Last updated on June 22nd, 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 this article, we featured the entire process of Airbnb rental arbitrage in Montreal, 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 Montreal, Samuel manages 73 listings and I’m pretty sure he doesn’t own all the properties. He made C$1,388,440 in the last 12 months.
How much can I make with rental arbitrage in Montreal?
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 Rosemont-Petite Patrie, located in the H2G district with plenty of entertainment & business establishments.
Since this neighborhood is situated in the centre-east of the city and it’s considered of of the most attractive neighborhoods here, it’s mostly preferred by young professionals and small families & has incredible rental demand!
Profit & Monthly Expense in Montreal
Based on Airbtics’ data, you can earn a whopping C$3,741 per month for a 3-bedroom apartment in Rosemont-Petite Patrie alone. With the data provided, you can certainly tell that investing in a property in Montreal is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| C$1,564 | C$3,741 | C$748 | C$1,429 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (C$3,741-C$1,564-C$748 = C$1,429).
Startup Cost in Montreal
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$5,128 | 4 months |
The average estimated startup cost (for furnishing) in Montreal is around C$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (C$3,128). Now that we have a total startup cost of C$5,128, cash return time can be calculated by dividing this by the monthly profit (C$1,429).
Given your monthly revenue of C$1,429, it will take approximately 4 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 Montreal!
Best Areas for Rental Arbitrage in Montreal
Before investing in a particular area in Montreal, 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 Montreal ranked by their annual revenue, along with their occupancy & daily rates!
1. Rosemont-Petite Patrie (H2G)
Rosemont-Petite Patrie is becoming an alternative to investors because of its underpriced amenities. The majority of small families and young professionals generally prefer this borough because of its quiet and peaceful environment. 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$1,032 | C$2,068 | 91% | C$114 |
| 2-bedrooms | C$1,292 | C$2,921 | 94% | C$176 |
| 3-bedrooms | C$1,564 | C$3,741 | 89% | C$298 |
This area has a total of 343 Airbnb listings with 250 entire home properties and 186 one-bedroom properties in this area. The monthly revenue for most properties in Rosemont-Petite Patrie is more than C$1,795 per month with occupancy being more than 77%.
2. Downtown Montreal (H3G)
This area has plenty to offer to property investors: from shopping centres, tourist attractions, 3 well-known universities, and a pair of major sports stadiums! 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$1,461 | C$2,225 | 84% | C$144 |
| 2-bedrooms | C$1,965 | C$3,137 | 77% | C$203 |
| 3-bedrooms | C$2,550 | C$4,019 | 68% | C$285 |
According to our Airbtics Dashboard, there are more than 702 Airbnb listings with 442 entire home properties and 332 one-bedroom properties in this area. The monthly revenue for most properties in Downtown Montreal is more than C$2,109 per month with occupancy being more than 63%.
3. The Old Port (Vieux-Montreal) (H2Y)
This neighborhood is a commercial real estate with plenty of rental opportunities. 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$1,725 | C$2,971 | 92% | C$259 |
| 2-bedrooms | C$2,105 | C$4,662 | 77% | C$378 |
| 3-bedrooms | C$2,395 | C$5,396 | 77% | C$395 |
This area has a total of 21 Airbnb listings with 7 one-bedroom properties and 4 two-bedroom properties. The monthly revenue for most properties in The Old Port is more than C$2,995 per month with occupancy being more than 74%.
Short-term rental regulations in Montreal
To begin with, it’s certainly important to be familiar with the Airbnb rules in Montreal to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- To rent accommodations to tourists in Montréal for 31 days or fewer, you need an establishment number and a classification certificate issued by the Corporation de l’Industrie Touristique du Québec.
- It is required to put your establishment number on any advertisement to rent your space, whether online or offline.
- Contact your permits counter to find out if your home is in an authorized area. A commercial or professional activity occupancy permit can then be issued.
- If you are renting out your primary residence, you are not required to get a certificate of classification, unless you wish to do so. Nevertheless, other restrictions may apply depending on your municipalities regulations.
- In Montreal, short-term tourist rentals are regulated by boroughs. You will need to find out if you are authorized to operate a tourist home in your borough and what the regulations are based on the city’s webpage.
Rental Properties in Montreal
Since Montreal has plenty of foreign students, business professionals, and international immigrants in the city, there is a relatively strong rental demand for rentals.
To run an Airbnb rental arbitrage in Canada, you can look at property websites and get a grasp of the ranging prices in Montreal:
1.Rentals
2. Centris
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!
