Introduction
If you’re a short-term rental (STR) owner in Calgary, you may find yourself worrying about your property’s profitability during the slower seasons. For some, the income generated during these months doesn’t seem enough to cover their mortgage, leading to frustration and doubts about continuing in the market.
However, short-term rentals are a seasonal business. While winter may bring challenges, the summer months—fueled by events like the Calgary Stampede—often generate enough income to balance the books for the entire year. In this blog, we’ll explore how understanding the annual nature of STR income, coupled with the right management approach, can help you weather the highs and lows of the market.
The Challenge of Slow Seasons in Calgary
Winter in Calgary is often a quieter period for short-term rentals. Tourists are fewer, corporate travel slows, and many people opt for indoor activities or destinations with warmer climates. This means that, for several months, rental demand can be lower, and your STR income might not cover your mortgage or other property expenses.
Common Concerns from Owners:
- “I’m not making enough during the slow season to cover my mortgage.”
- “How do I stay profitable when demand drops?”
- “Is STR even worth it if I’m losing money half the year?”
While these concerns are valid, it’s important to remember that short-term rentals operate on a seasonal income cycle.
The Importance of Patience: STR Income is Seasonal
Short-term rentals are not a month-to-month business—they are an annual investment. What you may lose in the slow winter months can be more than made up for during the summer peak season. Events like the Calgary Stampede, summer festivals, and an influx of tourists make the warmer months highly profitable.
Related Question:
How can I survive the slow season as a short-term rental owner?
Answer: Budgeting for the full year and setting aside funds during the summer peak season can help cover expenses during the winter months. Patience and planning are key to success in this seasonal market.
Should You Hire a Management Company?
Many STR owners consider hiring a management company to handle the day-to-day operations of their property. While this can be a stress-reliever, it’s essential to understand the trade-offs.
The Pros of Hiring a Management Company:
- Stress-Free Operations: Management companies handle everything, from guest communications to cleaning and maintenance.
- Professional Expertise: They use dynamic pricing tools to maximize your revenue and ensure your property is consistently booked.
- Time Savings: You can enjoy passive income without the hassle of managing demanding guests.
The Cons of Hiring a Management Company:
- Lower Profit Margins: Management companies typically charge 15-30% of your rental income as fees, which eats into your profits.
- Reduced Hands-On Control: You won’t have direct control over how your property is marketed or managed.
Related Question:
Can I still be profitable with a management company?
Answer: Yes, but don’t expect maximum profitability. The trade-off is reduced stress and time commitment, which can be worth it for many owners. If you’re looking for the highest profit margins, self-managing is the way to go—but it comes with significant responsibilities and risks.
Self-Managing Your STR: Risks and Rewards
If you choose to manage your STR on your own, you can retain more of the income—but it comes with challenges:
- Demanding Guests: Short-term renters expect quick responses, clean accommodations, and seamless experiences. Meeting these demands can be time-consuming and stressful.
- Pricing and Marketing: You’ll need to optimize your listing, adjust pricing for seasonality, and handle marketing on your own.
- Maintenance and Cleaning: Every guest turnover requires attention to detail, from ensuring the property is spotless to addressing maintenance issues.
Tip for Self-Managers:
Invest in automation tools for messaging, dynamic pricing, and scheduling cleaners to reduce the manual workload.
Balancing the Workload and Expectations
Whether you manage your STR yourself or hire a professional company, the key to success lies in realistic expectations and strategic planning. Here’s what to keep in mind:
- Seasonality is Normal: Don’t panic if winter income doesn’t cover all your expenses. Calgary’s summer season often generates enough revenue to offset slower months.
- Budget for the Year: Set aside a portion of your summer profits to cover winter expenses. This prevents financial strain during slow seasons.
- Consider Your Time and Stress Levels: If managing guests and property issues is overwhelming, a management company might be worth the cost.
Frequently Asked Questions
Why is my short-term rental not covering my mortgage?
Answer: Slow seasons like winter often have reduced demand, which is normal in the STR industry. Budgeting for the year and capitalizing on peak seasons can help balance this out.
Should I hire a management company for my short-term rental?
Answer: If you value your time and want to avoid guest-related stress, a management company can be a great option. However, expect slightly lower profit margins due to management fees.
How can I increase bookings during the slow season?
Answer: Offer seasonal promotions, target niche markets like corporate travelers, and ensure your property stands out with unique amenities.
Conclusion
Short-term rentals are a long-term investment that require patience, planning, and adaptability. While slow seasons like winter can feel discouraging, they are part of the natural cycle of the STR market. By focusing on the bigger picture and planning for annual income rather than monthly profits, you can build a successful and sustainable rental business.
Whether you decide to self-manage or hire a professional, the key is to stay informed, flexible, and prepared to handle the challenges that come with this rewarding business. Remember, the summer season—with its high demand and premium rates—will always return to balance the scales.