Sometimes the best part of my job is meeting really smart people. They’re planners. While I struggle to sign-up for parent teacher interviews in advance – meaning, I meet my kids’ respective teachers on Tuesday at 4pm, Wednesday at 3pm and then again on Wednesday at 7pm – these Planners are looking to buy a property for their college-bound kids… about 15 – 20 years early. Why so early? Well, it turns out that there are a number of good reasons:
- Local real estate has proven to be an effective long-term wealth creator. By purchasing a condo that you intend to use in the future and renting it out in the interim, you get the added advantage of earning regular income from your investment.
- In the future, you can avoid paying through the nose for a dorm room or apartment.
- After the four to five (or, heaven forbid, six) years your child spends in college, you can sell the apartment. If you purchase the property while Junior is crawling instead of driving, the odds are better that you’ll cash out with a profit.
Here are some tips for investing in rental property:
There is no doubt that Vancouver’s housing market is HOT and it’s not showing any signs of cooling down. While prices are sky high in some areas, you can still get a condo for:
- Less than $300,000 near SFU in Burnaby;
- In the $400,000 range around Capilano University in North Vancouver; or
- Between $500,000 – $600,000 near UBC in Vancouver.
If you’re in it for the long haul, you’ll generate income and capital appreciation over time.
RENT IT OUT!
Once you have an idea of what you can afford to buy, figure out what income your rental property can produce.
Local market conditions will determine how much rent you can charge. In desirable areas like Metro Vancouver, the potential for regular rent increases gives your income a good chance of keeping up with inflation. In its recent Rental Market Report, CMHC reports that areas like Vancouver, Richmond and the North Shore are seeing vacancy rates as low as 0.7% making our region one of the tightest rental markets in the province.
NEED HELP? GET HELP!
If you can’t imagine taking on the role of “landlord” while juggling your responsibilities at home, hiring a property management company is an alternative to overseeing the property yourself. But, remember, those fees will cut into your profits.
If you’re considering a rental property, planning is the key to success – the sooner, the better! But, if your child is only a few years away from college, it’s not too late. You can still buy now and hang onto it after your child graduates. Investing in Vancouver’s real estate market today can pay off smartly for you – and your child’s future.
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