Short-term rentals are necessary in hot markets

Short-term rentals have become a necessary component of living in an expensive city, such as Toronto or Vancouver, and one that landlords will have to accept, says one expert.

Vancouver is a very expensive place to live, period,” said Peter Kinch, an investor and mortgage broker. “So it only makes sense that more and more residents are going to be looking for ways to subsidize their housing costs, and short-term rentals are a fantastic solution.”

In hot markets like Toronto and Vancouver, the majority of people living downtown are in condos, so having an added basement suite, something Kinch calls a traditional “mortgage helper”, is not an option.

He added: “As such, having the ability to make your place available as a short-term rental when you are not occupying it yourself could be a great solution.”

Besides homeowners offering up their downtown space for short-term rentals, many landlords are taking advantage of this option too. But one commenter on the CREW website said these short-term rentals are not lucrative because vacancy rates are high and landlords have to invest in the upkeep of furnishings.

“Landlords can expect a furnished suite to be vacant at least one month per year,” they wrote. “So even when you hear an investor getting hundreds per night [for a short-term rental], you also need to take into account that their unit is vacant about 30 per cent of the time.

“The real advantage is the caliber of tenants, at least in newer condos. Short-term tenants are extremely responsible and more respectful, and owners have greater interest to ensure good tenants because they have invested normally thousands of dollars in the furnishings and decor of their units.”

When it comes to considering short-term rentals as an option in your building, it’s advisable to do your homework first. If your unit is in a condo, check with your condo board, recommended another comment on the CREW website.

“Many condo complexes now require a one-year lease due to the extra wear and tear and expenses that short-term leases cause,” they added.

“In addition, [the Municipal Property Assessment Corporation] might reassess the condo as ‘commercial’ – a MUCH higher property tax rate – if the condo is being used essentially as a hotel.”

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