Higher interest rates combined with stricter regulations have some Canadians beginning to second-guess the wisdom of investing in a short-term rental property.
Deana Steele says she has never seen as many condo and vacation homes for sale as there are in Kelowna, B.C. right now.
The founder of Keys to Kelowna Properties Inc., a luxury vacation rental management agency, said the lake-front city’s real estate market is currently “saturated” by properties zoned for short-term rental use. Some of the sellers are people who bought not that long ago and are already trying to get out.
“We had all these first-timers flood the market — they were late adopters,” said Steele.
“They thought they were going to make a mint because they saw what was happening in the gold rush. And now they’re realizing, ‘Oh, big mistake.”’
The “gold rush” Steele is referring to is the investor stampede to short-term rentals that Kelowna and many other Canadian cities saw at the start of the COVID-19 pandemic.
Work-from-home mandates coupled with a plunge in international travel drove renewed interest among Canadians in domestic destinations. For a while, people listing cottages and condos for rent on Airbnb, Vrbo and other online marketplaces were making more money than they had in years.
But as more and more people tried to get in on the action, the balance shifted. By the summer of this year, Steele said, the number of Airbnb and similar listings in the city was outstripping demand.
As the glut of short-term rentals grew, nightly average occupancy rates fell, and so did the amount of revenue investors were able to generate.
“Our occupancy just bombed, just because of the number of new listings,” Steele said.
“So now those who aren’t seasoned investors, or aren’t interested in subsidizing their property, are looking to sell.”
Airbnb, Vrbo and other similar online rental platforms have long been tempting opportunities for Canadians with enough cash for a down payment and the willingness to become short-term landlords or “hosts.”
According to Statistics Canada, between 2015 and 2018 alone, the amount of revenue earned by the owners of private, short-term rental homes in this country rose to $2.2 billion — a nearly tenfold jump in just a three-year period.
But in 2023, some of the shine has worn off short-term rentals as an investment strategy. It’s partly because various levels of government are increasingly imposing restrictions aimed at curbing the practice, such as banning short-term rentals where the owner doesn’t reside in the property.
In addition to tougher regulations, the financial side of the equation has also changed dramatically. Interest rates are much higher than they were a few years ago, meaning property owners interested in the short-term rental market need to be able to generate more income just to cover their mortgage costs.
It’s also no longer safe to assume, as many people once did, that property values will continue to rise in the long term.
“In the past, some people may have cared less about the income they were generating and more about the potential price appreciation of their property,” said Jason Heath, managing director of Objective Financial Partners Inc.
“But with higher interest rates and (a) weaker housing market, prices might not go up by nearly as much as they once did. They might even go down.”
Heath added that anyone buying an investment property in Canada is required to make a minimum 20 per cent down payment before being approved for a loan.
He said that factor, combined with today’s higher borrowing costs, means potential investors really need to do some number crunching.
“The big question is, ‘Is it a viable business model?’ Can you make more money running an Airbnb property than having a regular rental property or just investing in stocks and bonds, for example?” Heath said.
“And remember that with stocks and bonds, you can buy them and there’s not much work involved. Owning an Airbnb property is a business, it’s a job, and you also need to factor in the cost of your time.”
Avery Birch, founder of 365 Experience Inc., a rental property management company in Halifax, acknowledged the short-term rental market has been in flux recently.
But Birch, who was just 21 when he first started earning short-term rental income by offering up a spare bedroom in his apartment, said he still believes it can be more lucrative than other forms of real estate investing.
He said that’s in part because short-term rentals give property owners more flexibility to adapt to supply and demand changes.
“I think it’s actually a safer bet for the property, especially in times of craziness, because we’re not locked into any pricing,” Birch said.
“We can throttle it up and down as much as we wish.”
Steele said she believes Kelowna will always be a desirable destination, and good investments can be made by those who have the up-front cash and are smart about their strategy.
For example, she said some savvy investors are currently switching from the short-term rental market to mid-length stays, catering not to tourists but to those in the city temporarily for work or medical treatments.
“I think anybody who’s interested in this industry needs to understand that it’s volatile … it is a higher-risk, but higher-reward industry,” she said.
