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Turn your condo into a cash machine.

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hotelbell.jpgHere’s one option for getting rich off your Vancouver condo investment: Turn your condo unit into a hotel room and provide temporary shelter for tourists. Why get only $1300 or so a month when you can get $2790*? Here’s an example located downtown at spectrum.

By going into the hotel room business you can earn enough to pay the mortgage on your investment, and as long as your strata agreement allows it you can compete with traditional hotels by allowing pets.

You can become an ambassador for the city AND make out like a bandit. Whats not to like?

*based on full occupancy at daily $90 per day rate for 31 day month

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Strataman

Aleks "If you rent your condo out by the night" I repeat the "legal renter is long term" the person who happens to be staying there is an unregistered guest. That person is not on strata record, could be the owners Uncle! 🙂 Only if they have legal records (utility bills, phone etc), do they have to fill out a form k "Tenant occupancy".

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Aleks

If you rent your condo out by the night don't you have to pay property tax at the business rate or did they change that?

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streel

Front page news on Yahoo Canada

Housing Boom: Doomed?

http://tinyurl.com/2gh7af

I know someone who has built a successful company doing what you describe above, Google Premier Executive Suites and see for yourself. They just bought up a bunch of property in St. Johns to handle the offshore executives.

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M-

Excellent, I like seeing articles like that!

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patriotz

She adds that she anticipates a "cooling in both housing demand and price appreciation in the months ahead" across Canada.

This is code language for "prices are going to go down", just like "hold" is code language for "sell this stock".

Note that the article fails to mention that prices in Calgary and Edmonton have been falling for 6 months and are down more than 10% from the peak. Guess they don't want to scare the kids.

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Warren

patriotz, this doesn't apply to any old condo. It has to be in immaculate condition, and within reasonable distance to the downtown core. Of course there's a finite market, but somehow hotels have been around for hundreds of years charging a lot more than monthly rental apartments. This is something in between.

Strataman, at 25% occupancy I'd be close to breaking even vs. renting, and even then I'd take it because its far less hassle.

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patriotz

The point is that in any business without barriers to entry, supply will rise until price equals marginal cost. That is, the extra money you get from subletting the apartment will eventually only cover the marginal costs of subletting, because if it were more, you would get more entrants coming into the market to try to take some of your margin.

I think this is right out of Samuelson and Scott really.

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depresso

This sort of thing is common in cities where the hotels have low vacancy rates. Like in Buenos Aires, for example.

What are the hotel vacancy rates in Vancouver?

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Strataman

patriotz

"If this sort of thing were viable on a large scale, it would cause the market rent on condos to be bid up to the point where the subletters would only be covering marginal expenses."

This is a long term lose scenario, for instance currently 25% of units of one of the largest agents in the business are vacant. This has grown from <5% in August. The differance here is this market is the business market not the real estate market. What counts is the business climate, a US recession will play havoc with this. Most if not all of those I meet are US business men not Asian and only some European.

Never the less right this instant it counts for a substantial amount of condo equity return! Check it out yourself and count em! 🙂
http://tinyurl.com/2sw5xw

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patriotz

If this sort of thing were viable on a large scale, it would cause the market rent on condos to be bid up to the point where the subletters would only be covering marginal expenses.

Like every other something-for-nothing scheme, you only hear from the winners, not the losers, so it sounds a lot better than it really is.

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jesse

This can be lucrative. There are premiums for having strangers stay, vacant days, and the admin/advertising. Of course if enough people do it (as I am sure they will if the rental market softens) then it becomes less lucrative. Renting out a unit by the day is one of the necessary steps on one's path through the sea of denial.

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steve

i rented a condo like this for 10 days over christmas. i have a wife and 18month old, staying with family for that long is out of the question, staying in a hotel room is too hard as well, with a napping toddler that goes to bed at 6pm. getting a hotel room with 2 separate bedrooms would be insanely expensive. for $200 a night i rented a furnished condo suite in the heart of yaletown, 2 bdms, about 850 sq feet. it was very comfortable (though i personally wouldn't want to live in one with a toddler) the cost advantage over a hotel is increased when you consider that we had a kitchen to cook our own meals and didn't have to eat out for every meal. on top of that, we were able to host our own little… Read more »

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Warren

To be clear, my returns have been $2600/month.

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Warren

After 3 years of renting my condo I signed up with a company that basically does the type of thing you describe for me. There was an initial startup cost as I did some renos and bought everything from a TV to linens. Here's a rough breakdown:

My approximate rental today would be $1000. Now add $200 in utilities which I have to pay. Then I add another $500 to recoup my startup costs. So I'm looking for $1700/month. So far (since Sept 07) my returns have been over $2600, and there's absolutely no effort on my part, simply cashing checks.

People think being a landlord is cashing checks, but if you've ever been one, you know it can be a huge hassle.

Now I'm not expecting high $$ every month, but so far, so good.

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Strataman

Don't under estimate this people, I know of well over a hundred of these. The Craiglist Guy is an amateur. Mostly its a management company (not property management but executive personnel management)they rent the suite for long term so that they cancircumnavigate strata laws. Just that differant people stay there every few days. They provide daily maid service and everything from cutlery to dogwalking. Very lucrative and common in many buildings. In most cases from my experience the temporary tenant has no idea what the rent is as it is paid by there company. Very common but more so in high end condo's. Spectrum is not usually what these people are used to.

Wonder why hotels don't complain? I suspect they do not know the extent of it! 🙂

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waiting for pie

How do the get around strata laws? The management company rents the suite from the owner and then rents it out on a nightly basis? Does that really fly with the strata?

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Strataman

"Does that really fly with the strata?" Technically no but enforcement is impossible. The "temporary tenant" is a guest which is not illegal. No differant from a legal point of view to me letting a friend stay in the place I rent. How would you know for sure that I am charging the friend? Also if I am a company renting the place for staff, the original renter stays the same just that they have a lot of guests. Stratas are unable to verify the charges as they are deeply buried. I rent to someone who rents to someone who supplies their employee with accomodation. As I said the actual resident is just given a FOB and key a parking space all legally rented by one person. It is not against the law to sublet your place especially if the… Read more »

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Drachen

Hey what a great idea! Take on an extra 20 or so hours of work a week as maid service, concierge, booking, bookkeeping and bellboy. In return for which you can earn almost twice as much as a 'normal' rental (if you work your ass off AND are very lucky) for 4-6 months a year and somewhat less than a normal rental for the other 6 months. Not to mention good luck filling it up since no travel agent has ever heard of you and probably fewer than 1% of travellers coming to Vancouver even glance at Craigslist when they're looking for accommodation. Other than that it's an excellent idea… Actually I get the feeling that this guy couldn't find anyone to rent his place at the rates he's proposing so he's desperate. In a few months he'll be forced… Read more »

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