In June 2026, Kelowna stepped out of BC's principal residence rule for short-term rentals. That got a lot of investors excited. It should also get them careful.
I speak from experience here. I own and manage two short-term rentals at Big White myself, so I look at these numbers from the owner's side as well as the agent's side.
What changed, and what did not
BC's Short-Term Rental Accommodations Act limits short-term rentals to the owner's principal residence in more than 60 BC communities with populations over 10,000, and Kelowna was one of them. Kelowna asked for an early exemption, and from June 1, 2026 the principal residence requirement no longer applies to buildings that the City approved for a short-term rental subzone.
That last part matters. The principal residence requirement still applies in every other zone. You also need a City of Kelowna business licence, provincial registration, and a strata that allows it. A building being on a list is the start of the check, not the end.
A good cap rate can still lose money
Here is an example, with round numbers I chose for illustration. They are not a market average or a forecast.
- Purchase price: $550,000, with 20% down
- Mortgage: 5.5% over 25 years
- Peak summer (June to August): $350 a night, 85% occupied
- The rest of the year: $150 a night, 45% occupied
- Carrying costs: $850 a month (strata, tax, utilities, insurance)
Those inputs give about $28,700 a year in net operating income after platform fees. On $550,000 that is a 5.22% cap rate, which looks respectable. But the mortgage payments are about $32,400 a year. After them, year one is about $3,700 negative.
The summer pays the bills. The rest of the year does not.
In the same example, costs plus the mortgage run about $3,550 a month. Only June, July and August earn more than that. September to May falls short every month.
So the real question is not "what is the cap rate?" It is "how do I cover the mortgage from October to May?" Revenue in the example is about 9% short of break-even. A small change in rates or occupancy moves that in either direction, which is why I wanted a tool that shows it.
What I check before a buyer puts in an offer
- Is the building approved for the short-term rental subzone, and can the unit get a City business licence?
- What do the strata bylaws say about short-term rentals, and are there extra rules or fees?
- What do comparable units actually earn? I ask for real booking history, not a listing's best month.
- What are the true carrying costs, including strata fees and special levies?
- Does it still work if rates fall 10% and occupancy falls 10 points?
Try it with your own numbers
I built a free calculator for exactly this. It shows cap rate, cash flow, a month-by-month view of which months cover costs, and a what-if grid, and it makes a report you can share. If you want a second set of eyes on a specific building, send me a message and I will go through it with you.
Open the Short-Term Rental Calculator
Estimates only. This is general information, not legal, tax or investment advice. Rules and building eligibility can change, and strata bylaws apply separately. Verify with the City of Kelowna and the strata before you rely on any figure. Joe MacDowell, REALTOR®, Royal LePage Kelowna.