Green Mortgage Quarterly Newsletter

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ISSUE 13 • WINTER 2022/23 Quarterly Newsletter KYLE GREEN’S GAB CANADA’S MARKET FORECAST HOW TO CALCULATE CASHFLOW BUYING DURING A RECESSION SHORT–TERM RENTAL, MEDIUM–TERM RENTAL, LONG–TERM RENTAL: What Is Most Profitable, What Are the Expenses, What Is the Best Platform, and What Are the Pros & Cons
“Advice is like the snow. The softer it falls, the longer it dwells upon and the deeper it sinks into the mind.”
Kyle Green Owner Max Jurock Systems/Operations Nitin Vats General Manager Geoff Shoji Underwriting Manager Shawna Gaudreau Executive Assistant/Bookkeeper Ami Arandi Commercial and Private Lending Underwriter Jason Cattermole Underwriter Sharon Shen Underwriter Tasha McKenzie Underwriter Michael Browne Account Manager Alex Gattey Account Manager Chris Clark Jr. Account Manager Lisa Bridal Documents Manager Lee–Ann Ong Documents Manager Kris McFarlane Copywriter Jenni Loppnow Graphic Designer THE TEAM 1. kyle green’s gab 2023 Canadian Housing Market Forecast 6. webinars 7. our latest news Client Appreciation Review and Win 9. spotlight Green Mortgage Team Members 11. what is a short–term rental property and is it a good investment? 15. what are medium–term and long–term rentals and are they good investments? 17. airbnb and vrbo Which platform is better for your short–term rental? 21. calculating cashflow for real estate. Step by step 23. buying a house during a recession IN THIS ISSUE

Kyle Green’s Gab

2023 Canadian Housing Market Forecast

The Bank of Canada increased its benchmark lending rate to 4.25%, and mortgage rates will soon follow suit. This has caused a wave of panic in the Canadian housing market, with sales dropping nearly 30% and prices falling by 4.5%.

However, it may not be all doom and gloom for Canadian homeowners—I believe we can look forward to steep price drops over the next few years. I predict that average home prices could decrease by up to 20% by 2023!

Provincial Housing Forecast for 2023

The pandemic has caused housing prices across Canada to vary widely. The Maritimes, Ontario, and British Columbia have experienced the most significant price increases and are expected to have the highest price adjustments. In Quebec, prices have decreased more slowly but are predicted to drop 17% by the end of 2023.

Alberta, Saskatchewan, and Newfoundland— Labrador’s oil production will benefit from post–pandemic tailwinds, leading to increased house sales and prices in these provinces. Manitoba is expected to be more stable than other provinces due to its diversified economy and limited supply–demand imbalances.

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Kyle

WHICH MARKETS TO WATCH IN 2023

Vancouver

The Vancouver real estate market is still one of the best in Canada regarding investment and development opportunities. Rents are expected to stay high because there is a high demand for rentals and not much new construction. At the same time, office vacancies are going down, and rents are going up thanks to the technology sector’s growth. Industrial vacancy is also at an all–time low with a 0.1% rate, leading to increasing rent prices.

Even though the number of home sales is supposed to drop anywhere from 25–35% depending on whom you talk to, the sale prices are expected to only drop by 5%. On the flip side, with the interest rates increasing substantially over the past year, this could also spark an increase in people wanting to sell their homes or investment properties. People that need to renew their mortgage or have a variable rate mortgage are put into a financially awkward situation because, over the last several years, the interest rates have been the lowest we have ever seen.

Vancouver is still one of the best cities in Canada when it comes to rental properties. This is because the vacancy rate for both commercial and residential are some of the lowest in North America.

Montreal

The Canadian Bank of Commerce (CBoC) predicts that Montreal’s economy will grow at 2.7% in 2023, and its unemployment rate is expected to drop to 5.3%. Developers are focusing on rental housing and condos because these markets are strong. They are also taking advantage of other opportunities, such as transit–oriented development and ways to keep costs down. Financing challenges remain a concern for many projects.

The office and industrial markets have remained competitive, with vacancy rates at 0.6% and 64% year–over–year rent increases, respectively. Large tenants are debating whether to downsize or sublease space as landlords of Class B and C offices seek tenants before investing in revitalization projects.

Calgary

Calgary is an attractive location for real estate investors due to its 2,600 new high–paying job commitments, relatively low real estate prices compared to Vancouver, and booming oil industry. Recently, De Havilland Aircraft of Canada announced it was building a manufacturing and maintenance facility, and India–based tech giant Infosys committed to 1,000 jobs in the city. Calgary’s strong job market, lower taxes, and business–friendly environment make it an ideal investment opportunity for 2023.

Edmonton

Toronto

The Toronto, real estate market, is expected to remain popular with survey respondents due to the region’s strong population growth projections and economic growth. The Bank of Canada’s 2022 major city insights report estimates that the area’s gross domestic product will increase by 3.5% in 2023, albeit slightly lower than its estimated 3.8% jump in 2022.

