The location of a property will determine the type of renters that will want to live there. Central areas generally have the highest demand, but less-pricey options in working-class areas often have better cash flows. Opt for high-growth areas over those that are in decline. Safety is also an important concern. Renters steer clear of unsafe neighbourhoods, so make sure your income property is in a safe and secure area.
The monthly rent you can charge for a given property will be crucial to determining whether it could be a solid investment. Determine average rental rates in the area to make sure the rent you charge will be able to cover your mortgage payment, taxes and other expenses like insurance every month.
Shopping, parks, restaurants, schools and public transportation are just a few of the amenities renters will be looking for, so make sure they are nearby when choosing a property.
An area with a high number of vacancies, indicated by a lot of housing inventory on the market, means it might be difficult to find renters for your property. It might also reduce the amount of rent you’ll be able to charge, impacting your cash flow.
- Property Taxes
Property taxes are a cost you will have to shoulder with any investment property, so make sure you review the most recent tax assessment to determine if they are high, and if so, why that is the case.
This is another cost you will have to factor in when determining your cash flow. Try to avoid areas where your coverage options might be limited or non-existent, such as a flood plain or other area that is susceptible to natural disasters.
Challenges continue for Calgary’s rental market
“Very cautious optimism” is how Gerry Baxter, executive director of the Calgary Residential Rental Association, describes the industry’s view of Calgary’s current rental landscape.
While Canada Mortgage and Housing Corp. (CMHC) pegged Calgary’s rental vacancy rate at seven per cent last fall – the highest it’s been in more than 25 years – Baxter says he thinks residential vacancies in the city are actually closer to the eight-to-10-per-cent range.
“There’s been some slight improvement in the rental market over the last few weeks, but it’s still a challenge to rent,” said Baxter, attributing the slack rental market to the economic downturn that started in late 2014 and early 2015.
In Calgary’s competitive rental market, homeowners looking to make a few extra bucks must set themselves apart
Short-term home renting has been going on for decades, but has now become an entrenched part of the economy, and a popular way to generate a bit of extra income, thanks to rental services and facilitators, such as Airbnb, VRBO, Kijiji and property management companies.
When Angela Casale lost a long-term tenant in the Ramsay property where she runs a wellness clinic on the lower floor and has a rental unit upstairs, it meant adjusting to Calgary’s competitive rental market.
“There are no renters to be had. Apartment buildings are giving people three free months and TVs and all kinds of things,” said Casale.
Housing experts predict Calgary’s rental market to see another year of high vacancies, low rents
Calgary’s rental housing market this year will not change much from 2016 as historically high vacancy rates will continue to usher in incentives and lower rents, say experts.
“We expect the vacancy rate to remain close to 2016 levels” said Richard Cho, Calgary-based principal market analyst for Canada Mortgage and Housing Corp. (CMHC).
Economic conditions create ideal situation for renters, challenges for landlords
In the most volatile economy in the country, it is no big surprise Calgary landlords endured 2016 with the highest rental housing vacancy rate in a quarter of a century.
“It is a free market economy, with all the ups and downs, and in the middle of (this downturn), you just hope many will survive it,” said Gerry Baxter, executive director of the Calgary Residential Rental Association (CRRA) of Calgary’s current seven per cent vacancy rate.