With the rise of numerous room-sharing and co-living options in today’s housing market, short-term rentals have become a hot button issue in Canada, especially in Toronto and Vancouver.
Municipal governments want to tax short-term rentals, while provincial governments want to crack down on short-term rentals. It is becoming increasingly more difficult for landlords, property owners and even consumers to get affordable access to these accommodations with the state interfering in voluntary transactions.
Perhaps it is time that you start protecting yourself in this fragile housing market.
Everything from correctly filing your taxes to following rental guidelines, there are many things you can do to shield yourself from the state and from tenants who want to cause a ruckus.
Here are five short-term rental tips for landlords and property owners:
1. Report Every Source of Rental Income
Let’s be honest: the Canada Revenue Agency (CRA) has an infinite amount of time and resources. If you ever think that you can fight the federal government, then be sure to take another look at your income tax and multiply that 35 million people.
To avoid trouble with the CRA, the best thing you can do is report every source of rental income. Every tenant, every room, every property. If you’re earning money from your property, then report it, and you don’t need to face penalties, lawsuits and headaches.
2. Create the Greatest Legal Document
In today’s environment, there is always someone who is looking for a loophole in a contract, or something wrong with the landlord himself, so they can cry to the media that they’re a victim.
Do you know how you can prevent this from happening? Come up with the greatest legal document that the world has ever seen.
Make an appointment with your attorney, answer every single question, protect yourself in every regard and ensure that tenants read through the contract and sign it.
By doing this, you won’t have a tenant come to you two weeks later, accuse you of something and then whine on social media that you’re the worst thing since the remake of “Ghostbusters.”
3. Talk to Your Insurance Provider
Indeed, there is always a risk by taking on tenants in short-term rentals. Whether it is through Airbnb or by connecting directly with tenants, you face potential risks.
With this in mind, it would be prudent to consult with your insurance provider about having people rent out rooms or entire properties. Although some room-sharing services do offer host guarantee reimbursements, it is always best to have your own form of insurance.
4. Make it Clear That You’re Offering Short-Term Rentals
As you advertise online, in the community or even newspapers, you must make it clear that you’re offering short-term rentals, NOT long-term accommodations.
You don’t want to constantly highlight this fact every time an interested prospect calls you or visits the humble abode. Bold, repeat, underline, whatever. Ensure they know!
5. Demand Deposit But Never Lower Amount
It is true that most tenants are superb. They will pay their rent on time, they will follow the rules of the property and they will not damage anything in the apartment or in the building.
But there is always that one person…We know who you are!
To encourage tenants to be on their best behaviour, you should demand a deposit when they move in. If everything is in great shape when they exit the premise, you will return the deposit (always provide a receipt during each phase).
Sometimes the tenant will grieve about the sum of the deposit. Whatever you do, don’t lower it.
The short-term rental market is heating up. College students, travelers, businessmen, foreigners on visas. There are many reasons why people are taking advantage of short-term rentals. You want to offer your property to those demanding short-term rentals. Kudos to you!
That said, you need to be equipped with knowledge before you place it on the market. With the right contract, a deposit and filing taxes, this can certainly be a rewarding endeavour.