The Toronto real estate market’s short-term outlook is mixed, with fewer preconstruction sales and residential development charges set to rise by 46% by 2024. The office market is also uncertain due to tenants waiting for return–to–office strategies. Industrial assets remain in solid demand despite concerns about a potential economic downturn.

Edmonton is set to experience strong economic growth in the next several years, with a forecasted annual GDP growth rate of 3.8–5.6% by 2023. The City of Edmonton is looking to promote urban density by imposing higher taxes on properties with low–density levels in favor of multiunit buildings. This shift towards a more mixed–use development model is part of the current trend sweeping through the city. Additionally, the industrial sector has been recovering, and plenty of warehouse space is available for tenants who need additional storage space to meet rising demands.

Ottawa

With the second phase of the Confederation Light–Rail Transit (LRT) system, more people are interested in living near LRT stations, which makes Ottawa more appealing to investors and developers. On the commercial side, there is uncertainty around leasing agreements between property owners and the federal government and rising rents due to solid tenant demand. With an unemployment level of 0.9%, Ottawa’s industrial sector has seen steady demand from tenants, which has translated into rising rents. Overall, Ottawa continues to show signs of growth and optimism for its future.

2  | Green Mortgage Newsletter | Issue 13 Winter 2022/23 Here is what the current average prices are for rentals in Vancouver: # bedroomsunfurnishedfurnished 1$2,500/month$3,100/month 2$3,600/month$4,800/month 3$4,200/monthS5,800/month

Halifax

The Canadian Bank of Commerce forecasts a slight increase in Halifax’s economic growth to 2.6% in 2023 due to a surge in interprovincial migration over the past two years, which was 10 times higher than the previous decade’s average.

The rental market is in high demand, leading to affordability challenges. In response, the provincial government is looking into ways to speed up development approval times in Halifax. CMHC predicts that rent prices may ease by 2024. Meanwhile, local rent control measures make it difficult for tenants to move, and more multi–residential housing is needed.

The Halifax industrial market is thriving, with Colliers reporting a record–low vacancy rate of 1.8% in the second quarter of 2022. This positive trend extends to other parts of the Atlantic region and could be bolstered further by new energy projects such as LNG terminals and hydrogen facilities.

Quebec City

Quebec City’s economy is improving, with rental building activity being one of the primary sources of new residential units. Despite this, there are challenges, such as an excess of new units available for rent in the near future and concerns about the tram line project. There is also a shortage of skilled workers and a lack of land available for commercial real estate development.

Landlords are offering incentives to tenants to stay put, and developers are investing in new projects. Overall, Quebec City is experiencing a positive economic outlook despite certain obstacles.

Winnipeg

The Winnipeg economy is projected to grow at an impressive rate, with home prices remaining more affordable than in many other major metropolitan centers. The downtown Class A vacancy rate stands at 14.5%, and suburban Class A vacancies have decreased slightly to 9.4%.

Meanwhile, the industrial market has remained stable, with low vacancies since 2016, and office demand remains strong. Overall, the outlook for Winnipeg looks positive.

Saskatoon

The Conference Board of Canada (CBoC) forecasts economic growth in Saskatchewan of 5.3 percent in 2022 and 4.1 percent in 2023 because of the increased global demand for minerals and other resources. The Canadian Real Estate Association (CREA) predicts that house prices will continue to go up in 2023 and that there will be more demand for more affordable properties, such as townhomes and condos.

2023 MORTGAGE TRENDS

The Bank of Canada’s first–rate hike in March caused a slowdown in home sales, which accelerated slightly in September due to higher borrowing costs disproportionally affecting the fixed–rate space. Homebuyers responded by opting for variable–rate mortgages instead, making it easier to qualify.

Many homeowners have seen their mortgage payments skyrocket with the Bank of Canada’s continuous rate hikes. In some cases, borrowers with closed variable rate mortgages find themselves in trigger rates, where the principal repayment element is reduced to zero, and amortizations increase while payments still go up.

Even those with fixed–rate mortgages are not entirely safe over the next five years, as they come up for renewal every day—a cause for concern for any homeowner who has been paying attention. However, an unpleasant surprise may await those who have yet to be tracking when it comes time to renew.

Despite the upward trend of mortgage rates, I’m still very optimistic about the housing market in Canada. According to Statistics Canada, our population has grown by more than 700,000 in the past year alone, and over 500,000 people in Canada turn 30 each year—meaning there’s an ever–increasing demand for housing. Also, nearly 500,000 immigrants are expected to come to Canada each year for the next three years.

With rising mortgage rates putting pressure on buyers, some of that demand is likely to shift toward the rental market. This means those who got into the property market early are unlikely to feel much impact from higher interest rates or a decrease in property values.

However, those who bought at elevated prices during this time and renters could face a more challenging road ahead in the coming years.

If you have any further questions, comments, or concerns please contact my team who are on top of all the changes in the housing market and would be happy to answer any of your questions.

ARE YOU ON OUR EXCLUSIVE WEBINAR LIST? WE’LL BRING THE REAL ESTATE KNOWLEDGE AND ACTION; YOU’LL BRING THE EXTRA QUESTIONS AND POPCORN
WEBINARS:

WEBINARS 2023 WITH KYLE GREEN

On–Demand Or Listen Live

DON’T MISS THESE TRENDING TOPICS

Don’t Miss These Trending

Every month we listen to your biggest questions and dive into a different real estate topic.

