KJT

Hi all,

I dont know the Canadian market at all, but am keen to know whether there is any potential in an income out of buying and renting out property. I know it would not be huge money, but searching MLS and using the mortgage calculator it seems that it would be possible to generate some profit out of buying a property with two or three flats inside and renting them,

Is this done much in Canada like it is in the UK?

Just an idea at this stage, What are your thoughts?

Cheers,

KJT

Glaswegian

There is a rental market so someone must do it.

The risks here seem greater though. Rental properties are sometimes used as grow-ops and the high humidity can do so much damage the property needs to be demolished. I have also heard that some insurance companies will not provide buildings insurance (presumably for the grow-op reasons) but this could be an urban myth.

As long as you go in with your eyes wide open you might be OK.

Mrs G

iaink

There is a rental market, but the incomes are not great. One guy I know here does very well out of his rental properties, but he has a whole bunch of them spread across town aquired over a lifetime. Other people I know doing it on a small scale make next to nothing, and have headaches dealing with rent arrears and damage to their properties... Havent heard anything about grow ops around here...the current mode for that seems to be to buy a new house in a quiet subdivision, as you are less likely to have a nosey landlord making an inspection every now and then.

Anyway, it seems to me that with property prices more reasonable on the whole here, most people can afford to buy there own place eventually (to actually live in, rather than as an investment!) so the rental market is smaller and generally low$, as once you are paying $800 a month, you may as well get a mortgage???

Glaswegian

I agree but its often recommended that individuals rent rather than buy originally plus there are a whole host of reasons why an individual would prefer to rent (or indeed has no choice but to rent).

Over in Calgary without a large deposit there is not that much available for $800/month mortgage payments.

Mrs G

Glaswegian

I know a guy who had a whole stack of properties and was doing very well for himself ... then interests rates went up in the mid-80's ... I think he lost everything.

I also know a few people who run property management companies in Calgary ... it's not a business that I would voluntarilly get into.

iaink

Ernie owns them outright, so he doesnt have to worry about the interest rate. Lets just call him "independently wealthy". Hes also one of the nicest guys I know too...

hot wasabi peas

I think you have to do a lot of research before you dive in. For one thing there is not really a 'Canadian' rental or property market, there aren't even provincial markets -- rental markets are tiny pin points the a map in Canada and may be influenced by seasonal and/or other fluctuations. If you can choose and get to understand the market you're interested in, plan properly, etc - yeah, it could work.

I have a rental property in Victoria and I'm happy with it... but I'm from Victoria, know the market, know trustworthy people who can rent it from me (so I don't lose money to a property manager company), etc. I'm even considering buying another if what I'm looking for comes available for sale.

I would feel very un-easy about thinking I can just assume what works for me in Victoria would work in Vancouver, let alone another country. But then, I'm not the adventurous property mogul type either, so...

yonk

Umm. What's a grow-op?

Y.

hot wasabi peas

I have absolutely no idea, never heard them. Honest, officer - I don't know anything!

Iginla

Makes me thing of the complex opposite the Foothills Hosp. that has had the 60% sold sign up for the last 8 months.

Overpriced big time. Refreshing to see it not moving.

yonk

Ahh, I lived in a block like that once. Doh!

Biiiiink

I bought a 1 bed +den 850sq ft condo suite in Eau Claire, Calgary and rent it out as a furnished rental. It tends to go on short term to corporate people who are in town on a company transfer/to search for their own property...etc etc.

I was advised that a fully furnished all-in (all cable, utilities, phone (incoming calls only!) ) was the only way to go for that style of property in that location. I spent about 13k CAD furnishing it and getting all crockery/linen/TV/DVD/Stereo etc.

I get 2k CAD a month for it but out of that comes management fee (200 CAD if tenanted, 75 CAD if vacant), tenancy fee (10% of gross rental if rental is less than 6mths), 40 CAD electric, 50 CAD cable, 28 CAD phone, 260 CAD condo fees (inc. sewage and water and heat) and of course it's taxed at 25% gross rental straight to Revenue Canada until I file my returns and usually get it all back. I've only had it 2yrs but so far it's been empty for an average of 2mths a year - during the winter.

It's not a mammoth return but I just needed to put the money into bricks and mortar or else it'd have gone on shoes and handbags

Which city/town were you thinking of buying in? Have a word with a realtor there and see what they advise. I struck gold with mine and if it's Calgary you were interested in I'd be happy to pass on his name to you.

Best,

Biiiiink



Edited to add in my property tax expense - another 136 CAD a month.

Glaswegian

Seriously??

A house is purchased (usually for cash), filled with hydroponics gear and used to grow cannabis ... the permanent high humidity encourages mould growth and the house pretty much needs gutted & refinished.

A decent realtor should know how to spot one and should have marked it on the property details.

The downside is that you can buy it, refinish it & move in and a rival gang will see the lights on, assume its back in business and torch it.

Maintaining rental properties in condo blocks can have its challenges ... a couple of years back a couple of guys were trying to refine cannabis resin in a rental apartment, unfortunately the pot (no pun intended) they were using exploded and set fire to the apartment.

Andy G

I am activly persuing reasearch in this area ahead of our move to Calgary and looking at second or third properties as investment to retirement - so long term.

The best returns, but with a greater investment (in time and money) appear to be in the recreational market in or around the National Parks of AB + BC - with year round short term rental potential - however with this there comes a higher level of maintinance and cleaning if you go for the " holiday let".

My other option is as in the UK, buy near a Hospital or Uni (Calgary has both)and go for a steady income and long term capital growth, Health staff often cant afford to buy and sp rent and student rentals can come with perental guarentees.

Thers's always a market, you just have to target the right one, with the right property at the right price and be prepaired to work at it as a business.

AG

yonk

Yep, it was a serious question. Never come across the phrase before and that's with lots of property/student experiences! Always safer to ask.....particularly as Real estate is my thing! So thanks.