Real estate in Calgary - another bubble?

[Rutuu]

Originally Posted by Shazam

Not even a 5% return. An awful, terrible use of cash. This isn't an opportunity.

Not a full analysis (those pesky op costs ):

Rent Collection: $10k/m
Mortgage Payment @ LVR 80%: $15.2k/m (most of it is interest at first)
Capital Appreciation @ longterm trend of 3.5%/yr: $9k/m
Initial Equity Outlay (20% down): $620k

You've got a back of the envelope 7% return to start...a lot of assumptions in there of course.

Plus you the principle you pay off and capital appreciation go into the equity that you can then leverage for another property.

Anyway I don't like real estate as an asset class myself, but the people that bang on and on about it are coming from the place above.

[81MC]

What impact do short term rentals have in housing prices? The house across from me has been sold twice in 5 years and is strictly used as a short term rental unit by both purchasers. Hope those ####ers lose their shirt, but I wonder if the impact can be quantified.

[Rutuu]

Originally Posted by 81MC

What impact do short term rentals have in housing prices? The house across from me has been sold twice in 5 years and is strictly used as a short term rental unit by both purchasers. Hope those ####ers lose their shirt, but I wonder if the impact can be quantified.

A good question. I always take it back to the cashflows.

Cap Rate = net operating income / cost of the property

If you're in an area where cap rates for resi are 5% and this neighbor has cracked the code to driving his NOI up with short term rentals on a consistent basis so his cap rate is 6%, well the cost of the property could go up to bring the cap rate in line with the rest of the similar properties when factoring the extra risk of short leases.

If you're hoping they lost money, well then you gotta look at the BOC rate rising quickly and sharply, because having a 5% cap rate was cool at 2% interest, but at 5% interest, well that means the cost of the property has to go down to drive the cap rate higher, or they have to raise the rent. Likely both are happening.

[GGG]

Originally Posted by 81MC

What impact do short term rentals have in housing prices? The house across from me has been sold twice in 5 years and is strictly used as a short term rental unit by both purchasers. Hope those ####ers lose their shirt, but I wonder if the impact can be quantified.

They should increase property prices as you add demand by moving Hotel guests into residential spaces.

In general it’s really bad public policy.

[blankall]

Originally Posted by 81MC

What impact do short term rentals have in housing prices? The house across from me has been sold twice in 5 years and is strictly used as a short term rental unit by both purchasers. Hope those ####ers lose their shirt, but I wonder if the impact can be quantified.

In Vancouver, they've had a pretty dramatic impact. They really further dwindle the already low housing supply. You can Air BnB a place for 2-3 times what your monthly rental would be. There are obviously negatives to Air BnB, in that you have to clean the place between stays and deal with random people, some of whom are there to party.

There are also services that will do the cleanup, key pick, up etc..for you (for a large cut of course). But that's perfect for the absentee and/or overseas landlord.

A major risk with applying for a short term rental license is that it invites the city in to do an inspection, and a lot of rental suites in Vancouver are unauthorized. When we were looking at places, one of the places had an illegal extension slapped onto the back many decades ago. The then owners had a short term rental inspection, the city saw the extension, and then demanded it be torn down. It would have been a 2-300k renovation to remove the extension and it forced the owners to sell.

[Winsor_Pilates]

Does Calgary have any restrictions on short term rental of properties?
In Vancouver we have to get a business license and it has to he part of your principal residence.
Even a legal suite in the house does not comply as that needs to be market rental.
99% of strata properties also don't allow short term rentals under 30 days.

[81MC]

Originally Posted by Winsor_Pilates

Does Calgary have any restrictions on short term rental of properties?
In Vancouver we have to get a business license and it has to he part of your principal residence.
Even a legal suite in the house does not comply as that needs to be market rental.
99% of strata properties also don't allow short term rentals under 30 days.

Man, personally Calgary’s STR requirements are a total ####ing joke.

A $100 business license for up to 4 rooms, 8 adults plus minors. No inspection requirements, no residency requirements, just pay your $100 and carry on. I don’t get it, home based business have very specific rules and permit requirements, including consideration about impact on surrounding community. But randoms using residential property as party hotels with vacant owners who have no tie to the residential community at all, yeah that’s no impact at all.