If you’re a Real Estate newbie, or a budding investor, our webinars are THE place to be. It’s the perfect chance to build your knowledge and get better prepared for your property–based future.

Every month we listen to your biggest questions

Held by Canada’s king of Real Estate finance and the owner of Green Mortgage—Kyle Green. Open for Q and A, it’s not every day you get to hear top advice from industry leading experts.

Held by our resident king of real estate and the owner of Green Mortgage—Kyle Green. Open for Q and A, it’s not every day you get to hear top advice from industry leading

Plus…you’re guaranteed a front row seat if you sign up. Spaces are always limited for these exclusive events, so make sure you sign up early.

2023 WE LOOK AT:

Plus…you’re guaranteed a front–row seat if you sign up. Spaces are always limited for these exclusive events, so

Webinars are limited to 500 attendees. Please register in advance by clicking on each webinar below.

February 1st How to Manage Cashflows in a High Interest Rate Environment

Click here to register

March 1st First–Time Home buyers

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April 5th Real Estate Market Roundtable

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May 3rd Why Invest in Real Estate

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June 7th How to Purchase your First Five Investment Properties

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July 5th How to Purchase 5+ Investment Properties

Click here to register

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Lisa and Kyle were amazing to work with, they made the mortgage approval process easy and seamless. I am so happy to have my new home. I would highly recommend them to my friends and family.

Professionalism. Quality. Responsiveness. Had a second great experience with Michael and the Green Team, and Michael went out of his way to get us a better rate.

CLIENT APPRECIATION REVIEW AND WIN

At Green Mortgage, we understand the value of customer feedback and truly appreciate our clients for leaving Google reviews with their honest opinions. That’s why every week, we randomly pick a client who has left us a review from our pool of reviewers and reward them with a $100 pre–paid Visa! We don’t just do this out of the goodness of our hearts—we also use these reviews in monthly meetings to celebrate when we have done great jobs or to learn what we can do better.

Every review helps shape Green Mortgage’s growth and development, ensuring that all customers get the best service possible. Our team works hard every day, and it means a lot to us when our clients take the time to provide feedback. We want everyone to feel heard, which is why we reward those who leave reviews each week.

We’d love to hear your feedback, and the team at Green Mortgage will use it to keep improving our services. Plus, you could even be chosen at random for our weekly draw!

So don’t wait—leave a review today!

Really thankful that Tasha and Lisa helped my wife and I out in this crazy economy by finding us a mortgage promptly and worked through the process efficiently.

| OUR LA TEST NEWS |
So, if you have ever worked with us, don’t forget to leave an honest review—you could be rewarded with a $100 pre–paid Visa!
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Nitin Vats

General Manager

This month, we would like to shine a spotlight on a few more members of our Green Mortgage team! Without each and every person, our team wouldn’t be as wonderful, and we wouldn’t offer you all that we do. While many of you know Kyle as the face of Green Mortgage, there’s a big team behind him all working incredibly hard, and they’re the reason why GM is in the top 0.1% of Canadian brokerages.

Nitin Vats is the General Manager of Green Mortgage, leading our top-notch sales team to success with his coaching and guidance. He has experience in business development, customer satisfaction, and expansion strategies that have developed our retail, residential, and commercial businesses.

Before joining us here at Green Mortgage, Nitin worked in the finance industry since the mid–2000’s holding various management positions with reputable lenders. Before that, he even managed Guest Relations at Dubai’s luxurious Burj Al Arab Hotel, where he improved efficiency and increased profits for the numerous departments he worked with.

When not spending quality time with his family, you can find Nitin traveling worldwide— embracing life and inspiring everyone he meets. His enthusiasm is contagious, and his determination to strive for the best is an inspiration!

Chris Clark, a UBC Sauder graduate, with a specilization in accouting, has joined Green Mortgage as our Business Analyst. His knowledge of problemsolving and finance background makes him invaluable when finding solutions to complex issues. He is passionate about learning different parts of the business and takes great care when analyzing the market.

Chris loves exploring new ideas and initiatives that can help drive better outcomes for himself and the company. Chris is a whiz at data–driven decisions. His knack for spotting patterns and making informed choices is truly impressive.

Chris Clark Business Analyst

WHAT IS A SHORT–TERM RENTAL PROPERTY, AND IS IT A GOOD INVESTMENT?

A short–term rental property is an attractive investment opportunity that can generate consistent income and provide excellent returns. Unlike traditional long–term rentals, short–term rentals are rented out on a nightly or weekly basis, allowing investors to capitalize on the transient nature of travel and tourism.

Investing in a short–term rental comes with its own challenges but offers excellent potential for those looking for an alternative form of real estate investing.

What Is a Short–Term Rental Property?

A short–term rental property is a type of real estate investment leased to guests for a short period, typically a few days to a few weeks. Short–term rentals are often furnished with cooking utensils, linens, cable, and internet service, making them perfect for travelers and vacationers.

