Last updated on September 4th, 2023
Are you interested in achieving financial independence through passive income? Here’s a disclaimer: You don’t need to own a property to start the Airbnb rental arbitrage business in Canada! In fact, one of the key metrics that investors should consider is the listing’s location. Thus, analyzing the cities with the highest Airbnb demand is a must.
In this article, we featured the entire process of Airbnb rental arbitrage in Kelowna, its profitability, along with the best areas and neighborhoods. Continue reading to learn more about short-term regulations and ways to convince landlords to sublet properties for rental arbitrage!
What is Rental Arbitrage?
Rental Arbitrage is a way to start an Airbnb business with no money. By convincing landlords to lease you a property, you can furnish and sublease it on Airbnb and VRBO. No need for you to buy a property!
It is perfectly legal and is a proven scalable business model. In my podcast, I have spoken to various entrepreneurs doing Airbnb arbitrage full-time.
Here’s a proof! In Kelowna, Cole manages 21 listings and I’m pretty sure that he doesn’t own all the properties. He made C$841,348 in the last 12 months.
How much can I make with rental arbitrage in Kelowna?
Before you dive in and start putting out your hard-earned money on a property, it’s important to know how much profit you can make. For instance, the best neighborhood to invest in is North End, located in the V1V district, where there’s a sweet combination of both residential & commercial industries!
Kelowna is generally a year-round vacation spot because of its ski hills, serene beaches, exquisite gastronomy, and world-class vineyards. In line with this, the rental demand in this area continuously increases!
Profit & Monthly Expense in Kelowna
Based on Airbtics’ data, you can earn a whopping C$6,514 per month for a 3-bedroom apartment in North End alone. With the data provided, you can certainly tell that investing in a property in Kelowna is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| C$3,500 | C$6,514 | C$1,303 | C$1,711 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (C$6,514-C$3,500-C$1,303= C$1,711).
Startup Cost in Kelowna
Now that you have an overview of how much your monthly expense and revenue is, let’s talk about the start-up cost! How long does it take for an investor like you to get back the startup cost? Let’s take a look at this calculation:
| Total Startup Cost (Average startup cost + 2 months rent price) | Cash Return Time |
|---|---|
| C$9,000 | 5.2 months |
The average estimated startup cost (for furnishing) in Kelowna is around C$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (C$7,000). Now that we have a total startup cost of C$9,000, cash return time can be calculated by dividing this by the monthly profit (C$1,711).
Given your monthly revenue of C$1,711, it will take approximately 5.2 months time to get back the startup cost! In such a short period of time, you can already expect profit and consider starting your second unit for rental arbitrage. If this sounds promising to you, then go ahead and look at the other best areas for rental arbitrage in Kelowna!
Best Areas for Rental Arbitrage in Kelowna
Before investing in a particular area in Kelowna, you have to take a look at the top markets and number of listings to set your expectations towards success. Check out the top 3 boroughs in Kelowna ranked by their annual revenue, along with their occupancy & daily rates!
1. North End (V8E)
North End is one of the most dynamic and diverse neighborhoods in Kelowna and they have long-established industrial businesses! Here’s what you can expect in this neighborhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | C$1,850 | C$3,568 | 82% | C$230 |
| 2-bedrooms | C$2,400 | C$4,348 | 84% | C$338 |
| 3-bedrooms | C$3,500 | C$6,514 | 86% | C$580 |
According to our Airbtics Dashboard, there are more than 126 Airbnb listings with 68 condo properties and 37 one-bedroom properties in this area. The monthly revenue for most properties in North End is more than C$4,605 per month with occupancy being more than 69%.
2. Lower Mission (V1W)
This neighborhood is one of the favourites in Kelowna as it offers recreation & sports facilities such as an ice rink and indoor soccer fields! Here’s what you can expect in this neighborhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | C$1,045 | C$2,588 | 89% | C$177 |
| 2-bedrooms | C$2,425 | C$4,267 | 90% | C$283 |
| 3-bedrooms | C$3,000 | C$5,321 | 93% | C$399 |
This area has a total of 83 Airbnb listings with 7 private room properties and 17 one-bedroom properties. The monthly revenue for most properties in Lower Mission is more than C$3,741 per month with occupancy being more than 63%.
3. Downtown Kelowna (V1Y)
Considered the most diverse cultural district, Downtown Kelowna offers international restaurants, galleries, theatres, and various local shops. Here’s what you can expect in this neighborhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| Studio | C$1,215 | C$3,337 | 66% | C$163 |
| 1-bedroom | C$2,300 | C$4,060 | 86% | C$285 |
| 2-bedrooms | C$2,550 | C$5,626 | 71% | C$382 |
This area has a total of 38 Airbnb listings with 23 condo properties and 15 one-bedroom properties. The monthly revenue for most properties in Downtown is more than C$4,263 per month with occupancy being more than 59%.
Short-term rental regulations in Kelowna
To begin with, it’s certainly important to be familiar with the Airbnb rules in Kelowna to make sure that your business will run smoothly. Here are some of the short-term rental regulations and ordinances to take note of:
- Anyone operating a short-term rental in Kelowna must apply for a business licence. A homeowner or primary resident can legally rent their principal residence (or a bedroom within their residence) for periods of less than 30 days in certain zones in the city.
- Annual business licences for short-term rentals cost $345 for principal residences and $750 for non-principal residences. These fees reflect the cost of implementation and compliance oversight activities. Short-term rental operators are required to renew their licence annually and ensure all documentation is accurate and up-to-date for the new year.
- The City actively inspects short-term rentals. Operators must provide access to their short-term rental accommodation for the City to inspect, upon request.
- Short-term rentals are NOT allowed in secondary suites or carriage houses.
- Your short-term rental application is required to include a parking plan that outlines and labels each parking stall to show that there is enough room to support a short-term rental, as well as any other uses, within your property lines.
Rental Properties in Kelowna
Kelowna’s tourism economy is one of the top five industries in the region with almost 1.8 million travellers visiting annually! The city of Kelowna is planning to build more rental units to meet the high demand as there is a shortage of units available.
To run an Airbnb rental arbitrage in Canada, you can look at property websites and get a grasp of the ranging prices in Kelowna:
1. Rent Faster
2. Rent Board
How to Find Landlords for Airbnb Rental Arbitrage
Airbnb investment through rental arbitrage is one of the best strategies to have passive income. However, it could be a challenge to find a landlord that allows their property for subletting on Airbnb. You can also convince a landlord by following the rental arbitrage email template & be extra creative!
Here are ways how you can find landlords that allow Airbnb rental arbitrage:
- Real Estate Websites
Renters in the digital world who are looking for properties online can easily connect with landlords. Some of the most recommended online real estate websites which allow you to filter by city, state, or ZIP code are:
However, you can also find apartment & condominium properties online in the following websites:
Search Engines & Marketplaces
There are numerous property owners who are leasing their properties and you can easily find them on Google & online marketplaces. Check out some of the most recommended marketplaces:
- Craigslist allows renters to specifically state what kind of property they are looking for. You can try typing in ‘landlords allowing Airbnb’ or ‘sublease property in (city name)’ and try other keywords to get you on the right track.
- Facebook marketplace has a vast community of landlords & renters, so you can try joining the right groups to lead you on the right path. Here are some of the finest Facebook groups that you can join:
Communicate with Landlords
If you are currently renting a space or know someone who is, then it’s also recommended to speak with them. Start by asking if there are vacant rooms or properties and let them know about your intentions of putting them up for rental arbitrage. They might also be able to recommend neighbors or local friends who are also interested in this idea!