All this ####ing chatter about affordable housing, and we put our head in the sand about this? “…people are doing this subsidize the way they live, to help pay their mortgages, those things…”. How detached from reality is that statement? Who knows, because I can’t find the data to support. I do know for a fact that within 5 houses of mine, two are full-time non-residence AirBnB houses.

The hell are people yelling about Trudope needing to fix the housing crisis when our own municipalities aren’t doing anything.

[Qwerty]

I was on a call the other day (work in real estate) and they said that in the USA there are 1.3M airbnbs in the USA, so maybe 10% of that in Canada? 100k or so?

They are worried that this "shadow inventory" is going to get unloaded as people have jacked up the rates on Airbnb's to ridiculous rates to cover their mortgages and if people stop using Airbnb's and move back towards hotels (sick and tired of doing 100 chores before you go and still getting a $600 cleanings fee?) you could see a lot of pressure on all these Airbnb slum lords to unload their inventory. It's an interesting concept and something to watch over the next couple years. Is Airbnb the new hotel, or was it a fad?

I myself, who have stayed in only Airbnb's for the last couple years have gotten extremely frustrated at the costs, quality and "chore lists", I am often curious if my sentiment is more widespread?

[Cecil Terwilliger]

You're not alone. Airbnb is borderline garbage now. Fees are out of control, low quality listings that half the time turn out to be fraud or misrepresentation and like you said, the hosts have these insane lists of chores.

The worst part is if you ignore the chores, the host can complain to airbnb and you could face additional charges for extra cleaning. And airbnb has a tendency to take the side of the hosts.

In the same vein as netflix, uber and amazon. These online behemoths that come in and disrupt an industry then very quickly become everything we hated about the old system. But now they've put all their competitors out of business so we have no more choices.

Thankfully hotels stuck around and still give travellers options.

[Dan02]

Originally Posted by Cecil Terwilliger

You're not alone. Airbnb is borderline garbage now. Fees are out of control, low quality listings that half the time turn out to be fraud or misrepresentation and like you said, the hosts have these insane lists of chores.

The worst part is if you ignore the chores, the host can complain to airbnb and you could face additional charges for extra cleaning. And airbnb has a tendency to take the side of the hosts.

In the same vein as netflix, uber and amazon. These online behemoths that come in and disrupt an industry then very quickly become everything we hated about the old system. But now they've put all their competitors out of business so we have no more choices.

Thankfully hotels stuck around and still give travellers options.

It's funny, this morning a friend proposed renting a 6 bedroom airBnB for a group of about 8 of us. I joked that is would be actually be a 3 bedroom with 2 sofas and a closet.

They send me the link to the listing, sure enough 3 bedrooms with double beds, one room you can only descibe as barely bigger then a den with a bunk bed in it, and sure enough 2 pull out couches.

AirBnB sucks.

[DoubleF]

Yeah there's a lot of junk Air BnB, but there's some half decent ones as well. You can't just randomly select and get a good one anymore. You gotta do extra due diligence. For the chore thing, I think it's valid to a certain extent. I'm usually half doing this stuff for hotels anyways as a final check to make sure nothing is left behind.

I do bedding crumpled on bed (anything extra is dumb and you can argue why it was your responsibility to wash, dry and redo the beds), towels/hand towels and those types of linens in bath tub. Washed dishes in dry rack or running in dish washer. Quick sweep or vacuum if anything visual or obvious, and wiping of water around sinks/taps or a quick scrub of a major stain from a spill or something etc.

Also, like a rental car, I'll also take a quick video when I arrive and when I leave to show the state it was in when I showed up, and when I left. I've never had an issue. I think it's also easier to keep the host from doing anything if you message, "We did the cleaning as instructed and took some pictures and videos after cleaning, just in case. Thanks for hosting us! We had a great time."