Examples of short–term rental properties include vacation homes, apartments, lane–way homes, and even individual rooms within a property. The property is managed by the owner or a property management company, and guests book and pay for their stays through online platforms or directly with the property owner.

Why Should I Buy a Short–Term Rental Property as an Investment?

1. High potential for profitability: Short–term rentals typically have higher nightly rates and occupancy rates than long–term rentals, which can be very lucrative. 30–day or more furnished rentals work with most strata companies and are perfect for people traveling for work or who have been put up by their insurance company because of a fire or flood.

2. Flexibility in property management: With a short–term rental, you can manage the property yourself or hire a professional property management company to handle bookings and guest relations. This allows you to tailor the management style to your preferences and goals.

3. Diversification of investment portfolio: Adding a short–term rental property to your investment portfolio can help diversify your income streams and reduce the risk of relying on a single source of income.

4. Location-based revenue: Short–term rental properties are often located in popular tourist destinations or urban centers, where demand for vacation rentals is high. This can lead to consistent income throughout the year.

5 Opportunity for personal use: If you purchase a short–term rental property in a location you enjoy visiting, you may be able to use the property for personal vacations when it is not being rented out. This can provide additional value and enjoyment from the investment.

6 Increase in property value: Depending on where you are buying, when the value of the property increases, so does your equity.

How Do I find a Profitable Short-Term Rental Property?

To find a profitable short–term rental property, consider the following factors:

1 Location: Short-term rental properties are often located in popular tourist destinations or urban centers, where demand for vacation rentals is high. Look for properties in areas with a high concentration of tourist attractions, restaurants, and other amenities that will attract guests.

2 Property type and size: Different property types and sizes appeal to different types of travelers, so consider the kind of guests you are trying to attract when choosing a property. For example, a small studio or one-bedroom apartment may be suitable for solo travelers or couples. A larger home or vacation rental may be more appealing to families or groups of friends.

3. Amenities: Short-term rental properties should be equipped with the amenities that travelers are looking for, such as a fully equipped kitchen, comfortable beds and linens, and high-speed internet. Consider the type of amenities guests likely value in your area and ensure that the property you are considering has these features.

4. Price: The property’s price should be competitive with similar properties in the area. Research the local rental market and compare the cost of the property you are considering with similar properties to ensure that it is priced appropriately.

5. Pr operty management: Consider whether you will manage the property yourself or hire a professional property management company. A property management company can handle bookings and guest relations, freeing up your time and allowing you to focus on other aspects of your investment.

6. Talk to a Realtor: Realtors are experts at finding these types of properties because of their popularity and how lucrative they are. They will have all the statistics and comparables you need to find the best available property.

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What Are all the Expenses of Owning a Short–Term Rental Property

Owning a short–term rental property can be a profitable investment. Still, it is essential to understand all the expenses involved to make informed decisions about the property. Some of the costs associated with owning a short-term rental property include the following:

Purchase price

The initial purchase price of the property is the most significant expense associated with owning a short–term rental. This cost will vary depending on the property type, size, location, and other factors.

Closing costs

In addition to the purchase price, several closing costs are associated with buying a property, such as attorney fees, title insurance, and transfer taxes. These costs can add up, so it is important to factor them into your budget when purchasing a property.

Financing costs

If you are financing the purchase of the property with a mortgage, you will need to pay interest and other fees associated with the loan. This can add to the overall cost of owning the property, so it is important to consider the terms of the loan and the impact on your cash flow.

Property taxes

As a property owner, you will be responsible for paying property taxes. The taxes will depend on the property’s value and the area’s tax rate.

Insurance

Short–term rental properties typically require insurance to protect against damage, theft, and other risks. The insurance cost will depend on the type of property and the coverage you choose.

Maintenance and repairs

Regular maintenance and repairs are necessary to keep the property in good condition and attractive to guests. These costs can include cleaning, landscaping, and repairs to appliances and other equipment. Put aside up to 10% of revenue to cover these costs.

Utilities

As the property owner, you will be responsible for paying the utility bills for the property, including electricity, water, and gas. The cost of utilities can vary depending on the season and the property usage.

Property management or listing fees

If you choose to hire a property management company to handle bookings and guest interactions, there will be a cost associated with their services. The price of property management can vary depending on the services offered and the size of the property.

If you are going to be your property manager, there will be listing fees on all the rental sites. These fees differ depending on the platform you are using, but they range between 3%–5%

Owning a short–term rental property involves several expenses that should be considered when making an investment decision. By understanding the costs associated with the property, you can make informed decisions about the profitability of the investment and plan for the necessary expenses.

What Are the Pros and Cons of Owning a Short–Term Rental Property?

Owning a short–term rental property can be a great way to make extra income. But it’s not without its drawbacks. Here are some of the common pros and cons of owning an Short–Term Rental (STR).

The Pros:

1. Potential for High Profits—One of the most significant advantages of owning a short–term rental property is the potential for high profits. You could generate more than double what you would from traditional long–term rentals due to the higher rates charged for shorter stays.