“But I’ve done it with my own personal properties, and I would never not look at it. I just love the furnished rental space because it gives you that opportunity to pivot.”
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
Losing a loved one is never easy, and the legal steps that follow can add even more stress to an already difficult time.
For years, families in Vancouver (and Canada in general) have struggled with a complex probate process—filled with paperwork and legal challenges.
Thankfully, recent changes to Canada’s probate laws aim to make this process simpler and easier to navigate.
Let’s unearth how these updates can simplify the process for you and your family.
What is probate?
Probate might sound complicated, but it’s simply the legal process of settling someone’s estate after death.
Here’s how it works.
Validating the will. The court checks if the will is legal and valid.
Appointing an executor. If named in the will, the executor manages the estate. If not, the court appoints someone.
Settling debts and taxes. The executor (and you) pays debts and taxes before anything can be given.
Distributing the estate. Once everything is settled, the executor distributes the remaining assets according to the will or legal rules.
Probate ensures everything is done by the book, giving you peace of mind during a difficult time.
Recent Changes in Canadian Probate Laws
Several updates to probate law in the country are making the process smoother for you and your family.
Here’s a closer look at the fundamental changes that are making a real difference.
1) Virtual witnessing of wills
Now permanent in many provinces, including British Columbia, wills can be signed and witnessed remotely through video calls.
Such a change makes estate planning more accessible, especially for those in remote areas or with limited mobility.
2) Simplified process for small estates
Smaller estates, like those under 25,000 CAD in BC, now have a faster, simplified probate process.
Fewer forms and legal steps mean less hassle for families handling modest estates.
3) Substantial compliance for wills
Courts can now approve wills with minor errors if they reflect the person’s true intentions.
This update prevents unnecessary legal challenges and ensures the deceased’s wishes are respected.
These changes help make probate less stressful and more efficient for you and other families across Canada.
The Probate Process and You: The Role of a Probate Lawyer
(Image: Freepik.com)
Working with a probate lawyer in Vancouver can significantly simplify the probate process, especially given the city’s complex legal landscape.
Here’s how they can help.
Navigating the legal process
Probate lawyers ensure all legal steps are followed, preventing costly mistakes and ensuring the estate is managed properly.
Handling paperwork and deadlines
They manage all the paperwork and court deadlines, taking the burden off of you during this difficult time.
Resolving disputes
If conflicts arise, probate lawyers resolve them, avoiding legal battles.
Providing you peace of mind
With a probate lawyer’s expertise, you can trust that the estate is being handled efficiently and according to the law.
With a skilled probate lawyer, you can ensure the entire process is smooth and stress-free.
Why These Changes Matter
The updates to probate law make a big difference for Canadian families. Here’s why.
Less stress for you. Simplified processes mean you can focus on grieving, not paperwork.
Faster estate settlements. Estates are settled more quickly, so beneficiaries don’t face long delays.
Fewer disputes. Courts can now honor will with minor errors, reducing family conflicts.
Accessible for everyone. Virtual witnessing and easier rules for small estates make probate more accessible for everyone, no matter where you live.
With these changes, probate becomes smoother and more manageable for you and your family.
How to Prepare for the Probate Process
Even with the recent changes, being prepared makes probate smoother. Here are a few steps to help you prepare.
Create a will. Ensure a valid will is in place to avoid complications.
Choose an executor. Pick someone responsible for managing the estate and discuss their role with them.
Organize documents. Keep key financial and legal documents in one place for easy access.
Talk to your family. Have open conversations with your family to prevent future misunderstandings.
Get legal advice. Consult with a probate lawyer to ensure everything is legally sound and up-to-date.
These simple steps make the probate process easier for everyone involved.
Wrapping Up: Making Probate Easier in Vancouver
Recent updates in probate law are simplifying the process for families, from virtual witnessing to easier estate rules. These reforms are designed to ease the burden, helping you focus on what matters—grieving and respecting your dead loved ones’ final wishes.
Despite these changes, it’s best to consult a probate lawyer to ensure you can manage everything properly. Remember, they’re here to help you during this difficult time.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
