Adapting to Seasonal Changes

The true north strong and free! Being Canadian, we are well aware of our winter season. When most of us are trying to stay warm, not many are willing to venture to our beautiful city in the middle of winter. That being said we can conclude summer would be our busiest season, and expect things to slow down come fall and winter. We must use the money generated in the busier months to offset the vacancies in the slower seasons. It is important to look at the operations for the year as a whole before we can make conclusions about financial performance.

Straight Rental vs Airbnb Rental

We have to look at the opportunity cost of operating an Airbnb, which would be the rent you would have earned from straight rental. In order to do this we would need to find the current market rate for rent in the area of the Airbnb plus utilities. The Airbnb would then have to beat this market rate, to be worth pursuing.

Property Management Fees

The first question you must ask is, “Do I want to manage this property?”. We also have to understand the responsibilities that come with managing an Airbnb and catering to customers. If you choose to relieve yourself of this responsibility you would what to hire a property management firm. This would mean you cash flow is less than what it would be if the Airbnb was operated personally. Everything comes with pros and cons; this is a decision that can be made.

HST’s Effect on Cash Flow

The rent on your Airbnb is inclusive of HST. That means you must set aside money for the CRA, for the sales tax. A trick some Airbnb operators tend to leverage is, deliberately keeping the income generated by their Airbnb lower than $30,000.00, to avoid paying HST.