The right answer depends on financing and zoning as much as on which one pays more per night. Here is how the two actually compare in Kelowna.
Written by Serge, Founder, Kelowna Carriage Homes
Before comparing nightly rates to monthly rent, know what you are legally allowed to do. Under BC’s Short-Term Rental Accommodations Act, in communities over 10,000 people, a short-term rental, a stay under 90 days, has to be either the host’s principal residence or one secondary suite or accessory dwelling unit on that same property. A carriage home qualifies as that one accessory unit, as long as you live in the main house.
On June 1, 2026, Kelowna became the first BC municipality to opt out of the principal-residence requirement, based on its rental vacancy rate meeting the province’s threshold on CMHC data. That exemption is narrow: it applies to buildings already rezoned into the city’s short-term rental subzone, mostly tourist-commercial buildings, not to a carriage home on a standard residential lot. For a typical residential property, the standard rule, live in the main house and rent out the one accessory unit, still applies.
Practically, this means most owners who want to run a carriage home as a nightly rental can, provided they live on the property. Owners who do not plan to live there themselves are restricted to a long-term tenancy of 90 days or more.
Long-term rent is the number with a real source behind it: CMHC’s 2025 Kelowna averages are $1,395 for a studio, $1,596 for a one-bedroom, $2,118 for a two-bedroom, and $2,895 for a three-bedroom. Those are surveyed averages across existing rental stock, not a forecast for a brand-new unit, which typically rents at or above the average for its size.
Short-term nightly income has no equivalent published benchmark. It depends on booking-platform demand, seasonality, and how the unit is marketed, and it swings far more than long-term rent between a July weekend and a January weekday. Treat any specific nightly-revenue projection you see elsewhere with some skepticism, and check it against actual booking-platform data for comparable units in your neighbourhood rather than a rule of thumb.
Short-term stays in BC also carry roughly 11% in combined provincial and municipal accommodation tax, 8% PST plus up to 3% Municipal and Regional District Tax in Kelowna, on top of a business licence requirement. That comes off the top of nightly income before it is fairly compared to long-term rent.
If you plan to fund the build through a CMHC-insured refinance of your principal residence, up to 90% of its value, the insurance rules require a minimum 90-day tenancy on the suite. That financing route is not compatible with running the unit as a nightly rental. Cash, a HELOC, or a standard uninsured mortgage do not carry that restriction; see financing & incentives for the detail.
This is worth deciding before you apply for financing, not after. Changing your mind later, from long-term to short-term, could mean refinancing again under different terms.
Central Okanagan rental vacancy rose to 6.4% in 2025 from 3.8% the year before, the highest of any major Canadian metro that year; within the City of Kelowna specifically it rose from 4.1% to 6.9% (CMHC). A softer long-term market means more time to find a tenant and more negotiating room for renters, though it does not mean a well-located unit sits empty.
A nightly rental carries a different kind of vacancy risk: it is empty by design on nights nobody books it, and that risk concentrates in the off-season rather than showing up as one long vacancy. Neither risk is worse across the board; they are different shapes, and which one you can tolerate depends on how much of your income the unit needs to cover.
Long-term renting suits an owner who wants predictable monthly income, minimal hands-on management or a property manager, and financing through the CMHC-insured refinance route. It is also the only legal option if you do not live on the property yourself.
Short-term renting suits an owner who lives on-site, wants to manage bookings actively or through a co-host, and is comfortable with income that varies month to month in exchange for a potentially higher ceiling. It also keeps the unit available for your own use between bookings, which matters to some owners more than the income does.
Long-term rental typically needs a landlord, or rental-dwelling, insurance policy, distinct from standard homeowner coverage, and a standard residential tenancy agreement under BC’s Residential Tenancy Act. Short-term rental operation adds a business licence, the accommodation tax registration described above, and often a different insurance product built for nightly stays; check with your insurer before assuming a homeowner policy covers either use.
Neither path carries more paperwork overall than the other; the paperwork is just front-loaded differently. Long-term renting front-loads the tenancy agreement and tenant screening; short-term renting front-loads the licence, tax registration, and insurance setup, then repeats cleaning and guest communication with every stay.
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Costs, timelines, rents, and incentive amounts on this page are estimates from the sources cited, current as of September 2026. Each is confirmed in writing in your free feasibility study. Licensed and insured; documentation available on request.