New Years, New Goals: 5 Reasons why condos should be part of your investment portfolio in 2018
By Condo Culture
2018 has arrived and we hope it’s been treating you well! Along with a new year comes new experiences, new projects, new opportunities and a fresh new game plan to make this year your best year yet! Last week we covered 5 reasons why living in a condo can help you maximize life in 2018. (If you were busy taking back that Jingle Juice, click here and get all caught up → http://bit.ly/2EFhsDA) Today, we’d like to share 5 reasons why condos should be part of your investment portfolio in 2018. Ready? Set? Let’s roll.
#1 Kitchener-Waterloo and Hamilton continue to develop and grow, which is positively causing change in the local real estate market and specifically the condo markets of each of these areas we call home. The Star stated the following in an article published July 7th, 2017; "As fewer people enter the ownership market — all other factors remaining equal, population growth continues, the job market is very strong — you're going to see that demand filter in somewhere. If they're not buying, they're renting," said Hildebrand.
To give you an idea of how things have changed over the past year, we’ve gathered some additional data from CMHC and drawn average rental rate comparisons between 2016 and 2017.
In 2016, the average rent prices in CMHC’s Rental Market Reports were:
- $967 in Hamilton
- $1007 in Kitchener-Waterloo
Looking at the data just one year later, you’ll notice there’s been significant increases in the average rental rates across both of these areas:
- $1032 in Hamilton, an increase of 6.72%
- $1106 in Kitchener-Waterloo, an increase of 9.83%
It’s important to note that the rental rates shown above represent the market as a whole. The condo units in many of our newer projects and popular existing buildings tend to be much higher, another reason why condo units in some of our more popular buildings tend to represent such great investments. To give you an idea, typical rental rates in the Kitchener-Waterloo and Hamilton area for popular buildings in the core areas generally range between $1450 to $1650 for a 1 bedroom condo unit and $1800 - $2200 for a 2 bedroom unit depending their size. As the core of our cities continue to develop, their attractiveness as a place to live will also continue to increase and so too will the demand for high quality rental condominiums in these areas.
#2 Condos in the core downtown areas with higher rents typically have higher professional income tenants. While it’s still important to be diligent when selecting a tenant, these tenants are generally great tenants with lower maintenance and headaches than properties with lower rental rates. Finding quality tenants helps protect your rental property, reduces vacancy, provides peace of mind and reduces time managing your rental property so it can serve you as the investment you intended, not provide you with a second job.
#3 In addition to typically requiring less management from a tenant perspective, they can also save you time in maintenance and repairs. Condos, unlike single detached homes, often represent a more hands-off, turn-key investment for the simple fact that there’s no exterior property maintenance and no usual list of repairs to deal with that often come with freehold properties such as roof shingles, windows, furnaces, air-conditioning units, sewer back-ups, snow and grass maintenance, etc.
#4 Trends come and go, but here’s one that’s marked its ground and sticking around for the future. More and more of us are choosing to live urban from young professionals to empty-nesters moving from their suburban homes and looking for a more convenient, walkable lifestyle. Over the past decade, urban living has become more than a trend and has transitioned into a movement of people looking to enjoy the mix of old and new urban shops, cafes, restaurants and amenities that are shaping our downtown areas. We’ve noticed a significant shift in this throughout Kitchener, Waterloo and Hamilton and surrounding areas over the past few years as more and more amenities take hold and more and more people have shifted their preference to this style of living. The movement has brought a new vibrancy to cities not only across the province, but across the country too. With urban living continuing to grow in popularity, downtown cores will become much more desirable and in higher demand for those looking to buy or rent property. As an investor, renting out a condo suite in an urban area allows you to take advantage of some of the city’s best locations with many condominiums providing top notch amenities, high walk scores and close proximity to light-rail transit, bus, bike share programs and GO Trains. Less commuting means more living, and that’s a trend that’ll never go out of style.
#5 Rent costs fluctuate from year to year and city to city. Generally, larger cities have higher rental costs than smaller cities. So, which booming cities are investors excited about this year? We could spend an entire blog post talking about why you should invest in the Waterloo Region (oh wait, we did that in November already…blush - see our November blog post here) but the truth is Kitchener-Waterloo continues to lead the ranks when it comes to rental rates vs. purchase price making it an excellent place to invest. Rents of many condominiums in Kitchener-Waterloo continue to cover all or most of your regular monthly expenses meaning you can put down your down payment, buy a property and your tenant can quite literally pay down your mortgage for you. Buy numerous properties and you can see where we’re going with this - your investment portfolio starts to look really good and so too does your retirement!
As for Hamilton, it has made its return as the #1 city to invest in 2017 once again since 2012, and is set to outperform many other regions of the province over the next five years! “Hamilton’s reputation from the outside is a little sullied,” said REIN founding partner Don Campbell. “It’s not a steel town. While steel is still a player, high tech and young professionals are redefining the city. Hamilton posted $562 million building permit values by the end of the second quarter, whereas Mississauga totalled $385 million for the same period.” What does it mean? That Hamilton’s economic development department and its efforts to attract jobs back into the city are not only on track, but are looking to break a few more records over the next few years. Hamilton has been attracting investors all over the GTA, Halton Region and Waterloo Region and one things for sure, it’s not showing any signs of slowing down. REIN (The Real Estate Investment Network of Canada) (REIN) ranked Hamilton as #1 and interesting Kitchener and Cambridge placed second with Waterloo landing third. As locals to all of these areas, we couldn’t be more proud and more excited about what’s to come in 2018.
As your condo experts, our priority is to inform, prepare and guide you in finding the best opportunities and investment options this year. Real estate has always been proven to be a great long-term investment option and not only preach but practice this ourselves. Whether you’re invested in the market already and looking to build your portfolio or looking to get into your first investment property in 2018 to start building wealth, we’re here to help.
Kitchener, Waterloo, Hamilton and their surrounding areas are all in the midst of a very unique turning point and the future is now. If you’re considering investing in rental properties or would like to evaluate and add to your current investment portfolio, give us a call or reach out and let us help you take advantage of the market- we strongly believe you’ll be so glad you did.
Happy Friday!
Sources:
http://www.cbc.ca/news/canada/hamilton/cmhc-hamilton-rental-rate-1.4422585
https://www.thestar.com/business/2017/07/07/toronto-tenants-face-tighter-squeeze-report.html
http://www.mah.gov.on.ca/Page16420.aspx
https://www.rentboard.ca/rentals/rental_rates.aspx?locid=4385
https://www.rentboard.ca/rentals/rental_rates.aspx?locid=4257
http://www.investinhamilton.ca/hamilton-reigns-as-top-place-to-invest/