Now is a great time to look at investing in a condominium. While this is something you would expect a Realtor to say, allow me to explain why. Although the Vancouver single family market has boomed over the last year and half, the downtown condominium market has remained relatively stable (see graph below). I believe there is an opportunity here.
Mortgage lenders have tightened the reins, but with a 25% down payment, you can buy a property that will break even (and not trigger income taxes), or generate a small cash flow after paying property taxes, strata fees and monthly mortgage payments. An investment property is also a great tax write-off. Maintenance costs, including strata fees, and mortgage interest can be written off against your income.
Here are some tips for potential investors:
Look for units in buildings that have good curb appeal – it will be easier to rent out and you will have more tenants to select from.
Review rent expectations on Craigslist – this is where renters go, so go there first! It will give you an idea of how much you can rent out a unit for. Then, go in a little bit lower to attract more prospective tenants. The ability to select a good quality tenant is crucial to minimizing your turnover and repair costs.
What to pay for – when you purchase a condo, you pay on a square foot basis. However, when you rent it out, you can charge rent based on the number of bedrooms. For example, a 600 sq. ft one-bedroom condo will cost a lot more than a 500 sq. ft. one-bedroom, but they may rent for the same amount. However, keep in mind that views, amenities, a quiet location and well managed building are things that will retain a good tenant once they are there, so pay attention to these intangibles.
There are literally so many units to choose from that it is easy to get “analysis paralysis.” To avoid this, get your financing ready, establish your budget and work with an experienced Realtor. Then, take the leap. Otherwise, you may look back and realize that your biggest mistake was not doing anything at all.
Please give me a call if you would like more information on ‘the numbers’ or to view some potential investment properties.