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 Victoria, 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 Victoria, Angela manages 24 listings and I’m pretty sure that she doesn’t own all the properties. She made C$970,541 in the last 12 months.
How much can I make with rental arbitrage in Victoria?
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 James Bay, located in the V8V district, where some of the popular tourist destinations are situated.
This neighborhood is attractive for tourists and locals who like to be surrounded by a combination of nature, parks, and museums! During the summertime, many vacationers try their carriage tours and cruise ships at Ogden Point, hence the rental demand at peak!
Profit & Monthly Expense in Victoria
Based on Airbtics’ data, you can earn a whopping C$5,335 per month for a 3-bedroom apartment in James Bay alone. With the data provided, you can certainly tell that investing in a property in Victoria is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| C$3,300 | C$5,335 | C$1,067 | C$968 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (C$5,335-C$3,300-C$1,067= C$968).
Startup Cost in Victoria
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$8,600 | 9 months |
The average estimated startup cost (for furnishing) in Victoria is around C$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (C$6,600). Now that we have a total startup cost of C$8,600, cash return time can be calculated by dividing this by the monthly profit (C$968).
Given your monthly revenue of C$968, it will take approximately 9 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 Victoria!
Best Areas for Rental Arbitrage in Victoria
Before investing in a particular area in Victoria, 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 Victoria ranked by their annual revenue, along with their occupancy & daily rates!
1. Downtown (V8T)
Downtown Victoria is the business centre of Greater Victoria and is known for its main attraction, the BC provincial legislative buildings! 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$1,350 | C$3,692 | 89% | C$163 |
| 1-bedroom | C$1,700 | C$4,614 | 92% | C$290 |
| 2-bedrooms | C$1,564 | C$3,741 | 89% | C$298 |
According to our Airbtics Dashboard, there are more than 438 Airbnb listings with 299 condo properties and 256 one-bedroom properties in this area. The monthly revenue for most properties in Downtown is more than C$4,753 per month with occupancy being more than 86%.
2. Fairfield (M6K)
Bounded by James Bay, Fairfield is a popular neighborhood for young families because of its amenities, parks, and schools. 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$1,240 | C$3,084 | 89% | C$215 |
| 1-bedroom | C$1,888 | C$3,517 | 92% | C$212 |
| 2-bedrooms | C$2,750 | C$4,200 | 78% | C$457 |
This area has a total of 61 Airbnb listings with 7 condo properties and 24 one-bedroom properties. The monthly revenue for most properties in Fairfield is more than C$4,598 per month with occupancy being more than 85%.
3. James Bay (V8V)
If you are looking to target various kinds of tourists and prefer long-term profitability in the business, this area might be the best one to invest in! The neighborhood of James Bay is home to the Fisherman’s Wharf and Royal BC Museum which attracts a handful of vacationers. 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$2,400 | C$3,084 | 89% | C$215 |
| 2-bedrooms | C$2,600 | C$5,086 | 82% | C$320 |
| 3-bedrooms | C$4,500 | C$7,393 | 87% | C$502 |
This area has a total of 73 Airbnb listings with 19 private room properties and 31 one-bedroom properties. The monthly revenue for most properties in James Bay is more than C$3,734 per month with occupancy being more than 86%.
Short-term rental regulations in Victoria
To begin with, it’s certainly important to be familiar with the Airbnb rules in Victoria to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- You are NOT eligible if the short-term rental unit is a self-contained dwelling suite, except for when a renter rents it out on occasion with the owner’s permission.
- It is required to have a Short-Term Rental Business Licence. The price for a principal residence is $150, while all other types of short-term rentals are $1,500.
- If you are denied a short-term rental business licence, you may request that Council reconsider your business licence application. You will have an opportunity to submit your reasons for reconsideration and Council may decide to either uphold or deny your appeal for a business licence.
- You are eligible if your short-term rental unit is your principal residence.
- The whole home on occasion (for example, when you are on vacation);
- Up to two bedrooms in your home with a shared kitchen and living spaces.
- You are eligible if you own a legally non-conforming unit where transient accommodation was a permitted use. Changes to the Zoning Bylaw now prohibit short-term rentals in residential units where “transient accommodation” was a permitted use in zoning. However, properties may be considered legally non-conforming under this use if they have been operating a short-term rental in a transient accommodation zone prior to the zoning changes, and comply with strata regulations and operating requirements.
Rental Properties in Victoria
Victoria is known as the City of Gardens and boasts its Inner Harbour & museums. According to local news, rental growth is expected to rise up to 10% in Victoria!
To run an Airbnb rental arbitrage in Canada, you can look at property websites and get a grasp of the ranging prices in Victoria:
1. Rentals Ca
2. Zumper
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!
