There’s no denying that adding an Airbnb investment to your portfolio can be hugely advantageous.
Canadian Airbnb hosts are profiting big time from their investments, earning roughly $7.1 billion (CAD) since 2010. For new entrepreneurs and hosts who want a piece of this revenue, it is crucial to consider what makes a great location for an Airbnb property.
In this article, we will discuss what to look for in an Airbnb property investment. Plus, we will dive into 6 of the best cities and towns in Canada to buy an Airbnb.
What Makes an Area Good for Airbnb Investment?
As you hunt for the best cities to own an Airbnb investment property, it is crucial to consider what factors make a property a great investment.
These factors include:
Airbnb Competitors
Before making any decisions, always do your research into the current Airbnb market and other local hosts in the geographic area of your vacation rental.
Most well-known towns and cities are likely to have an active Airbnb market, so don’t be immediately discouraged if you find a lot of listings. Instead, consider what holes in the market there may be – such as affordably-priced rentals or a unique Airbnb.
Some areas will have endless vacation rentals, while others may have almost no competition. However, even in highly competitive areas, you can find properties that can stand out. Look and see how many properties are actively rented – does the market seem oversaturated? Websites such as Airdna, list rental statistics for rental locations that include average price, average revenue, average monthly revenue, occupancy rate, the number of active rentals, and more.
Popular Attractions Nearby
It is important to consider the number of visitors and tourists a town or city receives each year – and a major indicator of how much traffic to expect at your vacation rental is by assessing the nearby popular attractions.
In Canada, for instance, many small towns are very close to major skiing destinations and ski resorts. This gives them a fantastic attraction for tourists who are looking for comfortable, small-town experiences to couple with their skiing adventures. The best Airbnb rentals are in locations with a wide range of activities and attractions.
By looking at the popular nearby attractions in different Airbnb markets, you can gain these types of insights about your potential future visitors.
Airbnb Seasonality
When looking at properties to invest in to start your Airbnb business, consider the seasonality of the vacation rental property. Ask yourself:
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Is this a property I could rent out year-round?
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What attractions or other factors affect the seasonality of this rental?
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If I plan to rent this property only during certain seasons, is there enough local tourism revenue to ensure this investment is profitable?
Considering the seasonality of your Airbnb is especially important in places like Canada, where the seasons can be drastically different in terms of weather and accessibility throughout the year.
Location Type
Before considering what city is best for you in terms of an Airbnb investment, you will want to first decide what type of location you want to host in. This means asking yourself questions such as do I want a property in a big city? Do I want to look at short-term rental properties in smaller towns? What are the advantages and disadvantages of each?
We have already discussed the topic of competition, while this shouldn’t completely deter you from purchasing an investment property in a big city, it is an important factor. While you might make more stable revenue throughout the year in a big city, it will be difficult to charge guests more based on the higher availability of options. This means you will have to put more effort into making your Airbnb stand out.
One of the biggest differences between owning a rental property in a big city vs a smaller town is the rules and regulations. In the past few years, big cities have begun placing heavier rules and regulations on short-term rental properties. This has happened in order to address the current cost of housing in cities like Vancouver and Toronto. While it is still possible to run a successful Airbnb in big cities, you have to be prepared to commit to following and keeping up-to-date with these changes.
In terms of location type, short-term rental investments in small towns will often present fewer hurdles to jump over. It is crucial to be aware of all laws and regulations before you purchase an Airbnb investment.
Airbnb Laws and Regulations
As an Airbnb host, when you are looking at vacation rental property investments in different regions and cities, it is important to note that there will be varying legal regulations and requirements to adhere to.
The most important legal requirements to look for in a given town or city include:
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Business Licenses: Each city or town will have its own licensing standards, requiring you to get the proper local business license to operate an Airbnb property.
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Zoning By-laws: Many cities and towns have begun taking action to preserve their residential areas, introducing zoning by-laws that dictate where an Airbnb or other rental property can and cannot be located within the town or city limits.
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Operational Requirements: Each city or town will have its own set of short-term rental regulations that include a list of operational requirements. Always research these regulations before committing to purchasing a property.
Other Considerations for Buying an Airbnb in Canada
If you are thinking about buying an Airbnb property in Canada, it is essential to familiarize yourself with the Canadian laws and regulations for Airbnb and other rentals.
Thankfully, the Airbnb Help Center offers a comprehensive webpage on Responsible Hosting in Canada, which includes key information such as:
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National taxes
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Regulations and permissions
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Local and city-specific regulations (for Calgary, Edmonton, Kingston, Mississauga, Montréal, Nova Scotia, Ontario, Ottawa, Quebec, Regina, Saskatoon, Toronto, and Vancouver)
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Insurance and liability coverage
Pay special attention to the differences in local regulation, as different cities can vary significantly in the strictness of their short-term rental property rules.
The 6 Most Profitable Airbnb Locations in Canada
So, you are ready to take the leap and purchase an Airbnb property – but which Canadian cities are best for starting your Airbnb venture?
