Renting out your home can bring cash—and complications + MORE May 21st

If you search “Airbnb how to get started” you’ll reach their splash page with a big number. As of May in Toronto, Airbnb says you can make more than $4,000 per month during the FIFA World Cup. It’s a powerful lure for someone who needs help with their rent or mortgage, and has a spare room to offer. But whether it’s Airbnb, Vrbo, booking.com, or another home rental platform, Laura Whiteland, financial planner and owner of Inclusive Financial Planning in Truro, N.S., says prospective short-term landlords should go into the business agreement with open eyes.

“[Airbnb’s] product is not what you’re selling—they’re selling the services of the website, so they’re not in the same business you are going into,” Whiteland said. “You’re the product in that scenario, because they need accommodations. That’s how they generate their revenue. So you’re being sold and you need to be honest with yourself about that, too.”

Know the rules before you rent

In her experience working with clients who have any kind of rental business, it’s always more challenging than they expected…

The Canadian property market has experienced a major contraction since the end of the pandemic, reversing rapid house price gains between 2020 and 2022. According to the MLS House Price Index, the cost of property fell by 20% from its peak in early 2022, as well as by 4.7% year-on-year. 

There’s unlikely to be respite any time soon, either. The cost of property fell by 0.4% month-on-month in March, and TD Economics predicted house prices dropping by a further 0.3% this year.

What it means to be underwater

If you bought at the top of the market, you may currently have negative equity in your home—known as being “underwater.” This happens when your loan ends up being higher than the value of your property.

While investors typically put at least 20% down on a property, many first-time buyers purchase properties with a down payment as low as 5–10%, meaning it doesn’t take much of a property price drop to put them in negative equity. 

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