Considering Investment in Short-Term Rentals? Here’s What You Need to Know

When venturing into the world of short-term rentals, taking the right steps from the start is crucial. Let’s walk through the essential considerations for anyone interested in this market.

  1. Check Local Regulations: Before you dive in, research if your area permits short-term rentals. Some places require permits or licenses, and local regulations may limit the length of stays, the number of guests you can host, and even impose additional taxes on each reservation.
  2. Seek Expert Guidance: If you’re in the market for a new property, it’s wise to connect with a real estate agent who not only knows the area well but also has expertise in the short-term rental market. Be especially cautious in areas where short-term rentals have come under scrutiny. For example, in Ontario, municipalities like Prince Edward County have strict limits on short-term rentals. Ensure that any property you’re eyeing has the necessary permits to operate as a short-term rental, or else you might be limited to longer-term options like a Bed & Breakfast. Beach destinations in southern Ontario also have specific requirements, such as a minimum stay of 30 days. Thorough research is essential before making a purchase.
  3. Rural Property Inspection: For rural properties, getting a comprehensive house inspection is highly recommended. Given the cooling real estate market in Ontario, buyers have more leeway to add conditions to their offers. Pay special attention to the well and septic systems. Potable water and efficient water supply for showers and laundry are crucial. When making an offer, consider including a condition for septic tank pumping at the closing. Your home inspector should evaluate the tank and drainage tiles to ensure they function properly.
  4. Year-Round Access: Don’t forget to inquire with your agent about year-round access to the property. Find out if the road access is maintained by the municipality or is privately owned. In the case of private ownership, make plans for snow removal to ensure guest access during winter. This is an important expense that should not be overlooked.

As you explore the opportunities in the short-term rental market, keep these key points in mind to make informed and successful investments.