Summer Edition V.1
As we embark on the summer travel season, many of you will be including the non-traditional means of accommodation styles and will choose to go with an Airbnb or a Vacation Rental rather than a traditional Hotel. Whether it be for convenience, cost, size or location, more than not a Vacation Rental vs a Hotel makes a lot of sense. How many times after staying at a Vacation Rental Property have you thought to yourself, ‘I need to explore getting into the short-term rental market’.
Short-term rental properties can be lucrative and can provide a steady supplemental income. However, you do need to do your homework before jumping into being the ‘Hostess with the Mostess’. Before you make the decision of getting into the short-term rental market, let’s dive into listing and purchasing properties with Airbnb and VRBO capabilities.
Airbnb Terms & Conditions
- If purchasing a pre-existing Airbnb, the seller’s Airbnb account is not transferrable with the purchase of the property
Seems obvious but some people assume it automatically transfers over. Once the deal closes, the new property owners must create their own Airbnb profile or add the new property to their existing profile. The new property owners cannot assume any existing reviews or ratings from the previous owners.
- Sellers need to cancel any reservations made after the possession date
Sellers cannot transfer existing bookings to a buyer. Once the buyers have taken possession, they can do re-bookings. However, if the sellers take the furniture or shut off the utilities, the buyer must be informed as this could be a problem if unprepared.
- Some municipalities may require a permit
If a permit is required to operate an Airbnb, you will need to find out if that permit will transfer when the property sells or if a new one can be issued.
VRBO Terms & Conditions
- Use of site content, name or images is prohibited on marketing material
The platform name ‘VRBO,’ or any copied content, cannot appear on any marketing material used to promote the purchase or sale of a property. This includes the MLS® System.
- Cannot list the contact information of another person
The VRBO profile cannot be used to advertise the property for sale nor direct potential buyers to contact a REALTOR® for more information.
Short-term Rentals & Condominiums
With the increasing popularity of condominiums used as Airbnbs and VRBOs, some condo boards have felt the opposite appeal towards the rental trend.
In an Edmonton court ruling, Justice Paul Belzil issued a permanent injunction that includes short-term rentals such as Airbnb to be considered a “commercial transaction” and, therefore, in violation of this specific condo board’s bylaws. You can read more about that ruling here: Edmonton judge backs condo board in banning online rentals | CBC News
With the example of this court ruling, it is important to discuss this with your Realtor and make sure they or you investigate a condominium’s bylaws concerning short-term rentals before highlighting this as a feature of the property on the MLS® System.
Short-term rentals & the MLS® System
If you are considering selling your short-term rental, there are guidelines your Realtor needs to follow when listing on the MLS, essentially treating it as a normal residential listing:
- Property specific
- Avoid the use of self or third-party promotion
- Avoid using websites, phone numbers, or promoting any rental reviews in the public remarks
- Avoid promoting the potential of income, as this creates a high risk for misleading information
- CREB® Rule Part III – 2.03(b) (24-hours to show rule) applies to short-term rentals and must be available to show. Therefore, if you have reservations during the sale period, it could be difficult to set up showings.
Quick tip
Remember, with any real estate transaction where it will be deemed an income earner, make sure to check in with an accounting firm concerning applicable tax. Depending on the business nature of their short-term rental or your intention when purchasing, seeking professional guidance in this area will be helpful.
