It might seem like Alberta is a have-not province over the last few years with the energy sector down turn. When you look at other areas such as Toronto (the GTA – greater Toronto area) have seen gains in prices in areas soar as sales volume increases hit as high as 96% in central Toronto this is driving prices into almost un-rentable territory.
How can rent keep pace with that? Well quite simply it can’t not to support a mortgage with 80% Loan to value, forcing investors who want to operate in that market to put huge down payments equal or greater than commercial rates.
This has forced investors to look further and further out to the suburbs to find rental properties to get decent returns on investment. When you consider multi-family cap rates so low it does not even out pace inflation, you are only land-banking in essence which is a speculative game.
Eventually there can be a shift in interest rates that would bury all those properties bought at those rates, forcing even more cash to go into those assets to prevent massively negative cashflows.
More investors are looking for better cap rates and better cash flow in other markets. Due to the energy sector taking a hit over the last few years we have seen downward pressure on pricing in Alberta overall, but only a small downward pressure on rents.
Since there have been harsh rent controls in Ontario and BC these markets also have those forces working against rental property investors. Alberta has seen rental rate gains back to normalized rates at or above pre-covid19 levels
What this means for investors is that we have the opportunity for massive upside in appreciation, and also an older value-add potential for many older assets that have been allowed to accumulate deferred maintenance for years in Alberta.
Have you thought about rental property in other markets?
If you are considering Alberta locally or from abroad in Canada contact our team to book a discovery call, we are here to help with access to private deals/Vendor financing opportunities just to name a few!
To your success,
Tim Reid
-Respect The Hustle