Maybe you have heard of the residential rental crunch the city of Calgary is experiencing this year. According to Canada Mortgage and Housing Corporation, Calgary’s vacancy rate is below 0.5%. The situation has been so extreme the U of C’s student union put out a call for Calgarian’s to consider housing a student for the year, due to the remarkably low number of affordable suites available for students to rent. Obviously there is a need for more rental suites in the city and not just the “affordable housing” that is in the headlines.
Combine this with the large supply of properties currently for sale in the city and the savvy investor will see an opportunity in the market. In the inner city alone there are nearly 200 condos for sale under $300,000, many of which would make excellent investments as rental units. Finding a tenant is not a problem in today’s tight rental market and there are solid investments to be found with the abundance of properties to buy.
Given the real estate environment in the city you may be looking to expand your investment portfolio into real estate. Of course the question becomes where to start. Begin with a call to your banker or mortgage broker. You may also want to speak to your tax accountant to explore how owning a rental property will affect your tax position.
Once you know what price point to focus on, start looking at properties. But why look to condos and not single family houses? Several reasons jump to mind: less property to manage and maintain (ie roofs, fences, furnaces, etc), the initial investment is lower due to the lower price point compared to single family homes and typically there is less wear and tear on the suite based on renter demographics. Proportionally, the rent received per dollar invested can be greater in inner city condos compared to single family homes.
If the condo rental market looks good to you, find a realtor who specializes in the condo market segment to guide you through the purchase process. You may also want to explore the option of having a management company look after the property, find tenants, collect rent, etc. Consider the option of renting the property fully furnished, which will bring in much larger rental income. Find out what different types of properties are renting for; a one bedroom suite verses two, with parking and without, one community compared to another, etc. In addition to looking in the classifieds section of the local paper for this information there are several online classified rental sites for the Calgary area that are excellent, including pictures and greater detail than the paper offers. In addition, once it is time to find your future tenant you can utilize these sites at a very reasonable rate.
It is important you familiarize yourself with the laws pertaining to landlords and tenants in Alberta. Check out www.servicealberta.gov.ab.ca as well as www.landlordandtenant.org for more information. Good luck with your income property!