Planning on buying an Airbnb investment property or running Airbnb from your home? Here is everything you need to know before you commit…
Airbnb is an online marketplace and accommodation-sharing platform where members offer their properties or spare rooms to guests as short-term rentals. This trend has had a positive impact on the economy in Ottawa as it is a great way for our 10 million annual visitors to find affordable accommodation. For those who have decided to use their property as an Airbnb, they surely experience the pros and cons of short-term renting. Investors and property owners alike are finding AirBnB can increase their return and offset the costs of property owning when done correctly.
What To Know When Renting Out Your Property on AirBnB
When you know the facts about short-term renting and using the Airbnb platform, you can better position yourself to decide if this is a right move for you. If you just look at the revenue from having a short-term rental, it seems like a no brainer to choose short-term over long term renting. However, it’s important to look at all of the costs associated with short-term rentals such as higher utility bills, house cleaning and taxes.
Here is a list of things to think about before considering renting your property short-term:
- Airbnb will take their 3% commission per booking from both the host as well as each guest
- As of January 1, 2018 Ottawa enforces a 4% Municipal Accommodation Tax (MAT) on any property rented out through Airbnb which is collected through the AirBnB platform and submitted on your behalf – this money will support Ottawa’s ongoing tourism
- Condo corporation rules and city by-laws have been put in place across the city in the last few years with the intent to restrict rentals less than 6 months long, therefore you must learn the rules and comply with them
- The city of Ottawa is strict when it comes to rooming houses, so after 4 rooming units you will require a city license
How To Do Airbnb Investment Properties Right
With an increased return for investors, short-term Airbnb rentals can be lucrative. It is still possible to capitalize on the audience that Airbnb has gathered over the past several years. Whether your goal is to make a large profit, offset the cost of your property or just make a little extra spending cash, short-term rentals are not an easy money solution so you must put in the work.
Here are some ways to improve your Airbnb investment property experience:
- One of the most important keys for success is your rental location, therefore having a property close to public transportation, amenities and entertainment will help ensure higher vacancy rates
- Though Airbnb offers a Host Guarantee protection, this coverage is treated on a case-by-case basis and should not replace homeowners or renters insurance
- You should check with your insurance policy to ensure you are covered for any damage that could be done by your guests
- Short-term rental prices fluctuate so it is important stay informed so you can keep your prices in line with competition
- You should figure out if your Airbnb income is considered rental income or business income because this will be important when it comes time to file your income taxes
- Landlords are entitled to claim certain rental expenses, therefore much of what you put into your rental property could be written off
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If you are seeking advice on buying a home, more information about Airbnb investment properties, or have more questions for us, we are happy to provide you with helpful guidance and support. Email us at info@buyandsellottawa.ca or call us at 613-590-3036.