Here are 6 of the best places in Canada to purchase an Airbnb:
1) Airbnb in Canmore
Tucked away in the Rocky Mountains of Alberta is the town of Canmore. This lovely location is just 20 minutes east of the famous Banff National Park and has plenty of outdoor activities such as hiking, skating, and skiing, as well as boutiques, restaurants, and more!
Banff National Park attracts more than 2.5 million visitors per year, bringing a whole lot of tourism traffic through and near Canmore – a town with a population of just under 14,000. This scenic destination is especially great for Airbnb owners with more rural or outdoorsy properties.
The biggest considerations for Airbnb owners in Canmore are the zoning laws and requirements. Tourist accommodations are not permitted in the majority of residential zones in Canmore, so Airbnb properties must be located within commercial and mixed-use districts, according to the Town of Canmore.
2) Airbnb in Whistler
Whistler is a scenic mountain and skiing destination situated north of Vancouver in British Columbia.
With consumers spending more than $1.5 billion in Whistler per year – as well as an average of 2.7 million unique visitors coming to Whistler each year – Whistler is a hot spot for adventure-seeking tourists. Tourists from all over flock for major events like the Fire and Ice ski and snowboard festival in the Winter and the mountain biking festival Crank Works in the Summer. Whistler has a strong short-term rental market due to the huge demand for places to stay throughout the year.
From a business standpoint, to rent out an Airbnb property in Whistler, you must comply with the Tourist Accommodation Regulation Bylaw set forth by the Resort Municipality of Whistler. This regulation requires rental property owners to either:
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Work with a property management company covered by a business license
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Obtain their own business license for tourist accommodation
Additionally, Whistler has strict zoning regulations that prohibit property owners from marketing tourist accommodations in residential zoning areas.
3) Airbnb in Tofino
Located on Vancouver Island, Tofino is a beautiful small town best known for its idyllic natural scenery, including sprawling forests and lakes.
For a small island town, Tofino certainly knows how to attract a profitable tourist base. The tourism industry in Tofino is reported to bring in $240 million annually and roughly 600,000 visitors throughout the year.
As a small town, local lawmakers are focused on keeping Airbnb rentals in check by requiring all Airbnb owners actively renting their properties to obtain a valid business license. Your property must also be correctly zoned.
4) Airbnb in Ottawa
Seated on the southern bank of the Ottawa River, Ottawa is the capital city of the great nation of Canada. As a mecca for Canadian culture and history, Ottawa is a must-see on the bucket lists of visitors from all around the globe.
With more than 11 million tourists visiting Ottawa each year – and bringing with them more than $2.2 billion in tourist revenue – the city is the perfect destination for aspiring Airbnb entrepreneurs.
In terms of laws and regulations for short-term rentals, there are a few restrictions. According to Airbnb, short-term rentals are allowed in a home that is a principal resident. Short-term rentals are also allowed in condos and apartments, but they must be approved by building owners/landlords.
Rural homes/cottages can be rented even if it is not a primary residence. However, you must get a separate permit that makes sure the property qualifies as a “cottage rental.”
To list an Airbnb, you must also complete the short-term rental application and obtain a business license.
5) Airbnb in Montréal
Montréal is one of the largest urban areas in Quebec City and an incredibly popular travel destination for both Canadian and international visitors alike. The breathtaking views and architecture, French influence, and unique city life and downtown core, make this Canadian City a bucket list destination for many – even in the Winter months.
Montréal attracts more than 11 million tourists annullary and a total of more than 29 million visitors as a hub for both business and leisure. With an abundance of attractions – including more than 40 international museums and more than 4,900 acres of public parks – Montréal is a tourist’s delight.
Montréal is one of the local areas where Airbnb offers an official webpage, including all the necessary legal requirements for operating an Airbnb in the city. These legal requirements include:
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Registration & a classification certificate
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Business licensing
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Adherence to zoning laws
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Quebec sales tax
6) Airbnb in Niagara Falls
Niagara Falls is located in Ontario, near the southern tip of the province. It is situated on the Niagara River, which is a Canada-US Border crossing. It is also in close proximity to Toronto, Lake Ontario, and Lake Erie. Tourists constantly coming and going makes for a strong short-term rental market.
Niagara Falls is renowned for its natural beauty. The area attracts tourists each year who come to witness the awe-inspiring spectacle of the falls, enjoy various attractions, and explore the surrounding region. Niagara Falls has a staggering 12 Million tourists visiting each year. Furthermore, tourism spending in the region reaches around $2 billion every year.
Due to the amount of tourism in Niagara Falls and its proximity to Toronto and the USA, the city is a great place to invest in an Airbnb property.
Final Thoughts
Canada is a beautiful country with countless scenic destinations that are perfect for Airbnb investment.
To make the most of your Canadian Airbnb investment, make sure you comply with all local legal regulations and have a good understanding of the tourism industry in your chosen town or city.