2. Tax Benefits—Another significant benefit to owning a short-term rental property is the tax benefits it. Depending on where you live, you may qualify for deductions that can help reduce your tax bill.

3. Flexible Schedule—Short–term rentals don’t require the same longterm commitment as traditional rentals. This means that you have more flexibility to choose when and how often to rent out your property and can even use it yourself if you want to.

The Cons:

1. High Maintenance Costs—One of the main drawbacks to owning a short-term rental property is the higher maintenance costs associated with maintaining the property in top condition for guests. Since guests stay for shorter periods, regular cleaning and repairs will be necessary to keep your property looking great and to ensure that guests are happy.

2. Increased Competition—The increasing popularity of short-term rentals means more competition in the market than ever before, making it more challenging to get your property noticed and booked. You’ll need to find ways to differentiate yourself from other properties to stand out.

3. Risk of Damage—Short-term renters can sometimes be less responsible with the property than long-term tenants, meaning you may end up dealing more damage or repairs than anticipated. It’s important to have a reliable system for collecting security deposits and enforcing rules with your guests to minimize any potential risk of damage or loss of income.

What You Need to Know

Overall, owning a short–term rental property can be a great way to make money and is worth considering if you’re looking for an additional source of income. However, to determine whether short–term rentals are a worthwhile investment for you, you must consider both their advantages and disadvantages.

WHAT ARE MEDIUM–TERM AND LONG–TERM RENTALS ARE

THEY GOOD INVESTMENTS?

Medium–term and long-term rentals can be lucrative real estate investments. Medium-term rentals are typically leased out for 6 to 12 months, while long–term rentals are often rented out for a year or more. These types of investments offer many advantages over other real estate investment options, including higher returns on investment, more consistent cash flow, and the potential to build equity with appreciation.

By carefully selecting properties in desirable areas and managing them well, investors can enjoy significant profits from their medium–term and long–term rental investments. Investing in medium–term and long–term rental properties is an attractive option for those looking for steady income, capital growth, tax benefits, and security of ownership.

With careful research and planning, investors can maximize their returns and minimize the risks associated with this type of real estate investment.

Medium Term Rentals (MTR)

Medium Term Rentals (MTR, also known as Executive Rentals) are stays typically measured in months and meant for people who require a semi–permanent arrangement. Examples include temporary work assignments, extended vacations, insurance claims, or waiting for a new house to be built. Generally, the guest will have another address where they receive mail, but this may only sometimes be true (i.e., when waiting for a home to be rebuilt after a natural disaster).

When it comes to MTRs, there often needs to be a clearcut answer regarding laws governing them; typically, operators interpret them as either short–term or long-term rentals. This has important implications: if an operator chooses to abide by most STR laws but not to collect HST, the tenant could challenge the Landlord Tenant Board and argue that they are a long–term tenant subject to the protections of the Residential Tenancies Act. Owners of MTRs need to be aware of all laws governing their rental type.

Pros and Cons of Owning a Medium–Term Rental

Medium–term rentals are another great way to rent out your investment property. Here are some pros and cons that we have come across:

Pros:

• Higher rental fees than regular short-term rentals due to longer occupancy times.

• Less wear and tear on the property from frequent guests.

• More flexibility regarding how long each guest stays since the agreement is for a period rather than a onenight stay.

• 30+ day rentals are less hassle for you because you will only need to fill the unit a few times per year compared to several times per year with an STR.

Cons:

• More paperwork is involved in setting up an MTR, with more detailed contracts and background checks required at setup time.

• Potential legal issues if the tenant challenges you that they should be considered an LTR.

• Lots of competition, so you need to ensure that your price point is competitive.

• Longer turnaround times between tenants, resulting in vacancy periods, which may reduce income.

Medium–term rentals (MTRs) offer an attractive opportunity to both tenants and landlords. With higher rental rates than short-term rentals and less wear and tear on the property from frequent guests, MTRs can be a lucrative option for owners. However, they also require more paperwork and greater legal awareness when setting up contracts and interpreting laws applicable to them.

If you’re considering giving MTRs a try, make sure you understand your responsibilities as a landlord to maximize your profits while providing quality accommodations for your tenants!

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Long–Term Rentals (LTR)

Managing a long–term accommodation business is no small feat and involves abiding by more than just the Residential Tenancies Act. Local zoning laws, municipal bylaws, business licensing requirements, taxation rules, health, and safety regulations, building code standards, and fire code compliance are all aspects that must be considered to keep tenants safe and protect the owner’s investment.

When purchasing a building with additional units beyond what’s allowed by zoning laws, it is important to get a compliance report from the municipality so as not to face penalties, including the destruction of any illegal unit. Similarly, when dealing with non–conforming units, one must remember that they were usually present before current zoning by–laws.

To ensure the property meets ongoing obligations and maintenance, it’s important to ensure that central fire systems are maintained as per regulations which may include annual or even monthly inspections. Smoke and Carbon Monoxide detectors need regular checks too!

Don’t get caught outmake sure you know all the ins and outs of managing a long–term accommodation business! Seek professional advice if need be. Keeping your tenants safe, your property in good standing, and your investment secure is worth it.

