This past month, according to Airbnb, Edmonton made the list of top trending destinations for rentals, ranking in 3rd behind Ganagneung, Korea and Bournemouth, UK. Only 2 Canadian destinations made the top 20 list with Fernie, BC at number 17. Our new ranking indicates Edmonton has seen a 284% increase in bookings¹! Wow. Edmonton? From someone who has personally benefited from renting out income properties with this particular service, here’s what I’ve learned.
Edmonton Property investors have typically maintained two means to make rental income:
- Long-term rentals, usually for 1 year or more. A typical one bedroom Edmonton condo could yield around $1000.00 per month.
- Shorter Term Rentals. These would typically be between 3-6 months and usually are furnished. A 1 bedroom would rent at around $1200.00 per month.
But now, property investors can choose services like Airbnb.
A typical night stay in an Airbnb in Edmonton, for a 1 bedroom condo (not shared accommodation) works out to an astounding $100.00 per night on average². Add cleaning service fees and you are looking at typically $120.00/night with average utilization being 80% – you are now making around $2500 per month. Sounds like a no-brainer right?
Well, we would love to say yes, but there are some considerations prior to jumping on the Airbnb train.
Are you allowed to Airbnb your Edmonton Condo?
By owning something, it is natural to think that you can do what you want; however, when you sign on to condo living, you are also agreeing to the condo associations bylaws. In many condo buildings in Edmonton, you will find a clause in the bylaws that advises that short-term leases are not permitted. Airbnb rentals are by the night, and most travellers usually average 3 nights or less, this, by definition, would not be allowed.
In this case, you can consider pursuing the Airbnb rental or you can look at ways to change your condo bylaws.
If you pursue moving forward with renting your Edmonton condo via Airbnb, please consider the following:
- The condo board may consider taking legal action against you.
- The board can deactivate your key-fobs, thereby making it difficult, if not impossible for your Airbnb tenants to get into the building.
- The board can deny access to the building and/or your unit to anyone attempting to occupy the unit in violation of the short-term lease rule.
If your condo association is limiting your options for renting out your YEG pad, you can work with the owners in your building to consider changing the bylaws to be more inclusive of rental agreements like Airbnb. This could be a long process as it can be difficult to change the bylaws of a condominium. The reason for this is that it requires approval from 75% of the total unit factors (residents) in order to be able to change, withdraw or replace, through a special resolution, a bylaw.
Change can happen. It does take time and a willingness from all parties it will affect. To influence change or help in decisions within your condo, we always recommend joining the board and becoming a part of the process.
Consider what CRA will want from you…
Using Airbnb could result in your yearly tax accounting getting more complicated since it is situated in a bit of a grey area from a taxation perspective. The government may consider your use of Airbnb as essentially operating a mini (very mini) hotel. Due to this, they may expect you to charge and remit taxes just like any other commercial operation.
Depending on your municipality and local rules, there may also be local hotel taxes that are expected go to the city that you would technically be responsible for collecting.
So what can you do? Be aware. Talk to your accountant about implications from a tax perspective sense. Read the condo bylaws and ask questions before you buy. Research the rules surrounding Airbnb from the municipal perspective.
Be sure you have the right insurance in place
Chances are your standard insurance policy does not include the use of services like Airbnb.
If something ever happened in your unit and you need to make a claim, or worse, if something ever happened to someone in the unit and you were being sued, your insurance company may not cover you if they found out that the occupant was from Airbnb.
Keep in mind, Airbnb does offer Host Protection Insurance in Canada, so be sure to read up on what it offers and how it can work with your own personal insurance to protect your assets. Talk to your insurance company and determine with them how they can work with you.
Conclusion: We agree Airbnb is great. Just put in the time to prepare your unit and determine if Airbnb is the right choice for your investment strategy.
At present time, perusing Airbnb.com you can see there are dozens of landlords using the website to rent out their condos downtown. Similar to the conflicts of Uber, Airbnb also needs to be looked at from a personal level, a condo level, a municipal level and a provincial level.
The fact that Airbnb usage is so high in Edmonton reflects that there is a need and desire for it in our marketplace. The question is, how can Real Estate investors navigate the world of Airbnb to ensure they are staying within the law and protecting their future cash flow in a positive way?
At present, the safest way an Edmonton real estate investor can use Airbnb is by pursuing home purchases that sit outside of condo regulation. There are great options, especially in mature areas of Edmonton (Westmount, Inglewood, Forest Heights, Ritchie etc) that offer homes with legal basement suites or attached home styles that are priced at similar rates to typical condos in the core.
Chat with our team to discuss your investment needs. We are here to help you navigate the Edmonton real estate market better.
Caitlin Heine,
TruHome Advisor
Caitlin Heine, your TruHome Real Estate Advisor has been using the services of Airbnb for years both in Edmonton and Vancouver. She understands what it means to invest in Edmonton Real Estate and strategies to navigate positive cash flow.
More information here:
https://www.ahla.ca/wp-content/uploads/2017/09/Edmonton-AB.pdf
¹ http://edmontonjournal.com/news/local-news/edmonton-is-a-trending-global-travel-hotspot-airbnb
² https://www.airbnb.ca
*We are not affiliated, associated, authorized, endorsed by, or in any way officially connected with Airbnb, or any of its subsidiaries or its affiliates. The official Airbnb website can be found at http://www.airbnb.ca The name “Airbnb” as well as related names, marks, emblems and images are registered trademarks of Airbnb.
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