue than long term. In fact, it’s not unusual for a short-term rental in a good high-demand location, nicely furnished and well serviced to pull in three times the rental income of an unfurnished, long-term rental.
2) Flexibility –When you rent as a conventional landlord, you’re usually tied up for one year, and even once the lease expires, your tenant will automatically go onto a month-to-month tenancy. The only way you can take back possession of your property is if you (or a member of your immediate family) intend to move into it. If you wish to sell, you cannot give notice to the tenant to move, and have to sell the property tenanted. This may be a problem if you have uncooperative tenants. On the other hand, as an Airbnb host, you have the flexibility determine which dates your property will be available and block off dates that you may need either for your own personal use, to execute renovations, list for sale, etc.
1) Risk – By far, the biggest con is the risk factor. It’s inevitable. Opening your home to strangers opens you up to some risk. While we would like to believe that most people would treat your property in a decent manner, even well-intentioned guests can have accidents that result in unintentional damage. Or you could get really unlucky and have the guest from hell that runs wild parties and trashes your home. That being said, as a traditional landlord, you could also have a long-term tenant from hell that you’ll be stuck with for a much longer period of time.
2) Time & Effort – Running a profitable Airbnb is not as easy as you might think. It requires a lot of time and hard work. Unless you pay someone to do it for you, you will have to take care of the maintenance yourself, such as cleaning, laundry, ensuring the property is stocked and occasional repairs; as well as the management process, such as managing the schedule, key handoffs, pre-stay communication, in-stay responses, calendar management, and the occasional repairs that are all part and parcel of this venture. If you have a job that doesn’t allow you the flexibility you need to perform these chores, then you will have to find a dependable person or service to maintain and manage the property for you. While being a traditional landlord also requires certain maintenance and management duties, these will be far less frequent and demanding.
These are just a couple of the pros and cons to consider before embarking on becoming an Airbnb host. To decide which one is better for you, you need to consider which of the pros and cons matter most to you, which option is better suited for your particular situation and whether it’s lawful. While Ontario currently doesn’t have laws expressly forbidding short-term rentals, most condominium buildings for example have rules that specifically prohibit you from doing so.
If you would like assistance in finding an investment property, call me today and we can discuss your options in detail.