If you’ve followed real estate news over the last few months, you know that a massive change is currently underway. Interest rates are up. Prices are falling. Fewer people are looking to buy a home, and more are renting. In other words, it’s a prime time for investors.
With the growing popularity of sites like Airbnb and Vrbo, short-term rentals are all the rage in the current market. You can see the appeal. There are no long-term leases to worry about. And if you’re unlucky enough to have a bad tenant, they’re gone in a day or two. Plus, rents are higher for short-term rentals, making it easier to generate passive income if you’re in a desirable tourist area. That’s not even mentioning the growing equity you earn as your property appreciates in value.
Should you consider buying an investment property in the Blue Mountains? If the thought has crossed your mind, there are a few things you need to know.
Blue Mountain’s Rules for Short-Term Accommodations are Very Strict
Blue Mountain is one of the hottest vacation destinations in Ontario. Though most famous for its ski hills, other attractions draw thousands of visitors all year long. The hiking trails, scenic caves and luxury spas are legendary. Blue Mountain is also home to the Ridge Runner, Ontario’s only mountain roller coaster. Talk about a fantastic way to enjoy the Fall colours!
As a vacation getaway, Blue Mountain is hard to beat. That said, you may be wise to think twice before investing in a short-term accommodation (STA) property. Why?
Blue Mountain has very stringent guidelines and by-laws you must abide by, and less than 1% of all properties are available for short-term rentals. Many investors have made the mistake of buying a property with the intention of renting it out. Then, they were caught off guard when they couldn’t get the zoning they needed to turn their vision into reality. Thorough research can protect you from making a costly mistake and lead you to the right investment opportunity.
At Keleher + Co., we like to do everything differently! Find out more about our buying process here.
Know the Rules Before You Invest
What are some of the rules and penalties you should be aware of? For example, under By-law 2017-71, operating a short-term rental without a license can cost you $2,500 in fines. Advertising your property without a license is subject to a $500 penalty. Exceeding the maximum occupancy can cost you another $500.
As you can see, non-compliance can quickly eat up all or most of your profits. And it’s critical to understand that Blue Mountain doesn’t just have strict rules–they enforce them. Buying a property and hoping to fly under the radar is not a good idea. Here are just a few of the guidelines you need to know:
- STA by-laws apply to all property owners who rent for 30 days or less, except for hotels and managed buildings with 10 units or more.
- Only specific areas are zoned for STA use, and you must apply for a permit.
- If approved, your property must also pass a fire safety inspection.
- You must abide by the Renter’s Code, Parking Management Plan and the maximum occupancy calculations.
How much should you pay to buy a vacation property? Check out some of our financial tools right here.
Alternative to Blue Mountain
If the many rules and regulations have put you off from investing in Blue Mountain, another option exists. The Town of Meaford is located in Grey County on the southern shore of Georgian Bay. Though not as famous as Blue Mountain, Meaford is another highly sought-after tourist destination. Its popularity is only expected to grow over the next few years.
Live music, stunning nature, and a breathtaking waterfront are just a few attractions that make the town worth visiting. Best of all, Blue Mountain is only 15 minutes away. Investing in Meaford may allow you to market your property to those who wish to experience more than one location.
Meaford’s laws are far more flexible for short-term rentals, which makes it one of the best up-and-coming destinations for savvy investors.
Understanding the market is critical before making any real estate decisions. Read our latest articles below:
- What Type of Mortgage Should You Get?
- How to Sell a Home on Someone Else’s Behalf
- Interest Rates are Rising: What Buyers and Sellers Need to Know
Accurate Advice is Critical
Some lifestyle investors try to work around the rules by living in the unit part-time and renting it out the rest of the year. Others live in the home full time and section off part of it for short-term rentals. These are valid workarounds in some municipalities but may still get you into trouble in others.
Before investing with short-term rentals in mind, it’s critical to talk to an intelligent real estate agent who knows the area and understands the law. Being a local agent isn’t enough. You need someone who understands the nuances and differences between each area. Compliance with all by-laws is key to your success as an investor.
Keleher + Co has 130+ combined years of experience working with investors in the entire South Georgian Bay area. If you have questions before you invest, reach out to us by email or call 705-532-9999.