Short-Term Rentals vs. Long-Term Rentals in Ontario

Greenell Properties Capital
Feb 26
2 min read

Real estate investors in Ontario often debate between short-term rentals (STRs) and long-term rentals (LTRs). While platforms like Airbnb have made short-term rentals attractive, recent government regulations and market shifts are changing the landscape.

In 2025, which rental strategy is the better investment? Let’s break it down.

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1. Understanding Short-Term Rentals (STRs)

What is a Short-Term Rental?

A short-term rental (STR) is a furnished property rented out for less than 30 days at a time, typically through platforms like Airbnb or VRBO.

Pros of Short-Term Rentals

Higher Income Potential: Nightly rates can generate 2-3x the income of a long-term rental. More Flexibility: Owners can block off dates for personal use.

Less Wear & Tear: Guests stay for shorter periods, reducing long-term damage.

Cons of Short-Term Rentals

Stricter Regulations: Many cities limit STRs to primary residences (e.g., Toronto, Hamilton). Seasonal Demand: Occupancy rates fluctuate, especially outside tourist hotspots. Higher Operating Costs: Cleaning, furnishing, and management fees reduce profits.

Best Ontario Markets for STRs (Where Legal)

Niagara Falls – High tourism demand.
Cottage Country (Muskoka, Blue Mountain) – Strong seasonal income.
Select Areas of Hamilton & Kitchener – Less restrictive regulations.

2. Understanding Long-Term Rentals (LTRs)

What is a Long-Term Rental?

A long-term rental (LTR) is a property leased to a tenant for 12 months or more, generating stable, consistent rental income.

Pros of Long-Term Rentals

Steady Cash Flow: Monthly rent payments provide reliable income.

Lower Management Costs: No need for constant guest turnover or cleaning fees.

Easier Financing: Banks prefer LTRs for mortgage approval.

Cons of Long-Term Rentals

Lower Income Potential: Rental rates are lower than STRs.

Tenant Protections: Ontario’s Landlord and Tenant Board (LTB) favors tenants, making evictions difficult.

Rent Control Restrictions: Most properties built before November 15, 2018, have rent increase limits.

Best Ontario Markets for LTRs

Hamilton (Downtown, Crown Point, Westdale) – Strong demand from students and professionals.
Mississauga (Cooksville, Erin Mills) – High rental prices and commuter demand.
Kitchener-Waterloo – Thriving tech and student rental market.

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3. Which Rental Strategy is Right for You?

Choose Short-Term Rentals If:

You’re in a tourist-friendly area where STRs are legal. You can handle high maintenance and management costs. You want higher income potential and can accept seasonal fluctuations.

Choose Long-Term Rentals If:

You want stable, predictable income with less risk of vacancy. You prefer lower management involvement. You want a safer investment in regulated Ontario markets.

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Conclusion

In 2025, Ontario’s strict regulations are making long-term rentals a safer and more predictable option for most investors. While short-term rentals can be highly profitable, they require careful research and management to ensure compliance with local laws.

For most investors, long-term rentals in high-demand cities like Hamilton, Mississauga, and Kitchener-Waterloo remain the best option for consistent, passive income.

Before choosing your strategy, always check municipal regulations and evaluate whether cash flow, stability, or flexibility is your top priority!