Calgary's New Zoning Laws: Why Short-Term Rentals for Tear-Down Investment Properties Aren't Worth the Trouble

Should you rent out your unit on a short-term lease while waiting for demolition? Our answer is no, it’s not worth the trouble, and here’s why.

Cary Jones

The recent approval of a blanket rezoning by the City of Calgary is a significant step in addressing the housing crisis. This change opens up the possibility for diverse low-density housing options, such as duplexes, fourplexes, and row houses, to be constructed in neighborhoods previously limited to single-resident units. Investors are seizing this opportunity by purchasing properties with plans to demolish and rebuild multi-unit homes - a great investment strategy, but the question continues to arise: what should an owner do with their property in the meantime?

Investors have been reaching out and asking, should they rent out their unit on a short-term lease while waiting for demolition? Our answer is no, it’s not worth the trouble, and here’s why: 

1. Potential for Neglect

When there is an impending demolition some tenants may take advantage of the situation. A lack of long-term consequences can quickly lead to negligence, resulting in damage and costly repairs. Although the unit may be scheduled for demolition the owner is still responsible for maintenance as long as the lease is in effect, meaning an owner can find themselves stuck with costly repair bills that could have been easily avoided.

2. Compliance Costs for Short-Term Rentals

Before renting out any property, it must meet specific rental standards and safety regulations. For a property set for demolition, this means investing in repairs and updates that will soon be rendered moot. The costs associated with bringing a property up to code for a short-term lease can be substantial, and these expenditures will not contribute to the long-term value of the investment nor be recouped.

3. Attracting Quality Tenants is Challenging

Quality tenants typically seek long-term stability. A short-term lease on a property destined for demolition is less likely to attract responsible tenants and more likely to attract applicants with little regard for the property, leading to issues such as missed rent payments, disputes, and additional management headaches. The time and effort required to address these problems will quickly outweigh the benefits of short-term rental income.

So What’s the Strategy? Hold Off on Short-Term Rentals

Investing in properties with plans for demolition and redevelopment can be highly lucrative under Calgary's new zoning laws. However, renting out these properties on a short-term basis is fraught with potential pitfalls. The temporary revenue generated from short-term leases is often outweighed by the risks and costs involved. For investors, it's best to avoid short-term rentals and focus on the long-term benefits of redeveloping the property.

If you have any questions about property management or investment strategies in light of Calgary's new zoning laws, feel free to reach out to us. We're here to help you navigate these changes and make the most of your investments.

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