Short-Term Rentals: Big Rewards, Hidden Rules

1️⃣  Why Short-Term Rentals Matter

Short-term rentals (STRs)—think Airbnb, VRBO, and similar platforms—have exploded across Ontario, especially in vacation hotspots like Muskoka 🌊🌲. For many property owners, they’ve turned into a way to cover mortgage costs 💵, pay property taxes, or even create a steady income stream.

And in lifestyle-rich destinations, they can also be a way to enjoy your own cottage while having it help pay for itself 🛶☀️.

But here’s the thing—what’s profitable today could be limited tomorrow 🔄. Towns and cities across Ontario are introducing new rules that can directly impact your ability to rent. That’s why understanding both the pros and the potential challenges is so important.

 

2️⃣  The Big Benefits of STRs 😎

Let’s start with the good news—because there’s a lot of it.

  • ✅ Income Potential – A well-managed property in a high-demand area can earn more in a few summer weeks than a long-term rental does in months.

  • ✅ Flexibility – You can block off dates for your own family use while still generating income the rest of the season.

  • ✅ Marketability – Licensed STR properties can stand out when selling—buyers love the idea of “instant income.”

  • ✅ Wealth Building – STR income can help you pay down your mortgage faster, cover maintenance, or even fund your next investment.

 

3️⃣  The “Read the Fine Print” Side 📜🔍

Even with all the upside, STRs aren’t a free-for-all anymore. Communities across Ontario are introducing bylaws, licensing requirements, and even caps on the number of rentals allowed 🚫.

And these rules? They can change at any time ⏳—which means what’s legal today may have new restrictions tomorrow.

 

4️⃣  Example: Huntsville’s New STR Rules 📍

Let’s look at Huntsville in Muskoka as a real-world example.

In 2025, Huntsville introduced:

  • One-year ownership requirement before you can rent short-term 📅

  • Cap of 250 licensed STR units in the town—once the limit’s reached, no new licenses until a spot opens up 🚪

  • Licensing on a first-come, first-serve basis 🏃♂️💨

  • Three strikes and you’re out policy—violations within two years can cost you your license ❌

If you’d bought a property expecting to rent it right away, these rules could completely change your plan.

 

5️⃣  How Rules Can Affect the Market 📈

Here’s why this matters to buyers and sellers:

  • Licensed STR properties may increase in value 💎 because they’re harder to come by.

  • Investors need to be strategic 🎯—choosing locations with stable or favourable rules.

  • Buyers must plan for change 🛠️—owning a property that remains financially viable, even if STR rules tighten.

 

6️⃣  Doing Your Due Diligence 🕵️♀️

Before you buy a property with short-term rentals in mind, make sure to:

  • Research Local Bylaws 📚 – Check the municipality’s website or call the planning department. Rules vary wildly between towns.

  • Ask About Licensing Caps 🚦 – If there’s a maximum number of STRs allowed, find out how many spots are left and what the application process looks like.

  • Understand Occupancy & Safety Rules 🛑 – Many towns limit the number of guests per bedroom or require proof of septic capacity.

  • Budget Conservatively 💹 – Make sure your numbers still work if you can’t rent full-time, or at all, in the future.

  • Get it in Writing ✍️ – If buying from a seller who claims the property is “STR-approved,” request documentation.

 

7️⃣  The Bright Side of Regulation 🌟

While restrictions may feel like a negative, they’re often introduced to protect community character, maintain safety, and preserve property values 🏘️.

For investors, this can actually be a good thing:

  • Fewer STRs = Less competition 🏆

  • Higher quality accommodations = Better guest experiences 🌟

  • Community harmony = Stable long-term values 🤝

In other words, being a compliant, high-quality host can put you ahead of the game.

 

8️⃣  My Take as a Realtor® 💬

I’ve seen STRs be a fantastic wealth-building tool for my clients in Muskoka and beyond 🌲🏡. But I’ve also seen buyers get caught off guard by changing rules.

The key is to go in with eyes wide open 👀:

  • Buy where you’d love to spend time yourself ❤️

  • Make sure the property works financially even with less rental income 📊

  • Treat your STR like a business—track expenses, keep it maintained, and deliver a great guest experience 🌟

 

9️⃣  Final Thought 📣

Short-term rentals can be a dream investment—if you plan for the long term. That means knowing your local bylaws today and being prepared for changes tomorrow.

If you’re thinking of buying a cottage or vacation home for rental income, let’s talk before you make a move. We can help you:

  • Identify the best STR-friendly areas 📍

  • Understand current and pending rules 🗂️

  • Find properties that make sense for both lifestyle and investment 💼

👩🏻💼 Lisa Selvage | Muskoka Realtor® | Serving Muskoka & Beyond

👩🏻💼 Shirlene Johnston | Parry Sound Realtor® | Serving Parry Sound & Beyond

Helping you “Be where you want to be” while building wealth through real estate.

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