Ultimate Guide To Buying Your Airbnb: How to Find an Airbnb Unicorn in Toronto

Airbnb Investment: How it works

If you’re here, it means you are considering buying an Airbnb property or have been actively seeking an Airbnb for sale in Toronto for some time now.

Toronto is listed as one of Canada’s most profitable Airbnb cities. Its vibrant tourism industry and diverse culture have attracted millions of visitors, creating a high demand for short-term accommodations. Not surprisingly, investing in Airbnb properties in Toronto can be a profitable opportunity for future hosts.

Why not? Airbnb hosts can generate significant rental income, especially during peak tourist seasons and major events like festivals, concerts, sporting events and conferences. 

However, before you leap, it’s essential to thoroughly research the local Toronto market, understand regulations, and provide excellent hospitality to ensure positive guest experiences and maximize returns on investment. 

The Pros and Cons of Investing in Short-Term Rental vs Long-Term Rental

It’s crucial to kickstart your Airbnb business on the right foot to prevent the waste of time, money, and effort down the line.

So, before you decide to buy an Airbnb property that seems to tick all your checklist boxes or get extremely excited about an Airbnb for sale at an affordable price, consider this: Should I go for short or long stays with my future guests? Hmm. 

Benefits of Investing in Short-Term Rental

Offers:

  • Potentially Gaining Higher Income: Toronto’s bustling tourism can bring higher rental income than long-term rental. You can adjust rates based on seasons and events to maximize earnings.
  • Greater Flexibility: When Airbnb is unoccupied, you can use the property for personal purposes, providing a balance between investment returns and personal enjoyment.
  • Build Rapport: Ability to meet people from diverse backgrounds and cultures through hosting short-term guests.

But, it may cause:

  • Potential Fluctuations In Occupancy Rates: These can occur during off-peak seasons or in response to external factors like travel restrictions or economic downturns.
  • Potential Problematic Issue: The risk of occasional problematic guests or cancellations can disrupt income flow and require time and effort to manage.
  • More Management Effort: Frequent guest turnover means more cleaning, guest communication, and potential wear-and-tear.

Benefits of Investing in Long-Term Rental

Offers:

  • Steady Income: A long-term rental provides a predictable income stream with less management hassle. There are no constant guest changes or cleaning worries.
  • Simple Airbnb Setup: Less time spent screening tenants and managing turnovers.
  • Attracts Stable Tenants: Long-term rentals typically attract more stable tenants looking for longer stays, minimizing the risk of problematic guests.

But, it may cause:

  • Lower Potential Income: Rental income might be lower overall than short-term rentals.
  • Limited flexibility: Compared to short-term rentals, you need more flexibility to use the property for personal use or adjust pricing based on demand.
  • Potential Problematic Issues: There is a risk of problematic tenants or lease disputes, which could lead to legal complications and additional expenses.

So, which one is the best option? The best option depending on your priorities. If you prioritize higher income and flexibility, you might be keen to buy an Airbnb Property for short-term rentals. However, if you prefer a steady, hands-off approach to long-term rentals, seek an Airbnb for sale that could be a good fit. Consider your time commitment, financial goals, and how you envision using the property to make an informed decision for your Airbnb in Toronto.

Finding the Right Airbnb Property For Investment 

There are so many properties on the market. How do you buy an Airbnb property or choose an Airbnb for sale that will bring you maximum success? These key factors will guide you. 

Selecting Location: The top Airbnb locations in the Greater Toronto Area

Picking the right neighbourhood significantly impacts your Airbnb’s success. When you want to buy an Airbnb property or choose an Airbnb for sale, consider factors like proximity to tourist attractions, public transportation hubs, and popular entertainment districts. 

Researching popular Airbnb listings and analyzing neighbourhood occupancy rates can help you pinpoint strategic locations that align with your investment goals.

Presently, Downtown Toronto, The Annex, West End, East End, Yorkville, Cabbagetown, Liberty Village, and High Park are among the most sought-after Toronto neighbourhoods for Airbnb rentals. 

Understand Toronto’s Local Legislation 

Familiarizing yourself with Toronto’s local regulations governing short-term rentals is crucial. In Toronto, you can list your property on platforms like Airbnb for a maximum of 180 days per year. Understanding these regulations and ensuring compliance is essential to avoid fines or legal issues. 


Stay alert about any updates or changes to local legislation that can help you adapt your investment strategy accordingly. 

Understanding the Key Metrics

  • Occupancy rate

Occupancy rate refers to the frequency at which your property is booked, directly impacting your overall income potential. Targeting areas with consistently high occupancy rates can optimize your earnings.

  • Average revenue by suburb

Research the average rental income for different neighbourhoods within the Greater Toronto Area. This will help you estimate potential earnings and compare investment options.

  • Number of listings in the area

Over-saturated markets might affect your booking rates. Analyze existing Airbnb listings in your target location to gauge potential competition.

  • Use Airbtics.com

Learn more about these metrics on airbtics.com. This website offers detailed market data and analytics, allowing you to research neighbourhoods, analyze rental performance trends, and make data-driven decisions for your investment.

Selecting Property: Property Criteria that Performs Best in Toronto 

Once you know your location, it’s time to pay attention to the property itself. Consider important factors before  you buy an Airbnb Property or choose an Airbnb for sale, such as:

  • Property Type
    • Condominiums are popular choices for Airbnb in Toronto due to their convenience, amenities, and often prime locations within the city.
    • Duplex properties can also be rewarding and offer multiple units for rental income.
    • Vacation rental properties can be profitable in Toronto, especially in areas like Yorkville, which has high rental demand and upscale amenities.
    • Rental arbitrage is an investment strategy in which investors lease properties to sublease on platforms like Airbnb without owning the property. It offers a low-cost entry into the market with the potential for high returns.
  • Proximity
    Property that is close to public transportation, amenities, and tourist attractions can be the first preference of guests and tenants.
  • Size and Amenities
    Toronto attracts a diverse range of travellers. Consider offering properties with varying sizes (studios to multi-bedroom units) and cater to guest preferences with popular amenities like in-suite laundry, hot tub, private balconies, and dedicated workspace.
  • Look for the Opportunity to Increase Rental Prices
    There is a tip: Offering multiple beds in the property unit will increase the appeal to guests and generate more income. You could put this in your KIV list for future reference. 

Other (Important) Things You Should Consider When Buying Your First Airbnb 

Financing your Airbnb

Financing your Airbnb requires exploring options like mortgages or investment loans. Compare rates and terms to find the best fit. Consider consulting a financial advisor for personalized guidance.

Airbnb liabilities

Airbnb ownership isn’t just about income. Include the budget for repairs and regular maintenance (plumbing, electrical, etc.) to avoid costly surprises. Proactively protects your investment and your guests.

Airbnb is a real estate and hospitality business 

Owning an Airbnb goes beyond real estate. It’s about hospitality!  Provide a comfortable, clean space with excellent service to get great reviews and maximize returns. Remember, regulations and taxes matter. Run your Airbnb like a business, prioritize guests, and enjoy the rewards!

Conclusion 

There you have it—the ultimate guide to buying an Airbnb property. Buying your first Airbnb can be an overwhelming experience. Chin up and chat with us if you need any advice on how to get and manage your first Airbnb. 

Let’s find your Airbnb unicorn in Toronto together!