Pros and Cons Owning a Long–Term Rental

Knowing all the pros and cons of owning a long–term rental is essential to making the right investment decision. Here are some of the things that we have seen with some of our clients:

Pros:

• Steady rental income—with regular tenants, rental payments remain consistent and provide a steady source of revenue.

• Security in knowing who lives on your property—when leasing long–term, you can screen applicants more thoroughly, giving you peace of mind that you know who is living on your property.

• Long–term tenants often take better care of the property— with a longer lease term, you can expect tenants to try to maintain the property and become more responsible for taking care of it.

Cons:

• Difficult to evict tenants if needed—evicting tenants in a long-term lease can be more complex and time-consuming than those in a short-term lease.

• Difficult to raise the rent—due to the longer term of the agreement, raising rent may also be more difficult because it requires an amendment to the existing contract. In BC, you can only increase a long–term lease by 2% and need to give 3 months’ notice before doing so.

• Loss of flexibility and mobility—having long-term tenants means less room to switch things up or change if needed.

• Higher tenant turnover costs—when a tenant leaves the property, it may take longer for you to find another suitable one and cost more money in terms of lost rental income and other expenses associated with finding a new tenant.

What You Need to Know

As a landlord, you must carefully weigh the pros and cons of long–term rentals. Long–term leases can benefit tenants and landlords, providing stability and security for all parties involved. But it’s important to understand the rules and regulations of managing a long–term rental property to ensure success!

With a network of over 60 lenders, Green Mortgage knows which ones won’t overstay their visit on your mortgage. While some lenders might shy away from lending on short–, medium–, or long–term rentals, we know the ones that love this business model. Get this house party started by contacting us today!

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AIRBNB AND VRB0

Which Platform is Better for Your Short Term Rental

WHETHER YOU’RE JUST LOOKING TO MAKE A BIT OF EXTRA MONEY, GROW YOUR RENTAL PORTFOLIO, OR DOUBLE DOWN ON YOUR PROFITS, GREEN MORTGAGE KNOWS WHAT LENDERS WILL LEND FOR THE LONG–TERM.

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Airbnb and VRBO are both popular listing platforms for short–term rental (STR) properties.

Airbnb is a peer–to–peer marketplace that allows individuals to list, discover and book unique accommodations worldwide.

VRBO (Vacation Rentals by Owner), on the other hand, is an online platform for homeowners to advertise their vacation properties for rent—including apartments, houses, villas, cabins, and more—to travelers looking for short-term stays.

Both platforms offer fantastic opportunities for property owners to make money by renting out their homes or part of their homes on a short–term basis. By the end of this article, you should have a better idea about which platform to post your STR on.

Airbnb

Airbnb is a unique travel platform that has revolutionized the way people rent and find lodging while traveling. It allows owners and investors to list their properties for short-term rental—from apartments and homes to cabins, treehouses, boats, and more—giving them access to a global market of travelers looking for something unique. As an Airbnb host, you can use its innovative features and technology to increase your reach, attract guests, and make money.

How to Become an Airbnb Host

To become an Airbnb host, you must create a listing on the website, including details about your property, such as location, amenities offered, pricing information, etc., along with pictures so potential guests can get an idea of what they are booking. From there, you’ll be able to manage your listing, communicate with guests, and use the various tools Airbnb provides to help maximize your earnings.

Airbnb’s easy–to–use platform helps make renting a property simple and stress–free. It also has powerful marketing features such as price optimization, discounts for more extended stays, the ability to offer early check–in or late check–outs, and more —allowing hosts to maximize their profits through customized pricing strategies. Additionally, Airbnb provides an additional layer of protection for hosts by vetting all guests before they’re allowed on the platform and providing host insurance in case of any damages or issues that arise during a guest’s stay.

How Much Does It Cost to List My STR on Airbnb?

The costs involved in renting your property through Airbnb can vary depending on the fees and taxes required by local regulations.

• Generally, hosts are subject to a 3% service fee for each reservation they accept, along with any applicable guest booking fees.

• Some cities may also require hosts to pay occupancy or hotel taxes that range from 4-14%. Airbnb does provide access to accountant and tax specialist services to help you understand your obligations as a host in each location you list your property.

Furthermore, it’s essential to consider other costs, such as cleaning, maintenance, and utilities, when budgeting for an Airbnb rental. To maximize earnings potential, it’s best to set competitive prices that cover all associated costs while ensuring your property remains profitable.

Overall, with the correct pricing strategies and taxes accounted for, renting out your property through Airbnb can be an intelligent way to make extra income while satisfying the needs of travelers looking for unique experiences.

What Are the Pros and Cons of Airbnb?

Here are some pros and cons to consider when using Airbnb: Pros

• Reach a global network of travelers looking for unique and memorable experiences.

• Easy–to–use platform with powerful marketing features.

• Additional guest vetting and host protection measures in place to ensure safety.

• Opportunity to make extra income off your property. Cons

• Need to abide by local regulations, including occupancy taxes and fees.

• It can be time–consuming managing a rental listing, from booking inquiries to cleanings between guests.

