I’d like to sell my 4 plex that I’m running an AirBnb business from. What will a potential buyer use as income when determining the Cap Rate?

Category: Investing

 

Hi David, 

I am running a 5-star AirBnB business out of my 4 plex. Income is double what I can get in market rents. (No current RTA tenants) Expenses are not considerably more.  I’d like to sell. What will a potential buyer use as income when determining the Cap Rate? And can it be marketed with two prices? One based on 4 empty rentable units, the other based on the AirBnB business with 4 fully furnished and equipped suites plus a 2 bedroom unit?

Steve


 

Hi Steve,

You can choose to market the property however you’d like, including two different cap rates, depending on two different business models.

There aren’t any real regulations from RECO when it comes to providing financial data for investment properties.

Just remember that running an AirbNB is a full-time job, and if you provided financials solely based on this, it would be misleading.  Most investors are looking at income properties with tenants on a lease-basis, so at the minimum, you should provide cap rates and financials according to that business model.
David.

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  1. Kate says:

    Isn’t running an Airbnb like this in a non principle residence illegal in Toronto?

    As for the “five star Airbnb”., give me a break. By now people are catching on to how the whole Airbnb rating system is gamed, so it’s losing any meaning.

    Is it legal for a realtor to market a property for a (currently) illegal purpose?

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