North Shore Real Estate Investing
What you need to know about Vancouver/North Shore Real Estate Investing
As a Vancouver and North Shore Real Estate Agent, I am seeing a rising trend in young people taking advantage of government programs to purchase. They’re renting on the cheap, while owning a secondary property to also have a foot in the market.
I’ve also worked with downsizers who are buying their future three-bedroom condo as a place to live in the next two-to-five years while they de-clutter and downsize slowly. Additionally, I have advised investors who are pulling out home equity lines of credit to purchase presale opportunities that are at today’s market value.
When to start investing?
The ideal time to consider investing in real estate is when you have a decent amount of savings and want to diversify beyond the stock market, while planning for possible revenue streams. Once you have done the math and determined it is time, let a real estate expert help you make the decision if the risks and rewards make it a wise decision.
My top three tips for investment buying
- Know the neighbourhood intimately, or at least understand the neighbourhood and what drives it. Working with an agent who knows the rental market and future city planning will help gauge long-term rewards when it comes to future resale and rental rates
- Know your cash flow scenario, and make sure your comfortable with it for at least five years. Meaning, some markets right now offer immediate cash-flow opportunities on condos (monthly rent > monthly cost). Cap rates are one way to measure if you are familiar with that level of return. I find most of my clients look at a simplified cash-flow statements to understand if the product is right.
- Ask yourself, are you in it for the long-term value or short-term cash flow opportunities. Presales offer great opportunities (and risk) to secure pricing ahead of a rising market that gives you net gains on the asset, if you were to sell upon completion. However, older resale inventory may give you a less-expensive investment but could turn a bigger monthly income in rent, though you need to save for future building maintenance, etc.
*Before considering a potential investment property, buyers are cautioned to seek advice from their accountant and/or tax specialist as to their personal financial and tax situation.
My top three investment mistakes to avoid
- Know your future tenant – it will help you understand what your product should be. Want to rent to get a premium on your rental from a young professional couple willing to pay extra? Then make the amenities are adequate and that it’s within walking distance to shops and restaurants they enjoy. Want to rent to a young family that you may find is stable for two to three years of rent, don’t invest in a ground floor unit with close access to a back alley (think safety).
- Don’t put your eggs into anything with rental restrictions. Buildings that have rental restrictions generally have long wait lists for tenants.
- Always read strata documents. You need to feel comfortable with how your strata is managed and what investments in the building have been made. Your agent should be able to shine a light on all the documents with you (depreciation report, minutes, annual general meeting, financials, etc.) and really help you understand them. Though you are advised to always seek legal advice, a great agent can also help highlight any potential red flags or items you need to be aware of.
Follow the money
The financials of a building are very important – not necessarily that they have big cash bank accounts but more that they are spending it. You want an active strata council that spends money on maintenance – a condo is like a house, it needs upkeep.
What to look for?
In terms of what to look for in a property when it comes to investing versus buying for personal use, I say opt for simplicity – a building with not a lot of outside amenities is good, as it means less to go wrong. Balconies and decks are great, and while south-facing views are always important for resale, renters generally don’t care and will not pay a premium for the views.
Finally, when it comes to investing right now, three neighbourhoods in Vancouver and on the North Shore I think buyers should consider are Lonsdale Corridor, Lynn Valley and the Olympic Village/Waterfront corridor.
Don’t hesitate to contact me or any VPG real estate experts with your investment questions.