I’m teaching a new business development course for the fifth summer in a row. Essentially the course teaches the process for developing a business idea, testing the feasibility of the idea and developing a business plan, including projected financials etc.
In this first week, we are discussing different business models and types of businesses that the students could explore.
I thought it might be interesting to share the steps involved in setting up and testing these various businesses.
One of the first ones I’m working with a student on is setting up an Airbnb business in Vancouver. Here I will go through what kinds of properties you can Airbnb in Vancouver, how to find a property, how to project revenues and costs and test the feasibility. I have also included a link to a pre-populated spreadsheet to help you calculate your costs.
This post assumes that you are looking to make an investment in a property that you can Airbnb in Vancouver and not that you already have a property - although some of the later steps will be the same.
Step One: Create a Long List of Possible Properties
The City of Vancouver is quite strict about what properties it allows for short-term rentals(STR) - which it defines as rentals under 30 days. Additionally, even if the city allows short-term rentals at these properties, the strata of the property may vote on a bylaw not to allow them.
So the first step is to create a short list of properties where Airbnb-ing is even possible.
Here is the list in Vancouver by neighbourhood (as of June 2023). The links will take you to REW where you can learn more about each property:
- 33 (33 West Pender Street, Vancouver, V6B 0E5) Downtown West
- Altadena (1238 Burrard Street, Vancouver, V6Z 3E1) Downtown West
- Electra (989 Nelson Street, Vancouver, V6Z 2S1) Downtown West
- Espana (633 Abbott Street, Vancouver, V6B 0J3) Downtown West
- Firenze (618 Abbott Street, Vancouver, V6B 0C1) Downtown West
- Fortune House (1010 Howe Street, Vancouver, V6Z 1P5) Downtown West
- The Mark (1372 Seymour Street, Vancouver, V6B 0L1) Downtown West
- Paris Place (183 Keefer Place, Vancouver, V6B 6B9) Downtown West
- The Spot (933 Seymour Street, Vancouver, V6B 6L6) Downtown West
- Wall Centre (1050 Burrard Street, Vancouver, V6Z 2S3) Downtown West
- Main Space (350 2nd Avenue East, Vancouver, V5T 4R8) Mount Pleasant East
- District 250 (6th Avenue East, Vancouver, V5T 0B7) Mount Pleasant East
- Shine (289 6th Avenue East, Vancouver, V5T 0E9) Mount Pleasant East
- The Wohlsein (311 East 6th Avenue, Vancouver, V5T 1J9) Mount Pleasant East
- The Flats (219 Georgia Street East, Vancouver, V6A 1Z6) Mount Pleasant East
Step Two: Project Airbnb Income
AirDNA is a great tool for projecting property income. It specializes in collecting, analyzing, and providing insights into the short-term vacation rental market. You can use it to understand average daily rates, occupancy rates, revenue potential, and seasonality trends.
You can use their Rentalizer tool to calculate the estimated revenue for each of the above properties.
Below is an example of the information that you’ll receive:
Step Three: Set Up Alerts for New Listings
At REW you can set up alerts to receive an email each time there is a new listing in any of the above properties.
I also recommend setting up your alerts so that you also get notified each time there is a new long term rental available in each of the above buildings. This will allow you to compare the feasibility of Short Term Rental (RTL) i.e. Airbnb-ing and Long Term Rental (LTR) i.e. renting a month to month or longer basis.
In each REW listing you can also calculate the projected monthly mortgage payment depending on your downpayment and other mortgage variables like length of mortgage, frequency of payments, fixed or variable rate, lending rate etc.
I recommend taking the annual projected revenue figure from AirDNA, dividing it by 12 to get your monthly projected income, and backing out the annual property taxes and the monthly strata fees (which you will also find on the REW listing) to find the largest monthly mortgage payment that the property will cash flow and then calculate the minimum that you will need to provide for a downpayment for the property to be self-sufficient (and maybe give yourself a buffer).
Step Four: Put it All in a Spreadsheet
Create a spreadsheet where you can collect and analyze all this data so that when the right opportunity comes along you can make an informed decision.
I have provided a template of a spreadsheet that would work here. You are welcome to use it. Just make a copy of it within google sheets.
Step Five: Learn about the City of Vancouver's Bylaws for Operating an Airbnb
In Vancouver, you need to have a short-term rental business license. You can learn more about applying for one here. Currently, the cost is $109 for the year plus a $66 application fee.
An important thing to note is that in the City of Vancouver, your short-term rental needs to be your principal residence. This means you cannot own and operate multiple Airbnb properties in Vancouver.
With a long-term rental business license you can own and rent out multiple properties - but only for periods longer than 30 days at a time.
The next steps after this will involve finding a realtor that specializes in properties like this, finding a mortgage broker and getting pre-approved for a mortgage, but we can cover that in a future post. In the meantime, I hope that this is helpful in understanding how to assess the feasibility of getting started with an Airbnb business in Vancouver.