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Victoria condo fetches astonishing resale premium thanks to AirBnB

A resident walks through the entrance of the Era condo tower in the 700-bock of Yates Street where one owner recently sold a unit for a 60% premium over the initial pre-sale price. The catch? It was marketed as a turnkey business.
 Citified.ca.

Victoria condo fetches astonishing resale premium thanks to AirBnB
MIKE KOZAKOWSKI, CITIFIED.CA

Move aside coffee shops and delis, there's a new turnkey business opportunity on the market targeting investors in search of instant cash flow.

A fully furnished one bedroom home in the recently completed Era residential tower on Yates Street recently sold for $338,000, some 60% above its pre-sale price of $212,000. The reason for the jaw-dropping uplift? The listing, it turns out, was not for a condo in the traditional sense, rather a popular vacation rental.

The ninth floor unit was described on the Multiple Listings Service as a "very successful AirBnB [vacation rental] that is always booked" and "great for anyone looking for an exciting new turnkey business with proven track records."

Although vacation rentals have been around for many years, the notion of selling a condo as a business in lieu of an investment rental is a relatively new phenomenon in Victoria, and one that is not yet easily valued by the market.

"It's tough to isolate how much of the vacation rental component was responsible for the increase in value, but what we do know is we just had a 15th floor one bedroom unit sell for $300,000 so there does appear to be real value associated with the AirBnB rapport," said Marko Juras, a REALTOR® with Fair Realty in Victoria and a strata council member at the Era.

The seller who sold the ninth floor rental has also listed a 15th floor one bedroom unit for a cool $464,000. It too is described as a successful AirBnB venture.

The boost in asking price for the unsold unit? 40% based on an original purchase amount of $329,000, and certainly far in excess of a neighbouring unit sold for $300,000 on the same floor.

However, buying into such a business may not be worth the added expense, Juras says, particularly if strata councils begin cracking down on short term rentals.

"At the Era if wear and tear is noticed by the strata and excessive noise complaints are received, I would say that the board would likely move to curb them," Juras said, adding that even something as innocuous as a move-in fee of $200 would effectively erode a vacation rental's profit margin as each new name associated with the home, however long the individual remains in the unit, would be assessed the fee.

Despite the possibility of a strata council nixing short term rentals, the reward for a well-run AirBnB listing can far exceed income generated with a long-term tenant.

"Right now most unfurnished one bedroom units at the Era rent for approximately $1,300 per month. If you list a condo on AirBnB for even $100 per night, it's easy to see how this can be a far more profitable venture for a real-estate investor who has the time to devote to such a business," says Juras.

News of significant returns through the sale of popular vacation rentals will no doubt spur greater interest in the industry and copycat listings, something that may be viewed as helping push housing prices higher. But according to Juras, the few vacation rental properties that are able to sell for a premium will have a negligible overall impact on Victoria's real-estate market.

"This is a business anyone can start from scratch and you certainly don't have to pay a seller more to get into the vacation rental market, and most buyers won't. Of course for the right person I suppose there is value in buying a property with a history of good reviews on a website like AirBnB, but there is likely little demand for these units at a premium price," Juras said. C

 

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