• Potential damages or issues during a guest’s stay that can diminish earning potential or require additional costs for repair/replacement.

Renting out your property on Airbnb can be a great way to earn extra income while connecting with travelers from around the world looking for unique experiences. With its user–friendly platform, comprehensive features, and marketing tools, you’ll be able to maximize your earnings in no time!

VRBO

VRBO (Vacation Rental by Owner) is an online platform that lets homeowners list and manages their vacation rental properties. With VRBO, owners can take complete control of the entire renting process. From setting rates, managing bookings, and collecting payments through secure payment gateways—it can all be handled quickly via the VRBO website or app. Homeowners even have access to a 24/7 support team for any questions or concerns they may have along the way.

As a bonus, you can share your rental listings on multiple channels, such as social media and travel websites, helping them reach potential guests from around the world quickly and easily. With VRBO, you don’t need to rely on traditional rental agencies or third–party brokers to manage vacation rentals. This gives you a lot more freedom and control over what you do with your property. With VRBO, owners can enjoy the benefits of running a successful rental business without any of the hassles associated with traditional methods.

18  | Green Mortgage Newsletter | Issue 13 Winter 2022/23

VRBO Fees for Owners

Although there is no listing fee associated with VRBO, you will still pay a commission on the rental amount. Here is what to expect:

• Expect a 5% commission when your property is booked, which c overs the rental amount and any extra fees, such as cleaning or pet fees.

• 3% payment processing fee will be taken from the total paym ent you receive from your renter, including taxes and refundable damage deposits.

• Property owners can manage their fees through their VRBO da shboard so that all expenses are covered.

What Are the Pros and Cons of VRBO?

Here are some of the pros and cons to consider when using VRBO:

Pros:

• Access multiple promotion channels, including social media and travel websites.

• Secure payment gateways for collecting payments quickly and securely.

• 24/7 customer support team to answer any questions or con cerns.

• Option of taking complete control over the renting process, f rom setting rates to managing bookings.

• Professional property management lets you know it is well ta ken care of while renting out.

• Customizable listings so you can create an attractive listing that stands out from the rest.

Cons:

• You may have to pay a fee to list your properties on VRBO.

• You may have to pay a commission if you hire a rental agency or third-party broker to handle bookings and other services.

• You will be responsible for handling customer service–related issues and be prepared to answer questions or concerns quickly and efficiently.

• There is no guarantee of occupancy rates or revenue, as this can vary depending on your location and the seasonality of the area.

• You may need to invest in additional promotional activities, such as advertising, to ensure that your listing reaches potential guests worldwide.

• The cost of maintaining and preparing the property for each booking can increase over time, so you must factor this into your budget.

• There is no guarantee of the quality of guests you will receive, as you rely on reviews to determine who books your property.

• You may be subject to legal and regulatory requirements depending on where your property is located.

Despite some potential downsides, VRBO provides an excellent opportunity for homeowners to take control of their vacation rental business and maximize bookings while minimizing effort. With features like secure payment gateways, 24/7 customer support, customizable listings, access to multiple channels for promotion, and professional management servicesall in an easy-to-use platform—VRBO presents an excellent option for those looking to make their dreams of owning a successful vacation rental come true.

19

What You Need to Know

For owners VRBO comes out on top for longer stays, superior customer service, and a stronger insurance policy. While Airbnb is one of the only sites that offers shared accommodation. Single rooms and communal apartments tend to be much cheaper than renting the entire place. Airbnb is typically for short–term stays while VRBO is typically for medium—and long–term stays.

With these factors taken into account, it’s up to you to decide between Airbnb and VRBO. Whether you’re just looking to make a bit of extra money, grow your rental portfolio, or double down on your profits, Green Mortgage knows what lenders will lend for the long–term .

ESCAPE THE ORDINARY

21 Calculating Cash Flow for Real Estate: Step by Step

Calculating cash flow in real estate is a crucial step in determining the profitability of property investment. Cash flow is the difference between the income generated by the property and the expenses incurred in maintaining and operating it. By understanding the cash flow of a property, investors can make informed decisions about whether the investment will be profitable.

To calculate cash flow in real estate, follow these steps:

1. Determine the monthly rent for the property. This is the amount the property is expected to generate from rental income each month. To estimate the monthly rent, consider factors such as the property’s location, size, and amenities, as well as the local rental market and comparable properties in the area.

2. Subtract any fixed expenses from the monthly rent. Fixed expenses are ongoing costs incurred regardl ess of whether the property is occupied, such as mortgage payments, property taxes, and insurance. You can determine the property’s net operating income by subtracting these costs from the monthly rent.

3. Subtract any variable expenses from the net operating income. Variable expenses fluctuate based on the property’s occupancy, such as maintenance and repair costs, utilities, and property management fees. It is imp ortant to consider the average amount of these expenses over a certain period, as they can vary monthly.

4. Determine the cash flow for the property by subtracting the total variable expenses from the net operating income. The resulting figure is the property’s cash flow, whi ch represents the amount left after all expenses are paid.

