Adding Up The Suite Life

Does having a rental suite help pay for your new home? These case studies and experts will help you do the potential math.

By Michelle Hopkins

Thirty-something Megan Hall and her fiancée Tariq Nizam knew the only way they could afford a home in Tofino was to have a so-called mortgage helper, or rental suite. “We bought a 3,000-square-foot house in 2017 with the intention of doing vacation rentals on the upper level,” says Hall. “After spending two months getting the house ready, we started getting bookings right away.”

They listed the ocean-view level on VRBO and Airbnb, and from May to Thanksgiving the couple’s weekend bookings were full. They shut down the rental suite to comply with health regulations in the spring of 2020, but when restrictions eased last summer, it was fully reserved again. “We can have up to six guests and we average 200 nights per year,” says Hall. “This income really helps us with our mortgage and also helps with home expenses.”

Similarly, Torontonian Gerry Merz bought a luxury oceanfront home in Nanoose Bay in 2018 with the intention of retiring there in 10 years. After months of renovations, last summer he and his wife opened up their five-bedroom residence to VRBO guests. “We decided to rent it out to help pay for the renovations,” says Merz. “Although the pandemic was a train wreck when it came to rentals, now it has exploded… we are fully booked all summer long.” Like Hall and Nizam, Merz has learned through the pandemic that it’s unwise to be too dependent on rental-suite income.

Tofino. Photo: Megan Hall

Although banks do not take vacation income revenues into consideration when approving mortgages, for most hosts it may be the savings answer to paying off their home mortgage or having a more comfortable buffer to cover other bills every month.

The idea of renting your home out to strangers through an online platform might seem a bit unsettling to some at first. Originally, Amanda Petronis and her husband were going to build a mini house on their Sooke property for visiting friends and family. Before long, that idea morphed into a deluxe treehouse.

“It got more extravagant as we went along,” quips Petronis. “The uniqueness of the treehouse appealed to locals, so we thought to help pay expenses, we would open it up to VRBO and Airbnb … Now, it’s mostly locals from all over the island and the Lower Mainland.” The income generated has allowed Petronis to quit her job as a waitress to spend more quality time with her eight-year-old daughter.

According to Nathan Rotman, manager of public policy for Airbnb Canada, most of their hosts are renting their homes for the same reasons these three do. “Half of all hosts worldwide tell us they use their Airbnb earnings to stay in their homes,” says Rotman. “And according to a recent survey, during the pandemic, three in 10 U.S. hosts (29 per cent) have used their income to pay their rent or mortgage and 26 per cent to pay down debts.”

When it some to fees charged by the leading vacation rental sites, Airbnb takes a three per cent commission off each rental, while VRBO compensation rates vary by property and geography, but average somewhere around eight per cent.

Tree House Owl’s Perch in Sooke can be found on Airbnb and VRBO. Photo: Michelle Pichert.

Both companies office similar insurance policies. However, Airbnb offers both property damage and host protection programs, both of which are up to $1 million. “Under the property damage program, hosts may be protected with up to $1 million if their place or belongings are damaged by a guest during a stay,” says Rotman. (Airbnb’s website does note, though, that “Hosts who want more protection may want to consider purchasing personal insurance that will cover property damage not protected by Airbnb’s Host Guarantee.”)

According to a VRBO spokesperson, all online bookings are covered by up to $1 million liability insurance in coverage per property, per year, at no additional cost to partners. The insurance provides owners and property managers with liability protection for all stays processed online through the VRBO checkout. VRBO charges extra for accidental damage protection insurance.

Although all three hosts are extremely happy with their decisions to rent their home for the extra money, prospective hosts should educate themselves on all of the financial legalities before opening up their homes to vacationers. But the extra income could make for a sweet life in your new home.


Here’s a hypothetical scenario showing how a “mortgage helper” suite might operate.

Property (with legal rental suite)
Purchase Price: $998,000
Other costs (inspection, appraisal, land-transfer tax, title insurance): $21,000
Total purchase cost: $1,019,000.

$300/night x 3 months (90 days peak season): $27,000
$1,700/month x 9 months (off-season): $15,300
Total revenue: $42,300 annually

Cleaning, maintenance, agency fees and insurance: $4,000
Cable, utilities, internet: $3,780
Mortgage and property tax = $47,952
Total expenses: $55,732
Income = 76% of annual costs (or, 55% if you use the revenue to totally cover purchase-related costs in your first year of ownership.)