If you’re looking to make a quick buck during the Pan Am Games by renting out your home to Toronto area tourists, think again.
While it’s true that there will be thousands of people flocking to Toronto to attend the Games, would-be landlords may be overestimating the demand for rental units.
Julie Van der Lugt, a Toronto-based Airbnb “superhost” and co-founder of manageAir, a short-term rental property management service, says that while she has seen an influx of new hosts listing their homes on the site, she hasn’t seen as high a number of guests booking accommodation for the Games.
It’s been reported that out of 1.4 million tickets available for the Games, just 650,000 have been sold.
This is just one of the reasons that becoming a first-time landlord of a short-term rental property in order to capitalize on the Games is a bad idea, says Brandon Sage from LandLord Property and Rental Management.
“You’re choosing to step into a competitive environment where there are ramifications if you don’t know how to play the game right, and you haven’t had any practice,” he says.
While popular services like Airbnb, couchsurfing.net and Kijiji may make hosting seem simple, the truth is that there are many things to take into consideration when renting out a furnished property for a short-term.
“I’ll be the first to say that property management isn’t a rocket science, but it still has its pitfalls,” says Sage.
Both Van der Lugt and Sage say that the short-term rental market during an event like Pan Am could be a breeding ground for disaster.
Here are a few things to take into consideration if you’re planning on hosting through Airbnb for the first time:
Make sure you can host
Are you legally permitted to rent out your property? Whether it’s your home, an apartment or a condo, it’s imperative to check if there are any bylaws you could potentially violate by hosting via Airbnb. Many condo boards in Toronto, for instance, have been laying down the law and banning tenants from renting out their properties to vacationers. Most condo declarations in Ontario don’t permit short-term rentals shorter than six months. If first-time hosts aren’t wary, they could violate this rule and return to find Cease and Desist letters from the board and even fines. An expert host herself, Van der Lugt faced this same problem and had to stop renting out her condo on Airbnb because it just wasn’t worth the hassle.
Van der Lugt says that she’s already noticing properties on Airbnb in the Toronto area that are grossly overpriced in preparation for the Pan Am Games. Those that are new to the renting business are assuming that their downtown properties are worth more than they are. The consequence of a high price, she says, is that either you won’t find a guest, or if you do, they’ll have some seriously high expectations that you won’t be prepared to meet. Sage adds that a conspicuously overpriced rental property is a sign of a rookie and could attract a predatory tenant that knows you’re new to the market and may take advantage of you.
If this is your first time venturing into the world of Airbnb, Van der Lugt says to use the tool provided by the service to estimate how much you should be pricing your listing. The tool analyzes your property’s location and amenities to calculate the competitive price at which to rent. She also suggests researching hotel prices and other Airbnb listings to make your best offer. Her advice to new hosts is to actually price their listing lower than it should be to attract more offers.
Screen your guest
Another first-time host faux pas is not screening a guest thoroughly enough. Those with no prior experience being a landlord may not probe enough to ensure they don’t have a problem guest, says Sage. Van der Lugt has implemented a strict screening process for all of the properties she manages on Airbnb. She requires would-be guests to be over the age of 25 with a full profile on the site that includes their real first and last name as well as a photo and personal details. She also requires her guests to have at least two to three positive Airbnb reviews and requests copies of their driver’s license or passport. The one time she made exceptions to these rules, her guest ended up throwing a wild party.
Provide house guidelines
First-time hosts that have lived in their own home for several years may forget that their renters have never stepped foot into your house or used your microwave. Those without hosting or landlord experience often don’t realize that their guests will likely reach out to them for a number of mundane things at odd hours of the night. That’s why Van der Lugt advises first-timers to create a set of house guidelines that includes small but important pieces of information, like the WiFi password and how to use your remote-control and thermostat. Sage says it’s also best to include a detailed set of rules that lays out what’s allowed and what’s not. If you’re unable to screen your guests to your liking, it may be a good idea to draw up a legal rental agreement as well. Just remember that you have to let potential guests know before they book with you that they need to sign a contract.
Hide your valuables
While part of the charm of an Airbnb accommodation may lie in its owner’s kitschy possessions, if hosting, it’s best to keep items of value locked up or remove them from the property. Van der Lugt adds that this holds true even for items that are of no monetary value. Even knick-knacks could catch the eye and slip into the pocket of an otherwise normal guest, so be wary.
Check your insurance
Contact your insurance provider to see if you’re covered during a short-term rental. Your home insurance policy may not protect you in the event of a calamity during an Airbnb rental. In that case, says Sage, you’d have to purchase a separate policy for the duration of your guest’s stay, which would be expensive and eat into your Airbnb profit. Or you could take a risk and hope nothing disastrous happens. Airbnb itself offers a Host Guarantee that covers property damage of up to $1,000,000. Be aware that this isn’t insurance. The company will not reimburse you for missing jewellery, art or money.
Be honest in your listing
A seasoned host or landlord will tell you to make sure not to misrepresent your property in your listing. Ensure that the photos you’re posting are up-to-date and list both the pros and cons of your home. It may be tempting to paint it as a palace with no flaws, but this will only lead to complaints from your guest that you’d rather not deal with while you’re off enjoying your own vacation.