All Forum Posts by: Anthony Therrien-Bernard

 That's technically not legal in Calgary to do this on Airbnb as you need 1 legal unit per listing unless you have a lodging house license.

 So been there done that in Calgary with a 7 bedroom house and there is a few things to unpack here.

1st, if you don't live in Calgary I wouldn't attempt doing this as it will be a massive property management nightmare, I would do an up and down suite.

if you are going to live here or still want to attempt doing this read 👇

Legality: 

Technically speaking if you live in the house to can rent out as many room as you wish with no restrictions. If you will not be living in the house full time you can rent out up to 3 rooms, more than that and you need a logding house license, but that starts at 8 bedrooms. So 4 to 7 bedroom rentals is technically in a weird spot where no license is available. Unless the City changed it that was the case 2 years ago. That being said the city will mostly turn a blind eye until there is complaints or an accident.

Insurance:

Insurance won't be easy or cheap, and yes you need to tell them you will be renting by the room or you may not be covered in case of a claim. If you will be living our of province this will property be even worse than my experience. For my 7 bedroom rentals I had to get commercial insurance specialized in student rentals (they allowed non-students too). It was quite expensive, around $3000 a year, and it had a lot of restrictions such as requiring all tenants full time employment, minimum lease term of 1 year and a bunch of other things. They also required I inspect the house a minimum of once a month and did random inspections several times, once arguing with me over a shed's roof needing to be replaced...

Management: 

As I mentioned earlier this is the BIGGEST issue. Good luck finding a property manager that is willing to take this on and do a good job at it, and self managing is a nightmare. It was very difficult for me to manage and I lived 30 mins away and ultimately this is why I sold this property. There is NO accountability, AT ALL from any of the tenants, and they tend to form a group, so if someone is smoking inside the house for example, everyone will claim it's not them, good luck handling those kind of issues without evicting every tenants. Your repair and maintenance will also be through the roof as not only more people live in the house but those tenants WILL NOT take good care of the property.

Financing:

If you ever plan on refinancing that property it may be difficult as most lenders won't consider the income from the room rentals and most will require leases over market rent appraisal for a refinance.

Economics:

Now I'm not going to lie, even considering the higher repair and maintenance, room rentals will perform better than pretty much any other strategies. My assumptions were all exceeded when I did my room rentals and had ridiculously high bet cashflow.

But is it worth all the extra hassle and headaches? For you to decide, for me it definitely wasn't worth it as that property required more time than my entire portfolio combined.

It might also be interesting to compare the return of investing in Bassano using a PM (assuming you find one) vs investing in Calgary and self-managing, pretty sure Calgary will do better in this scenario (and that's ignoring all the other issues other have pointed out such as lower appreciation potential)

 I did I went with a commercial insurer specialized in this

 Definitely not always the case, I can name you countless areas of Calgary where appreciation is very strong (re-development potentials, high land value) and you would be cashflow negative it would not be improving over time, and have a pretty bad tenant profile too. A lot of the areas with very high land value in ratio to building values are great for appreciation but often don't commend much higher rents (and in some cases lower rents) while requiring you to pay significantly more for the property. 

 It needs to be both, and a lot of markets can provide that (such as my local market Calgary). I think every property should at a minimum have a small cashflow to protect you (especially as you scale up the number of properties you own) but it DEFINITELY should have strong appreciation potential as well, most of the returns are still made from the appreciation and not the cashflow. It's more of a balancing act of how much cashflow you are willing to sacrifice for extra appreciation (which let's all be honest is a lot more speculative than the cashflow portion) and that will depend on your goals and financial situation. I've been through downturn markets with reduced rents and property value and unlike some of my fellow investors in my market that did not care about cashflow and were struggling to stay above water, and very stressed out I slept very well at night and was able to afford for the market to turn because I had healthy cashflow going into the downturn.