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 Ottawa, 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 Ottawa, Lisa manages 25 listings and I’m pretty sure she doesn’t own all the properties. She made C$667,178 in the last 12 months.
How much can I make with rental arbitrage in Ottawa?
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 Lower Town, located in the K1N district, which is generally home to affluent young professionals in Ottawa.
Since this neighborhood is centrally located and accessible to tourist areas, it has had an exceptional rental demand over the years!
Profit & Monthly Expense in Ottawa
Based on Airbtics’ data, you can earn a whopping C$2,907 per month for a 2-bedroom apartment in Lower Town alone. With the data provided, you can certainly tell that investing in a property in Ottawa is profitable!
Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
---|---|---|---|
C$1,825 | C$2,907 | C$581 | C$501 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (C$2,907-C$1,825-C$581 = C$501).
Startup Cost in Ottawa
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$5,650 | 11 months |
The average estimated startup cost (for furnishing) in Ottawa is around C$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (C$3,650). Now that we have a total startup cost of C$5,650, cash return time can be calculated by dividing this by the monthly profit (C$501).
Given your monthly revenue of C$501, it will take approximately 11 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 Ottawa!
Best Areas for Rental Arbitrage in Ottawa
Before investing in a particular area in Ottawa, 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 Ottawa ranked by their annual revenue, along with their occupancy & daily rates!
1. Vanier (K1L)
This neighborhood is one of the francophone areas in Ottawa and is also the least expensive neighborhood! Rental property investors who are looking for cash flow will discover great opportunities in Vanier. 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$1,040 | C$1,793 | 94% | C$109 |
2-bedrooms | C$1,600 | C$2,289 | 83% | C$173 |
3-bedrooms | C$2,023 | C$3,064 | 90% | C$173 |
According to our Airbtics Dashboard, there are more than 54 Airbnb listings with 40 entire home properties and 20 one-bedroom properties in this area. The monthly revenue for most properties in Vanier is more than C$1,580 per month with occupancy being more than 60%.
2. Byward Market (K1A)
Considered as Ottawa’s entertainment centre, Byward Market consists of affordable properties and a vibrant neighborhood! The median rent for a two-bedroom apartment in this area is also 26% higher than the entire city of Ottawa. 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$1,675 | C$2,488 | 72% | C$127 |
2-bedrooms | C$1,969 | C$3,009 | 78% | C$153 |
3-bedrooms | C$1,900 | C$3,336 | 63% | C$191 |
This area has a total of 54 Airbnb listings with 7 condo properties and 22 one-bedroom properties. The monthly revenue for most properties in Byward Market is more than C$1,478 per month with occupancy being more than 51%.
3. Lower Town (K1N)
Aside from this neighborhood’s low crime rate, it also has inexpensive properties and has barely tracked inflation. 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$1,400 | C$2,628 | 74% | C$128 |
2-bedrooms | C$1,825 | C$2,907 | 78% | C$188 |
3-bedrooms | C$2,300 | C$3,264 | 82% | C$217 |
This area has a total of 118 Airbnb listings with 15 condo properties and 24 two-bedroom properties in this area. The monthly revenue for most properties in Lower Town is more than C$1,662 per month with occupancy being more than 62%.
Short-term rental regulations in Ottawa
To begin with, it’s certainly important to be familiar with the Airbnb rules in Ottawa to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- Homeowners can offer short-term rentals in their own home (principal residence).
- Renters can offer short-term rentals in the rental unit that is their principal residence unless prohibited by their landlord.
- Condominium and housing co-operative unit owners can offer short-term rentals in their principal residence unless prohibited by their condominium corporation or housing co-operative
- Rural homeowners and cottage owners can offer “cottage rentals” with a separate permit. This must be separate from any permit for their primary residence.
- Short-term rental hosts are only able to list (market or book) a short-term rental through short-term rental platforms registered with the City.
- Must include the City-issued host permit number and the maximum number of overnight guests, as noted on the host permit, on all listings
Rental Properties in Ottawa
To run an Airbnb rental arbitrage in Canada, you can look at property websites and get a grasp of the ranging prices in Ottawa:
1. Point 2 Homes
2. Zillow
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!