Sicamous Airbnb | Where to invest in Canada

Note that the information provided herein should not be considered financial advice. I am not an accountant, and recommend seeking professional guidance specific to your personal circumstances.

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In this series of posts, I analyze individual markets to help understand the best places to invest in real estate in Canada. I take a deep dive into the market trends, municipal regulations and seasonality to understand the investment potential in each market. Today I will look at Sicamous, BC, Canada.

Sicamous is known as the houseboat capital of Canada. It is home to spectacularly beautiful lake life surrounded by mountains. It is an incredibly popular destination in the summer, especially for Calgary residents looking to get away from the city. As a result of its summer popularity, the council has elected to strictly regulate short term rentals in the town. Unfortunately for those looking to invest in the area in a short term rental business, many of these regulations make it difficult to operate profitably, if at all.

Should you invest in Sicamous? Are the challenges worth it? Read on for the complete break down on on the real estate investment potential of Sicamous, British Columbia.

Why Sicamous?

Sicamous has a lot going for it. It is beautiful, lakefront to both the Shuswap and Mara Lakes, and is surrounded by gorgeous mountains. The mountains provide protection from the elements creating a wonderfully warm climate in the summer. For those in Alberta, it is the closest “warm” lake we can reach (our lakes are quite cold being at elevation). As a result, you’ll see flocks of Alberta license plates towing boats out to Sicamous for summer holidays. At only 5 hours away, it is a reasonable drive for a family vacation.

In the winter, it remains mild however is typically cloudy. They receive enough snow to be a great home for snowmobiling, backcountry snowshoeing, fatbiking and more. The nearest skiing opportunity is about one hour to the east in Revelstoke. Although there are certainly great winter activities to enjoy, Sicamous is most popular in the summer months.

Market growth and saturation

Although Sicamous is a very active tourism destination, the short term rental supply is extremely limited. There has been slight growth over the last year, however the total active available units hovers just over 100. Compared to other destinations, there is extremely short supply. The limited supply can be seen as a direct consequence of the extremely restrictive short term rental bylaws and regulations that the town has set.

Demand appears to be growing, however remains highly seasonal. The very best properties are booked consistently, however the majority (75th percentile and below) are booked much less frequently in the off-season. With that in mind, it does not appear that the market is fully saturated. To succeed in a short term rental business, your property would need to be managed in line with the very best that Sicamous has to offer.

The average daily rates (ADR) have remained quite flat with only very modest growth. Given that this includes through much of the pandemic, this is a concerning indicator that strong demand does not exist for short term rentals in the area. Competing markets such as Canmore, Revelstoke and Invermere have all witnessed a more pronounced rise in ADR.

Home affordability

*MLS search on Sicamous between $550,000 - $750,000.*

Homes in Sicamous remain relatively affordable. Unlike other centers such as Canmore, you can find well maintained homes in the $6-700k range. Lake side homes start to approach the $1M plus range, however. If you are looking for a more standard home, you may be able to attain reasonable cash flow numbers as a result. Although these numbers may appear high to some, the reality in Canadian tourism destinations is that this is more on the low end.

Seasonality

Sicamous tourism is highly seasonal, with a strong surge of demand in the summer months of July and August, and a sharp decline in revenue for all of the remaining months of the year. It truly could not be more feast or famine when looking at the seasonality of Sicamous tourism.

With this said, the very strongest rentals do remain highly occupied through all months of the year. Even rentals falling in the 75th percentile see reduced demand, meaning that you must be able to manage your property at the very highest level to compete. There is really no room for error on this one! For me, this is a very strong red flag to watch out for.

Municipal regulations

The Town of Sicamous has enforced strong regulations regarding short term rentals in BC. The specific items to note below are in relation to very restrictive zoning requirements, and occupancy bylaws. Also of note, they have publicly declared that they will review online booking platforms such as Airbnb and VRBO to ensure compliance. This is an area to watch out for in particular, as even “creative” listing details may land you in trouble.

The break down below is current as at November 2022. We’ll keep this updated as things change!

Category	Sicamous Bylaws	Rating
Current State	The Sicamous council is not the most friendly to STR operators. The limited zoning requirements and occupancy limitations significantly hurt the viability of a STR business in Sicamous. With indications that Council will introduce additional measures in 2022-23, we do not recommend Sicamous for an STR investment.	D-
Licensing	All STR's require a business license. At present, the cost is $95, however it is expected to increase in the near future.	B-
Building Code and Inspections	No specific building code requirements in place. We would like to see some minimum code requirements, as this improves safety for guests and weeds out the lower quality STRs that hurt the reputation of responsible STR operators.	B
Parking	Off-street parking provisions are required.	B
Taxes	PST and MRDT (2%) must be collected and remitted. Not all Municipalities participat in MRDT, which increases the cost to guests and thus lowers desirability relative to markets that do not charge this tax. In addition, a land transfer tax is required for the purchase of any property in BC.	C+
Zoning	STRs are allowed only in designated zones. Most residential neighbourhoods are excluded, with limited areas only allowed. Designated zones mandate that STRs can only be operated in an owner's principal residence.	D
Occupancy	Maximum occupancy of 2 adults per bedroom. Bylaw Enforcement retains the right to review online listing details for compliance. This is problematic as it does not account for pull-out couches, non-rooms, or bunk beds. Restricting this has a direct impact on average nightly rate.	F
Property Management	A "Local Responsible Person" must be able to attend the premise within 1 hour in response to complaints.	C-

Competing markets

Unfortunately for Sicamous, there is strong demand for investment in almost every other direction. To the south and closer to Vancouver, you have excellent hot spots such as Kelowna, Vernon, and Penticton. To the east and nearer Calgary, you have Revelstoke, Canmore, Banff, Invermere and others. To the west you have Kamloops and Merritt. There exists a great deal of choice in markets that offer less seasonality and more favourable municipal restrictions.

Summary

Sicamous is a beautiful spot, nestled in the mountains with picturesque lakes. It is a great place to visit in the summer, to rent a house boat, and relax. As an investment opportunity, it leaves a lot lacking. The stark seasonality will leave you bleeding money in the off season, that is, if you can even get a property in the right zone with the right bedroom configuration to cash flow at all. They have also elected to adopt additional taxes and made mention to implement additional measures in the coming year. For those reasons, we are Just not having it as an investment opportunty!

What do you think about Sicamous? Would you invest there? What market do you want to see a deep dive on next? I’d love to hear your thoughts!