I and my family got great reviews on Air BnB which surprised us. We did the place up as requested to probably barely passable for a dorm inspection type of cleaning and we've frequently received comments that the owners were happy we treated the unit like it was our own. It's not like we cleaned to hotel standards (been there, done that for a few summers during uni) or army standards clean or in laws requirements of cleaning anything close to that level of cleaning. People must be leaving the place looking like an uncleaned college dorm to get bad reviews on lack of cleaning.


And if there's an Air Bnb with in unity laundry that requests you toss a load into the laundry (for towels, bedding etc.) before you leave the unit... I love those ones! With kids, you can conveniently run a load or two when they expectedly make a mess on their clothing. Last time I was in the States, we had an Air BnB like this and we ran like a dozen loads of laundry while there and we scrubbed and cleaned over and over. I couldn't imagine how embarrassed we'd be in a hotel requesting replacement sheets and stuff over and over because the little ones had gotten some stomach bug and were randomly throwing up on ####. I don't mind the extra 20-30 minutes of extra cleaning if I can exploit the #### out of those facilities while I'm staying there.

[Sliver]

Originally Posted by DoubleF

Yeah there's a lot of junk Air BnB, but there's some half decent ones as well. You can't just randomly select and get a good one anymore. You gotta do extra due diligence. For the chore thing, I think it's valid to a certain extent. I'm usually half doing this stuff for hotels anyways as a final check to make sure nothing is left behind.

I do bedding crumpled on bed (anything extra is dumb and you can argue why it was your responsibility to wash, dry and redo the beds), towels/hand towels and those types of linens in bath tub. Washed dishes in dry rack or running in dish washer. Quick sweep or vacuum if anything visual or obvious, and wiping of water around sinks/taps or a quick scrub of a major stain from a spill or something etc.

Also, like a rental car, I'll also take a quick video when I arrive and when I leave to show the state it was in when I showed up, and when I left. I've never had an issue. I think it's also easier to keep the host from doing anything if you message, "We did the cleaning as instructed and took some pictures and videos after cleaning, just in case. Thanks for hosting us! We had a great time."

I and my family got great reviews on Air BnB which surprised us. We did the place up as requested to probably barely passable for a dorm inspection type of cleaning and we've frequently received comments that the owners were happy we treated the unit like it was our own. It's not like we cleaned to hotel standards (been there, done that for a few summers during uni) or army standards clean or in laws requirements of cleaning anything close to that level of cleaning. People must be leaving the place looking like an uncleaned college dorm to get bad reviews on lack of cleaning.


And if there's an Air Bnb with in unity laundry that requests you toss a load into the laundry (for towels, bedding etc.) before you leave the unit... I love those ones! With kids, you can conveniently run a load or two when they expectedly make a mess on their clothing. Last time I was in the States, we had an Air BnB like this and we ran like a dozen loads of laundry while there and we scrubbed and cleaned over and over. I couldn't imagine how embarrassed we'd be in a hotel requesting replacement sheets and stuff over and over because the little ones had gotten some stomach bug and were randomly throwing up on ####. I don't mind the extra 20-30 minutes of extra cleaning if I can exploit the #### out of those facilities while I'm staying there.

In-suite laundry rules. My wife is a laundry-a-holic so it keeps her busy and when we get home there are no jobs waiting for us. Just put all our clean clothes in the dresser and carry on with life.

[Slava]

Originally Posted by DoubleF

Yeah there's a lot of junk Air BnB, but there's some half decent ones as well. You can't just randomly select and get a good one anymore. You gotta do extra due diligence. For the chore thing, I think it's valid to a certain extent. I'm usually half doing this stuff for hotels anyways as a final check to make sure nothing is left behind.

I do bedding crumpled on bed (anything extra is dumb and you can argue why it was your responsibility to wash, dry and redo the beds), towels/hand towels and those types of linens in bath tub. Washed dishes in dry rack or running in dish washer. Quick sweep or vacuum if anything visual or obvious, and wiping of water around sinks/taps or a quick scrub of a major stain from a spill or something etc.

