The Way Home is a series looking at the issues and challenges for people who are in the market for a home.
Airbnb’s rise to prominence in Canada shows no signs of abating.
A report this year, by the Ted Rogers School of Management at Ryerson University in Toronto and HLT Advisory Inc., revealed that the number of Airbnb listings in Toronto, Ottawa, Vancouver and Calgary has grown by 140 per cent since early 2015.
But while owners of detached, semi-detached and townhouses in areas zoned for residential and mixed use have happily cashed in, most condominium owners have been left out in the cold, or in the shadows. That’s not to say condo owners haven’t put their homes up for short-term rentals, but condominium bylaws generally prevent such rentals.
However, a new condo development in Quebec City may be about to change all that. Condos LB9, which is yet to break ground and started selling its units last June, is located in the Lebourgneuf area of the Quebec capital, about a two-minute walk from the Vidéotron Centre, which would be the home of the city’s hockey team if the National Hockey League decides to return.
What sets LB9 apart from every other run-of-the-mill condo development in this country is that it is using Airbnb and other short-term rental platforms to entice owners and investors, by writing it into the condo owners’ declaration.
“What we found in the past is that many times when you do buy a condo, your hands are tied,” says developer Denis Bolduc of Groupe Bolduc. “You’re never allowed to lease it on a short-term basis because of the way that the ownership of the condo is set up.”
The development will comprise three 12-storey towers, each with a specific target audience. One will offer 250 condos that are fully open to short-term rentals; another will be 198 units designed for owner occupation or short-term rentals; while the final one will be aimed toward retirees and snowbirds who like to spend chunks of time outside the country.
The building also offers buyers, particularly overseas investors, services to assist in the handling of the management of their units, such as concierge and cleaning. However, Mr. Bolduc points out that the owners will have to get the proper permits to rent their units and pay taxes on any income they receive.
For parents of students who are going to school in the city, for example, the opportunity to make added income over the summer months and Christmas is clear. At the end of the day, the concept offers owners true flexibility.
“Really what we’re promoting here is we want the people to be free to do whatever they want,” he says.
The units range in price from $159,000 to $660,000, and so far 40 to 50 units have been sold, with the developers looking to break ground later this year.
“I think it’s really interesting because I’ve sold a couple places in the last year where people had this specific request but it couldn’t work for them,” says Matt Parker, a realtor with Keller Williams in Puget Sound, Wash., and author of Real Estate Smart: The New Home Buying Guide.
“I’m seeing every condo buyer has this question which is: ‘Can I Airbnb it?’ Or whatever system you’re using.”
Though he says U.S. real estate laws wouldn’t allow this kind of development, he says for Canada, and especially in vacation communities, it makes perfect sense.
However, for potential owners or investors it comes with a caveat. One of the restrictions to allowing condo owners to put their units up for short-term rentals has been security of the other residents in allowing a constant flow of strangers into the building. As such, that may incur extra costs for owners and investors.
“It’s probably going to be more expensive because of the concierge you’re going to have to hire, security, security cameras, stricter means of getting in and out of the building,” Mr. Parker adds.
Zulfikar Jiwa, a Vancouver realtor who incurred the wrath of some condominium owners in Vancouver by renting out three of his own units in the same building on Airbnb while he waited to sell them a couple of years ago, says the concept could catch on nationwide.
“Vancouver right now is a hot market, there are no rentals and a lot of demand, so it would be a profitable venture here,” he says.
Michael Marini, a Toronto-based mortgage broker with Dominion Lending Centres, is no stranger to Airbnb and other short-term rental platforms. Mr. Marini owns a fourplex in the High Park area of Toronto, along with a four-season cottage in Orillia, Ont., and he also rents out the basement apartment in his home.
While he thinks the LB9 concept has potential down the road, he also cautions about getting involved in this kind of project from the ground up.
“Any building that’s not owner-occupied mainly or above 50 per cent [rentals], typically these buildings are a little run-down and shoddy,” he said, adding it might affect the equity value. “But in terms of cash flow, it’s insane. These Airbnbs make three times the amount of cash flow that you can on a regular investment property.”
Though Mr. Marini has so far invested only in houses, if the condo model made its way to Toronto, he’d be more than happy to get on board, though he wouldn’t necessarily buy into new construction off a floor plan.
“I’d want to see three years in what that building looks like,” he says. “If it’s deteriorated you’re not going to get Airbnb people wanting to go to that building. It’s going to get a bad rap on Airbnb or VacationRentals.com so that’s the only thing.”Report Typo/Error