This is Part 2 of 2 for the “How to Maximize Cash Flow with Airbnb” insight article series. In case you missed it, here’s a link to last week’s Part 1 insight article: >>>>Click Here
But before you continue, please note that the City of Toronto has officially passed the new regulations for short-term rentals late last week. The rules will be in effect as of July 1st, 2018. These rules will be effective for all forms of short-term rentals, less than 28 days, including Airbnb and other lodging platforms. As per usual, I’ll provide the rules for the new regulation below and what that means for you and the City.
NEW Airbnb Rules in Toronto (Effective July 1, 2018):
Rule #1: Short-term rentals are for primary residences only.
Effect: Unfortunately, that means no more Airbnb for investment properties.
Rule #2: As long it’s your primary residence (as per Rule #1), your entire home can only be rented out for a maximum of 180 days (i.e., half of the year).
Effect: You won’t be able to claim your home as primary residence and then rent it out for the whole year to cheat the system.
Rule #3: Rentals are permitted for up to 3 bedrooms with no limit on the number of days, but only if you are present for the entire time.
Effect: You can rent your property out by rooms, but you must also reside in the property. No offsite management.
Rule #4: $5,000 initial licensing fee with a $50 per year reoccurring renewal.
Effect: There will be a significant cash outflow to rent your own home now (i.e., more revenue for the City)
Rule #5: $1 per night tax
Effect: An additional expense for you to consider.
Rule #6: Secondary suite short-term rentals are not permitted (i.e., basement apartment).
Effect: You can’t build a secondary suite Airbnb unit in your house (these are ways to provide affordable rentals).
Rule #7: All short-term rental listings will be registered with the City of Toronto.
Effect: The City will track each and every listing (Big Brother is watching!)
There will definitely be an adjustment period next year when these new rules come into effect July 1st, 2018. My initial thoughts on the matter is that any condo investor buying condos for the sole purpose to Airbnb their units won’t be able to able to do so anymore (legally, anyways).
Currently, many buildings don’t even allow Airbnb rentals, but the residents continue to use the platform because it is hard for property management to govern it. However, with these new rules in place soon, the City will be involved, meaning that there will be licensing fees, and added revenues. The degree of difficulty to run an Airbnb rental will definitely increase.
If you’ve read through all of the above and the rules still don’t affect you, then here are my 7 strategies to maximize cash flow for your Airbnb rental.
1) Use a professional photographer to take photos. Remember, you are marketing your property for people to reside in and the photos will provide the first impressions. A good photographer (roughly $200) will get you amazing results and the bookings will even out the costs.
2) Let Airbnb optimize your price. Airbnb has algorithms to increase prices based on demand, similar to airlines. Set your standard price and let the algorithms do the rest for you, especially during the peak summer seasons.
3) Have the necessities such as Wi-Fi, cleaning supplies, utensils, plates and condiments ready. Many guests will appreciate this and write you great reviews, which will ultimately decrease your vacancy.
4) Hire a cleaner to go through the property after each stay. You can charge that back to the guest via Airbnb, but a fresh and new smelling home will do you wonders for your new guest.
5) Have a laminated document for house rules and guides to the City. This will preserve your unit and will simultaneously help ensure that your guests are well-informed of the best places to go to in the City.
6) Ask for reviews at the end of each stay. People most often book based on photos and reviews. The higher the number of great reviews, the greater the demand for your listing will be.
7) I used to leave chocolates at my properties for guests and they loved it. They always left me an amazing review.
By using these tips, I’ve barely had any vacancy when I was using Airbnb for my property. I hope this sheds some light on how to maximize cash flow using Airbnb.
Until Next time, Happy Real Estate-ing,