Expert tips for choosing an investment property in Calgary

With the way real estate prices have been headed, even $1 million doesn’t seem to get you much in the major Canadian cities anymore. However, there are still some areas in the country where the dream of affordable homes is much more attainable, and one major city attracting investors is the city of Calgary.

For any investors interested in the Calgary area, we wanted to take an opportunity to go into more depth on why you should invest in Calgary and how to choose the perfect property for you based on your budget and needs.

To help us with that, we spoke with Jesse Davies, a top local realtor, about some of the things you should know when choosing an investment property in Calgary. Not only is Davies an agent working in Calgary, but he is also an investor himself and has a family history in the Calgary real estate industry. When he speaks about the city, you can be assured his information comes from a deep wealth of knowledge and experience in the area.

Why invest in Calgary?

Calgary is one of Canada’s major metropolitan areas and has all the comforts you would expect from a city of its size. In addition, the city has been appealing to newcomers for its growing and diversifying economy and its beautiful surroundings, including the nearby mountains that many Calgarians enjoy visiting.

As far as investing goes, Calgary has managed to stay relatively affordable, but many are pointing to a bright future for the city.

“I think Calgary has a great opportunity to outperform the rest of Canada due to the fact that our real estate prices are extremely affordable,” says Davies. “Beyond that, it’s a beautiful, clean city and incredibly friendly. We have a professional hockey team, a professional football team, and some great amenities like world-class swimming areas, tennis facilities, golf courses and more. On top of that, Calgary is one of the sunniest cities in Canada, even when it’s cold, and that can be attractive to a lot of people.”

Investing for different budgets

Affordability is one of the big highlights coming out of Calgary and the city has a lot to offer for people looking to invest with different budgets.

When it comes to homes, the average single-family home in the city sold for approximately $547,300 in December of 2021, while semi-detached and row houses went for $432,400 and $300,100 respectively. Those prices mean that Calgary is one of the most affordable major cities to buy real estate today, while still enjoying a fantastic return on investment. On average, homes in the Calgary market appreciated by 10% in the last year.

For those looking to get into the market for a little less, the condo market in Calgary has properties available for $252,000 on average, which makes this one of the lowest barriers to entry markets.

“With the way that the market has gone, condos haven’t yet recovered in the same way as other segments,” says Davies. “So as houses become too competitive and too expensive, people are being forced to consider condominium living. But we also see people that are coming here from other provinces, usually executive couples or a single person in their early twenties that are looking for affordable condos they can actually purchase, whereas if they’re from Vancouver or Toronto, for example, they can’t afford a condominium based on their income level. So this gives people the ability to get into an affordable market that has good potential to grow.”

In terms of what condos to look out for, Davies offered this tip:

“I think there’s some great opportunity in buildings that are five to 10 years old. The reason that I like those types of assets is that there’s some history on the condominium. So you can review the condo docs, the quality of the build, and such. “

In terms of investments with the best bang for your buck, Davies highlighted potential in older semi-detached houses with multiple units that offer a good balance between price and opportunity.

“These work both from an appreciation and cash flow perspective, because the majority of the value of the asset will be in land value because it’s an older property, but the best use will be to continually rent it out because it would be cash flow positive.”

“Now if you have the budget, you could also buy a side-by-side duplex that has separate entrances and convert that into a legal fourplex,” continues Davies. “Something like that would cost you about $650,000, while each half of a duplex might cost you $400,000. So you can see there’s actually a discount for buying both sides.”

Davies goes on to explain that this segment offers a lot of options for investors who are willing to make improvements on their property, such as renovating for legal basement units. And as the home itself ages, these lots can become valuable locations for new builds years down the line, leveraged from the equity of the existing homes.

“The asset will hold its value because of the value of that land to a developer. It’s only going to continually go up as there’s less and less inventory as they build out in these inner-city communities.”

Advice for rentals

Davies also offered some advice for those looking to rent their properties. For those looking to buy from out of town, he stresses that you may want to consider newer builds that will require less attention and maintenance on your part.

“For example, if you’re buying an older building that’s built in the fifties and sixties, that’s obviously going to come with a lot more attention and care as things like appliances, furnaces, roofs and the like are coming to the end of their life. Whereas, if you kind of want to be a little more hands-off and not have to worry about that type of stuff, then maybe look at buying a newer home that was built in the last five to 10 years or so, and the likelihood of you having these types of issues will be a little less.”

Areas to invest in

There are multiple different areas that are great for investment in Calgary, but finding the right one for you is crucial. And when it comes to rentals, the surrounding area can have a big effect on the rent you can charge and the kind of tenants you can take on.

“I already touched on the inner city, which I like because of the land value and its proximity to the downtown core and most of the amenities in Calgary. So you’ll be close to the rivers, walking paths, and infrastructure that’s well developed.”

Further out into the suburbs, however, Calgary is experiencing the same high demand and supply issues as many other areas, causing a lot of competition between buyers and a very hot real estate market.

“The suburbs are some of the hottest markets, right now. For example, the Northeast is probably one of the hottest markets I’ve ever seen,” said Davies. “Also, new builds are extremely hot. There are waitlists of 40 to 60 people and they’re only releasing around 10 lots a quarter, so they have people lining up at 6:00 a.m. in the morning to try and buy. I was lucky enough to get a bunch of investors into some new builds and they are seeing great cash flow.”

“If we talked in, in 2020 or early 2021, our conversation would be a lot different than what we’re experiencing right now. And it’s just because there is such a lack of supply and I don’t really see that getting much better very quickly.”

Working with the right agent in Calgary

If you are interested in investing in Calgary, having the right agent can make all the difference. Davies and his team are ready to help you not only buy but to make the smart investment choices that will perform best for you.

Contact Jesse Davies on his site for more information about investing in Calgary.

2022-02-01 13:00:00

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