For example, if a property has a monthly rent of $1,500 and fixed expenses of $500, the net operating income would be $1,000. If the property has variable expenses of $200 per month, the cash flow would be $800.

Don’t Forget This

It is important to note that cash flow is a measure of the property’s performance and does not account for the appreciation or depreciation of the property’s value over time. Therefore, investors should also consider the property’s location, condition, and potential for future growth when making investment decisions.

What You Need to Know

Calculating cash flow in real estate is a crucial step in determining the profitability of property investment. By understanding the income and expenses of a property, investors can make informed decisions about whether the investment is likely to be profitable. Still looking for an even easier solution? You’re in luck, we have a calculator for that. Find it, and many others, on our website today!

22  | Green Mortgage Newsletter | Issue 13 Winter 2022/23

BUYING A HOUSE DURING A RECESSION

So, you are considering buying a house but don’t know if buying one during a recession is the right move? Everything from interest rates to consumables and inflation is on the rise. This all leads to uncertainty but could it also lead to opportunity?

If your finances are tight or uncertain due to potential job loss or decreased income, it’s probably best to wait until the economy starts picking up again. Of course, this could be an excellent opportunity for those who don’t need to worry about their current financial situation and may be looking for long–term investment options in an unstable market.

Current State of the Canadian Real Estate Market

The Canadian real estate market is currently experiencing a slowdown. Due to stricter mortgage rules, higher interest rates, and inflation, sales and prices have decreased in some major cities, such as Toronto, Vancouver, and the Maritimes. However, the market is still relatively stable in some areas, like Edmonton and Calgary which still have pockets of growth.

What Are Some Pros and Cons to Consider? Pros

• Lower prices: During a recession, prices for homes tend to be lower as people are less willing to pay high prices for homes, and sellers are more motivated to sell quickly.

• More negotiating power: With less demand for homes during a recession, buyers can negotiate a better deal on the price of a home.

• I ncreased affordability: Interest rates may also be lower during a recession, making it more affordable for buyers to take out a mortgage.

• More available inventory: As people may be more likely to sell their homes during a recession, there may be more available in the market for buyers to choose from.

Cons

• Economic uncertainty: A recession can bring uncertainty and instability, making it difficult for buyers to know if they are making a wise financial decision.

• Reduced income: During a recession, many people may experience job loss or reduced income, making it difficult for them to afford a home.

• L imited financing options: Lenders may be more cautious about offering mortgages during a recession, which can limit the financing options available to buyers.

• Depressed housing market: The housing market may be depressed during a recession, leading to lower property values and reduced demand for homes.

What You Need to Know

It all comes down to whether you have the money to comfortably cover the costs and enough savings for a down payment. The Canadian real estate market is projected to drop back to around where it was before the pandemic.

Check out Canada’s best mortgage rates and talk to one of our experienced mortgage brokers to get personalized advice that can help make sure this important decision is one you won’t regret. Get started today—it could be your best investment in 2023!

23

COVER

Image: Mount Seymour—BC Canada—Bruce Loppnow.

IN THIS ISSUE

Image: Bruce Loppnow

KYLE GREEN’S GAB

PAGE: 5 Image: Unsplash—Tracy Adams WEBINARS

PAGE: 6 Image: Fiming with Professional Camera Item ID: KZVUS5G, Envato Elements

OUR LATEST NEWS

License Code: W6HQZ9SKA Author User Name: osbmxhouse

PAGE: 7 Image: Pexels— Markus Winkler PAGE:8 Image: Pexels—Spencer–Selover

WHAT IS A SHORT–TERM RENTAL PROPERTY AND IS IT A GOOD INVESTMENT?

PAGE: 11 Image: Unsplash Greg Makozy PAGE: 12 Image: jmackenziephotography.com

WHAT ARE MEDIUM–TERM AND LONG–TERM RENTALS ARE THEY GOOD INVESTMENTS?

PAGE: 16 Image: Unsplash—Merrit Thomas

AIRBNB AND VRBO

PAGE: 17 Image 1: Unsplash—Ian Keefe Image 2: Unsplash—Desert Rose Image 3: Eiffel Tower in Paris Item ID: ERFGAEY, Envato Elements License Code: RT98GSDAHW Author Username: RossHelen Page 20: Image 1: Unsplash—Ian Keefe Image 1: jmackenziephotography.com

credits in this issue

CALCULATING CASH FLOW FOR REAL ESATE

PAGE: 21 Image: Winter City landscape Item ID: R2UD2V, Envato Elements License Code: YD9Z5WHFUA Author Username: Faber14

BUYING A HOUSE DURING A RECESSION

PAGE: 24

Image: Old Wooden House in Winter Item ID: PMMB2SB, Envato Elements License Code: 5443TS7K2P Author Username: byrdyak

PAGE: 25 & 26 Image: jmackenziephotography.com

BACK COVER: Image: jmackenziephotography.com

26  | Green Mortgage Newsletter | Issue 13 Winter 2022/23
T 604-229-5515 greenmortgageteam.ca info@greenmortgageteam.ca #550–2608 Granville Street Vancouver, BC V6H 3V3

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