Thinking of buying a house or condo to put up on Airbnb? Whether you're hoping to subsidize the mortgage on a vacation home or are just looking for a creative way to make a few extra bucks, buying a property to rent out for short-term use is becoming a widely popular investment strategy.
In some cases, managing an Airbnb, HomeAway or KidandKoe listing could generate a great profit. However, such financial gains are not without their potential pitfalls. Savvy investors know the key to success is due diligence. Here are some things to look out for.
1. Does your condo board (or city) allow it?
Gone are the days when owners could list a condo on the short-term rental market and everyone would be none-the-wiser. Thanks to the popularity of websites like Airbnb, many homeowner associations or co-op boards now implement restrictions on short-term property use. If you're looking to purchase a condo for the purpose of short-term rentals, make sure to check with the HOA's rules before investing.
If you're not beholden to a homeowners association, you still need to do your due diligence. Some cities like Vancouver require specific businesses licenses and registration to operate an Airbnb. You may also need to check with your homeowner's insurance agency since there are many ways hosting could equal liability.
2. Are you buying in a popular area?
As with all property investments, location is important—a beachside property will likely be in demand more than one inland—but it can also mean more competition. Start by working with a REALTOR® who can help you analyze comparative listings in the area you're considering purchasing. Get a taste for the neighbourhood by checking out nearby amenities and statistics on REALTOR.ca listings. It's also important to get a full understanding of how much you can charge and generally how occupied it gets throughout the year. A beach rental property might do well in the summer, but the winter may be a different (and costly) story. A local REALTOR® can help you consider what drives popular year-round properties.
3. Take into account your overhead and understand your ROI
There are many hidden or circumstantial factors potential owners have to consider before investing in a short-term rental property. Costs such as condo fees, décor, professional cleaning and vacancy rates all must factor into your calculations. If you don't want to deal with the day-to-day management of the property, outsourcing could alleviate headaches but may also eat into your profit. Potential buyers must also consider property and income taxes, as well as home insurance.
4. Use the right REALTOR®
Last but certainly not least, the expertise of a REALTOR® is invaluable, especially considering the important variables above. Do your research and work with a local REALTOR® and you could be on your way to earning a comfortable monthly income.
The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.
Are you interested in selling or buying your home in the next few months? Work with award winning realtor, Carmen Leal and her team that specialize in Real Estate Vancouver and have qualified Buyers that are looking for a home in your area! 604.218.4846 & www.carmenleal.ca