Long-Term vs Short-Term Rentals

Thinking about renting your new laneway or garden suite? There are two main paths:

• Long-Term Rental (LTR): a tenant signs a lease and stays for months or years.

• Short-Term Rental (STR): guests stay a few nights at a time (like Airbnb).

This page explains both in simple, everyday language so you can choose what fits your life.

Long-Term Rental (LTR)

Good things

• Steady money: Rent comes in every month.

• Less work: Fewer cleanings and check-ins.

• Fewer gaps: Tenants usually stay longer, so it’s not empty as often.

Hard things

• Rent rules: Ontario limits how much you can raise the rent each year.

• Strong tenant rights: Evictions can be slow and need paperwork.

• Price is set: Once you sign a lease, you can’t change the rent until renewal.

Short-Term Rental (STR)

Good things

• Can earn more per night: Example: $320 per night at 85% full can look high on paper.

  • Gross math: $320 × 0.85 × 30.4 ≈ $8,270/month before costs.

• Change your price: You can raise prices for busy times (events, holidays).

• Use it yourself: You can block dates for family and friends.

Hard things

• More work: More cleanings, messages, and guest help.

• More costs: Cleaning, platform fees, higher utilities, and insurance.

• Toronto rules: If it’s your principal home, you can only rent 180 nights per year and must add a 4% MAT tax.

Hosted STR reality in Toronto:
With the 180-night limit, $320/night → $57,600/year before costs and tax (about $4,800/month on average). After platform fees, cleaning, utilities, and the 4% MAT, the money you keep is often similar to LTR.

Toronto Rules

• STRs are allowed only at your principal residence.

• You must register with the City.

• You can rent up to 180 nights per year.

• You must collect 4% MAT (Municipal Accommodation Tax) on bookings.

Breaking the rules can lead to fines. Stay compliant.

Costs to Remember (Both Options)

• Vacancy (empty time)

• Bills & upkeep (utilities, insurance, small repairs)

• For STR: platform/manager fees, cleaning per stay, and MAT 4% (if hosted)

• Loan payments (if you have a mortgage on the build)

Break-Even: When Do You Get Your Money Back?

Simple idea:
Take your build cost and divide by the money you keep after bills each year.

• LTR break-even = Build Cost ÷ Yearly money kept from LTR

• STR break-even = Build Cost ÷ Yearly money kept from STR

In many cases, STR can pay back faster. But in Toronto, because of the 180-night cap and 4% MAT, LTR and STR can end up very close. Your numbers matter.

Cash Flow vs. Equity

• Cash flow: What you keep after bills each month.

• Equity: Value that grows over time as the market changes and as you pay down the loan.

Goal: A smart plan balances monthly cash and long-term value.

What the Calculator Shows

• Money in a year and per month after bills

• Loan payments per year (if any)

• Return on build cost (percent)

• Return on your own cash (percent)

• Years to pay back your build

• A 5-year rent picture with a modest 2% yearly increase so you can see how small steps add up

Which One Is Better?

• Pick LTR if you want steady, simple income with less daily work.

• Pick STR if you want to optimize busy seasons, can handle more tasks, and understand Toronto’s 180-night rule and 4% MAT.

Often, with real Toronto numbers, the take-home can be similar. Choose the option that fits your life.

How EvaLanes Helps

We design and plan laneway and garden suites that earn well and follow the rules.
We’ll help you compare LTR vs STR with your numbers, then design for solid cash flow and long-term value.

Let’s run your site together and make a clear plan.
👉 Book a quick call today!

Mini Glossary

• MAT: Municipal Accommodation Tax (Toronto) — 4% on STR bookings.

• Principal residence: The home where you live most of the year.

• Vacancy: Time when your suite is empty and not bringing in money.

Short-Term Rentals (STR) & Laneway/Garden Suites in Toronto

In Toronto, laneway suites and garden suites can be utilized as short-term rentals (STRs) under specific conditions. The primary requirement is that the suite must serve as the principal residence of the host. This means the owner or tenant primarily resides in the laneway or garden suite and rents it out on a short-term basis when they are temporarily away.

Key Rules:

Principal Residence Requirement – STRs are not allowed in secondary suites if the main house is the host’s residence.

Registration & Taxes – Hosts must register with the city and pay a 4% Municipal Accommodation Tax (MAT).

Laneway and garden suites are not exempt from STR regulations. Non-compliance can result in fines and penalties.

For a simpler, unrestricted income stream, long-term rentals (LTRs) offer stable monthly revenue without STR limitations. Consult experts to ensure compliance and choose the best strategy for your investment goals.