The Hottest Canadian Condo Market for Investors
Yesterday we talked about how, despite the risky markets in Toronto and Vancouver, there are still some great markets around the country for the investor. Yesterday we looked at the condo market in Montreal, the second-hottest market overall. But where’s the absolute best place for investors to put their money right now? Those looking to buy rental property, and are looking towards condos to do it, might want to turn towards Edmonton – hands down the best condo market in the country for investors right now.
The prices might be a bit higher in Edmonton than they are in Montreal, sitting at $343,347 in the Western province. But that’s still relatively low when you consider condo prices in other Albertan regions, namely Calgary. And the vacancy rate is quite lower than you’ll see in Montreal, with Edmonton investors enjoying a very low 1.7 per cent. That means supply is extremely tight, and there are lots of potential tenants on the market. If you’re heading to Edmonton though, don’t be looking for high-rises. Instead, turn towards the townhouse condos.
“Many of my clients look to townhouse condos as a great starting place for their real estate investing,” says Corey Young, an experienced real estate investor , and a real estate agent with Re/Max. “They have a lower purchase price, which means a lower down payment is required. On a typical $200,000 three-bedroom townhouse, the down payment is only $40,000.”
And he continues, “A typical $200,000 townhouse that is rent-ready has a condo fee of less than $250 per month. After paying the mortgage, taxes, insurance, and condo fee, townhouse condos can usually see cash flow between $100 – $200 a month. At $200 per month cash flow, that gives an investor a 6 per cent cash-on-cash return, not including any mortgage paydown or property price.”
Throw another average of $2,000 per month in rent on top of that, and it’s easy to see why Edmonton is such a popular place for investors. But it’s not just lucrative rents and low prices that are driving investors to these types of properties. It’s also the fact that they’re relatively maintenance-free.
“Usually these types of properties require a little less repair and maintenance than a typical single-family home,” Young says. “The condo association takes care of the repairs on the roof, windows, doors, landscaping, lawn care, and snow removal. Less repairs and no maintenance for an investor means less calls from the property manager with repair issues. Condos also tend to attract quality tenants, which are key to any investor staying in the game.”