Also, like a rental car, I'll also take a quick video when I arrive and when I leave to show the state it was in when I showed up, and when I left. I've never had an issue. I think it's also easier to keep the host from doing anything if you message, "We did the cleaning as instructed and took some pictures and videos after cleaning, just in case. Thanks for hosting us! We had a great time."

I and my family got great reviews on Air BnB which surprised us. We did the place up as requested to probably barely passable for a dorm inspection type of cleaning and we've frequently received comments that the owners were happy we treated the unit like it was our own. It's not like we cleaned to hotel standards (been there, done that for a few summers during uni) or army standards clean or in laws requirements of cleaning anything close to that level of cleaning. People must be leaving the place looking like an uncleaned college dorm to get bad reviews on lack of cleaning.


And if there's an Air Bnb with in unity laundry that requests you toss a load into the laundry (for towels, bedding etc.) before you leave the unit... I love those ones! With kids, you can conveniently run a load or two when they expectedly make a mess on their clothing. Last time I was in the States, we had an Air BnB like this and we ran like a dozen loads of laundry while there and we scrubbed and cleaned over and over. I couldn't imagine how embarrassed we'd be in a hotel requesting replacement sheets and stuff over and over because the little ones had gotten some stomach bug and were randomly throwing up on ####. I don't mind the extra 20-30 minutes of extra cleaning if I can exploit the #### out of those facilities while I'm staying there.

I disagree regarding the chores. It’s beyond ridiculous; you’re paying a cleaning fee and then you have to do a bunch of cleaning? I stayed at an Airbnb in Fairmont Hot Springs and we had to drive the garbage to the dump, otherwise we’d pay $45. It’s just annoying. I think Airbnbs have some use, for things like families or groups that want a bigger place. But a hotel where you can just enjoy your stay is just much nicer.

[Cecil Terwilliger]

Ya I’m all about leaving the place like I found it. Washing my dishes, making sure the place doesn’t look like a disaster, making sure all waste is in the garbage. But that ends at cleaning the bathroom, doing any laundry, doing anything beyond throwing the trash in the bin etc.

I’ve seen some truly obnoxious requests by hosts to the guests.

[Wormius]

Originally Posted by Cecil Terwilliger

Ya I’m all about leaving the place like I found it. Washing my dishes, making sure the place doesn’t look like a disaster, making sure all waste is in the garbage. But that ends at cleaning the bathroom, doing any laundry, doing anything beyond throwing the trash in the bin etc.

I’ve seen some truly obnoxious requests by hosts to the guests.

Did this all change within the last few years? We stayed at a couple of places in Europe back in 2019, and it was pretty relaxed, but recently when comparing with hotels and AirBNB it hasn't been worth booking anything with the AirBNB.

[Rutuu]

Originally Posted by Cecil Terwilliger

I’ve seen some truly obnoxious requests by hosts to the guests.

Start a thread on this please. I'm curious.

[cam_calderon]

Must be different in Canada, or I just got lucky. Stayed at a Melbourne Airbnb in January and there was no requests regarding cleaning from the host, apart from throwing rubbish in the bin (two metres from the front door).

[keenan87]

I am hearing the condo market is starting to pick up too. Anyone else have any insight?

[OldDutch]

I dunno I vrbo a house in Palm Springs the week before Christmas for $600 usd a night. It was modern with 3 bedroom, pool, hot tub and in a quiet location.

Hotels were in the $400-$600 range for a single room. There were cheaper but they were 3 stars and your eating out every meal.

I think it was a steal and the chore was minimal.

Never done air bnb. Seems like a nightmare happens on both sides too often

[Hemi-Cuda]

Originally Posted by keenan87

I am hearing the condo market is starting to pick up too. Anyone else have any insight?

It was last year for sure. We had a condo in Chestermere that we were trying to sell in 2020 before buying a house in Calgary, initially listed at $249k but ended up dropping it to $219k over several months with little to no traction. Eventually took it off the market and rented it out after we bought a house. Tried selling it again in Jan of last year, listed at $249k again and within 3 days had a signed offer for the asking price. I haven't looked at condo prices lately, but I can't imagine they've come down with the low house inventory and crazy rent prices in the city