Thinking of buying a Canmore Vacation Property? – Use this guide to help you choose a management structure that matches your goals.
Over the past 10 years, Canmore, Alberta, has become one of the most sought after vacation destinations in Canada and vacation rentals are in high demand. The opportunity for adventure, fine cuisine, fantastic events and scenic beauty are in abundance. All the key elements to a good investment can be found here, including a low vacancy rate, financial appreciation factors, solid cash-flow opportunities and of course the lifestyle rewards. In this guide, I aim to show you the options available to you as an investor and some of the important considerations you need to make to make this venture spectacular and profitable.
There are multiple property management options for Canmore vacation rental owners.
Long term rental companies in Canmore:
If you are not concerned with generating cash-flow and don’t plan on utilizing the property over the duration of the contracted period, this structure can offer a low stress option to help you benefit from an appreciating market. Rental rates are slightly higher than the provincial averages, although purchase prices are also higher unless you have owned the property for 10 years or have a sizeable down payment. Peka & Asset West are the big players in the Bow Valley and rent their clients properties out on a monthly/yearly basis with fees from 10-15% of gross revenue.
Short term management companies:
By comparison, management fees range anywhere from 25-35% of gross revenue, although this is balanced out by the higher margin returns that nightly rentals provide.
There are many new companies trying to get into this market, so it is best to do your homework before trusting your valuable asset to one of them. Look for those that advertise through property listing sites such as VRBO, AirBNB and Flipkey.
Hotel Rental Pool structures:
This option has the highest cost of all with charges of 45-55% of gross margin, although there is the flexibility for owners to use the unit as much as they want and supplement their expenses on the property while away. The problem is that you only share in the profits of the rental pool and it is often managed by a rental pool management company distinct from the hotel property management company. This can mean limited control and a large cut out of your profits.
This is definitely the most time consuming option, but it can be financially rewarding if you take it upon yourself to learn the ropes. I recommend that my investment clients consider this the same as building a business and advise them to not underestimate the workload involved in building it’s infrastructure. This method is great for owners that have flexible schedules and are often in front of their computers to communicate with prospective renters.
If you decide to enter the world of self management, there are many considerations to make about costs, listings and protecting yourself from clients. Before you can do that, however, you need to take some important first steps.
Firstly, you need to define your goals in this business. What you intend to accomplish with your Canmore vacation rental? How many rental weeks you intend to personally use annually. What are your financial objectives beyond making a profit? The next step is to ensure that the property you list complies with all of Canmore’s regulations.
Look into zoning, homeowner association bylaws, business licenses, and sales taxes to understand the bigger picture.
The costs involved in establishing a successful vacation rental.
It is one thing to know your financial goals from renting out a Canmore investment, but you also have to consider all the outgoing costs of getting that property in the perfect condition and making it profitable.
You will need to find a platform that will make your property visible to potential renters, facilitate its bookings and collect the funds. Each company has its own fee structure and costs, from percentage charges per booking (7-12%) to yearly advertising fees ($300- $1300), but VRBO, AirBnB & FlipKey are all worth consideration.
The cleanliness of your vacation home could make the difference between a satisfied, happy customer and a bad review online. A trusted cleaner can also assist in assessing the unit upon clients leaving, change the codes on the keypad/lockboxes and prepare for the next booking. Most owners add this cost into their rental quotes so it does not come directly out of their profits. Contact me for recommendations.
Renovations & Entertainment:
You may need to do some renovations to your home to get it up to the standard that renters expect. It may start with some repainting, a reliable internet connection and some new furniture but there are finer details to think about, such as providing adequate utensils in the kitchen (double the maximum number of guests your condo can hold), quality bedding and towels, a first aid kit and other equipment to use during their visit. What about snow gear for outdoor sports, bikes, a national park pass or gaming equipment for the kids?
Aside from the initial renovations, there will be ongoing maintenance costs to consider.
Create a digital Rolodex full of different, local tradesman that you can rely on in an emergency, such as a handyman, painter, locksmith, plumber and electrician.