Calgary is a diverse and vibrant city, with a wide array of possibilities for the individual or group looking to start property investment. There are three important questions, however, that the prospective investor should ask before looking into Calgary investment properties.
Choosing Your Investment Property’s Location
The largest part of any investment is attracting the right tenant. By researching the neighborhood where the property is located, one can get an overview of the types of tenants they will attract, what average monthly income to expect, and how often their tenants will vacate. Is the investor looking for a long term family tenancy, where they family can rent an entire house on an average income? Or is the investor looking at a room-to-room tenant, one that needs a minimal private space and is okay sharing the house with other tenants, while benefiting from a lower rental cost?
Another important aspect of location is proximity to Calgary’s transit system. While Calgary is an affluent city with vehicle ownership a point of pride, more often than not the average Calgarian will use transit at some point. In fact, Calgary transit ridership has increased year over year at a nearly constant rate. While often overlooked, transit proximity could be the key to a long term tenant above almost any other consideration, especially if that tenant does not own a vehicle.
Planning for Expenses Associated with Rental Properties
Hand in hand with location, property tax and upkeep is the next most important subject to consider. It does not make sense to buy an investment property in a highly desirable area of Calgary, only to use most of the income from that investment paying upkeep and taxes.
Another important aspect to consider is the condition of the property when it is purchased. Does the investment property require extensive renovations to make it market ready, and does the price of purchase reflect that? It is all well and good to buy in Mount Royal, Edgemont, the Beltline and other highly desirable locations, yet to have to extensively renovate the property can bury your investment before the first return is ever seen.
The Calgary Rental Market: Vacancy Rates & Lease Terms
Calgary is currently (2014) riding a rental surge, with average vacancies for rental properties hovering near the 1% mark over the past 18 months. How long the surge lasts, and when it will end, is all part of the risk assumed when starting out in the Calgary investment property market.
A prime example are properties near Calgary’s three major post-secondary institutions, where a tenant is expecting lower rent, a well maintained property, and easy access to their institution of choice, usually within the “magic 10 minutes” walking distance. All that, and they are only expecting an 8 to 10 month lease at the most.
In counterpoint, a rental property near the downtown core, or even within, can see a long term tenant that can afford higher rent, yet expects their property to be in excellent condition, and expects professional and rapid response to any of their concerns.