Is this Canada’s top investment market?

Very affordable housing prices and landlord-friendly laws are conspiring to make Edmonton one of Canada’s top investment markets right now, and the city is attracting plenty of attention countrywide.

“The attractiveness of the Alberta market to out-of-town investors is we have a few good advantages to doing business here, which is a good tax rate, no HST, no land transfer tax and no rent control, meaning you can increase rents to whatever the market will support once per year,” said Warren Pratt, a realtor and owner of Alberta on Fire Investor Team. “Reasonable landlord and tenant rules have created a good balance between renters and landlords. There’s an ease of doing business and an easier path to being a long-term landlord, and those are a few of the key things that draw investors to Alberta. In Edmonton, we get a lot of long-term buy-and-hold investors from Ontario, B.C., and Calgary.”

Pratt extols the city for its reasonable housing prices—the result of a balanced market, which he says makes fewer investors reliant on the condominium market. Instead, investors can purchase properties in the freehold market for around $400,000-450,000 that cash flow about $500 a month after expenses. However, Pratt says multifamily dwellings offer the best bang for their buck, especially compared to other major Canadian markets.

“You can scale up from there and get anywhere from six to 12 units, and you still get an incrementally higher cash flow,” he said, noting that such properties require commercial mortgages, for which borrowing rates are historically low. “We see a lot of B.C. and Ontario investors take a portion of their capital and put it into small multifamily buildings. In Edmonton, sixplexes and eightplexes sell for $1-1.2 million, whereas they’re double or triple that in other markets in the country. It’s attractive right now for investors who can’t cash flow in other cities and are in search of both value and brand new product, which, to them, is low risk because they don’t have to worry about deferred maintenance and vacancies.”

The south, west and southwest areas of Edmonton are preferred submarkets because of their affordable price points for ownership and robust rental demand, and because the city is very much car-oriented, even the suburbs offer value.

“Spruce Grove is 15 minutes west and Leduc is 15 minutes south. Lots there are less expensive but rents are the same as they are in the city, so you achieve stronger cash flow,” said Pratt. “Leduc has the international airport and it’s very close to the Amazon warehouse, a new hospital and new schools on the south side. Leduc also has the industrial park, which hosts a lot of oil and gas business, so there are a lot of job prospects in Leduc as well. Edmonton, and Alberta in general, has one of the highest per capita incomes in the country and a more affordable cost of living, meaning there’s more disposable income that can be spent on rent.”

2021-09-02 12:29:30

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