Real Estate Talk: Buying
a property for Airbnb
Purchasing for the purpose of Airbnb in light of COVID-19
By Joseph Marovitch
When I decided to write about Airbnb, I thought it was a good idea since so many people are asking me to find a property in municipalities that allow Airbnb of which there are few on the island of Montreal. Few areas allow Airbnb because allowing transient boarders in a building where permanent residents live tends to cause disturbances to the permanent residents, and the civil code states that permanent tenants are allowed to have peaceful and joyful use of the residence they live in.
However, individual single dwellings and buildings used solely for Airbnb, which do not have permanent residents, are usually okay for temporary short-term rentals.
Airbnb was a consideration as a topic before the COVID-19 outbreak. Now that Canada is not allowing foreigners into the country, the US is closing their borders and we all must stay home, Airbnb may not be such a good investment anymore, or at least not for the next 3 to 12 months. It may be a very good time to purchase property for Airbnb if you can hold onto the property, without income, until the crisis passes.
… individual single dwellings and buildings used solely for Airbnb, which do not have permanent residents, are usually okay for temporary short-term rentals.
The Quebec government recently passed emergency measures to combat the spread of the coronavirus. Some of these measures include the closing of bars, restaurants, movie theatres, libraries, museums and schools. In this time of “social distancing” or isolation, as people stay home from work and school, the country will experience a massive hit to the economy. Revenues will decrease across the board as retailers receive fewer patrons. Wholesalers will lose revenue as supply chains with new inventory slow to a halt.
For those who do not have the funds to invest – and many are losing money as the capital markets across the world are declining – now is a time to consider preparation for survival, financially and physically.
For those who have funds to invest, there is an opportunity, as in any war or crisis. On the assumption the crisis will pass in a few months, now is the time to keep a close eye on the real state market. Many opportunities to purchase at low prices will arise. As the economy waivers and income revenue decreases, consumer consumption will decrease, demand will decrease. In economics 101 the rule is the higher the demand, the higher the price, the lower the demand, the lower the price. There will be a decrease in single home purchases. However, there will possibly be opportunities to purchase multi-residential income properties at reduced prices over the next few months.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Be cautious and stay healthy!
Next article: When is a good time to sell and when is a good time to hold?
State of the market
This past week the Federal government reduced the prime lending rate even lower to ¾ % in an effort to reduce damage to the economy from the COVID-19 crisis. If you have funds to purchase property, you will likely never see such a low lending rate for a mortgage again. Therefore go and get a pre-approval for a mortgage today. If you currently have a variable mortgage, your payments just dropped significantly.
For now, those who are not fully aware of the world situation or think this is not a serious situation, the lowering of lending rates should encourage these people to go out and buy today.
‘If you have funds to purchase property, you will likely never see such a low lending rate for a mortgage again. Therefore go and get a pre-approval for a mortgage today.’
For those with money to invest and have a handle on the crisis, it may be a good time to buy a month or two later when prices are down.
For the rest who currently own property and have no intention to sell, holding is a great option as there should be a significant bounce back once the crisis passes.
Should the crisis not pass and is prolonged, your last concern should be investing in real estate!
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or email@example.com