Why Airbnb is not a good property investment despite higher cashflow over long-term renting.

Recently, more people have discussed the pros and cons of buying an investment property and turning it into an Airbnb versus a long-term rental. Here is why this discussion is like comparing apples to oranges. Owning and running an Airbnb is a hassle in the form of a part-time job, not a property investment. Here is why;

• It's a Part-Time Job: If you want to make money, as in more than you would have gotten if you were renting it out long-term, you will need to clean and maintain it yourself. Paying someone to do it for you will not yield as much at the end of the month to make it worth it. If you have, let's say, five move-ins and outs in a week, you are looking at about ten hours of work without considering the time spent communicating with the guests, sending them instructions, answering their questions and fetching the coffee or toilet paper that has run out. It is not a touch-and-go business, let's not sugarcoat it under the argument that "it makes great money." The money is great, I agree, but it is a true part-time job.

  
  

  

• Regulatory Challenges: Many cities around the world have implemented strict regulations on short-term rentals, which can impact Airbnb's operations and growth potential. Every year, we hear how cities are restricting short-term rent licencing regulations, and yes, you do need a short-term rental license in Calgary to operate an Airbnb. Only 12 months ago, all you had to do to get a permit in Calgary was fill out an online form and pay a fee of around $100. Since January 2024, however, we are now required to have proof of sufficient insurance coverage, a fire inspection, submit evacuation plans and pay a higher fee of just over $200. And all that needs to be repeated every year despite no changes to the property. In BC, some cities are now only allowing you to operate a short-term rental if you also reside on the property. For example, you could rent out a room or your basement, but it has to be your residing property. The city of Canmore in Alberta has also implemented changes to their short-term rental regulations by following in BC's footsteps. You either live in the property you rent out or pay a yearly Tourist Home Tax.

  
  

• Economic Sensitivity: Airbnb's business model is susceptible to economic and political downturns, as travel is often one of the first areas consumers cut back on during tough economic times.

  
  

• Operational Risks: Issues such as property damage, guest safety, and host reliability pose ongoing operational challenges for Airbnb. No matter how diligent you are about picking your guests and approving their stays, they will never treat your home like their own, so regular repairs, patching and upkeep are time-consuming and will need their own line in your expenses bookkeeping records.

  
  

• Dependence on Travel Trends: Changes in travel trends or business situations could impact Airbnb's business model. In Calgary, Canmore, Banff or other winter destination cities, if the winter is not particularly snowy, people don't travel for their ski trips. No ski trips, no bookings. The recent Air Canada pilot strike negotiations, for example, have resulted in booking cancellations as people did not want to risk their vacations. Covid is also a great example of how short-term rentals can be impacted by what is happening in the world. People stop travelling; you top making money.

Following the points above, I want to say that if you are going into the business of Airbnb, you are going into a hospitality business, NOT a property investment. That is the truth, and unless you want to be in the hospitality business, do not waste your efforts and save yourself the stress.