(April 06, 2015
Q: I have some capital to invest in a rental property. Is it better to invest in a central but smaller unit or a larger suburban property?
A: Real estate investing is one of the most topical conversations at any dinner party or water cooler. Often times as a Realtor I’m asked, “Where is the best spot to buy an investment unit? Is it in the city or the suburbs? Why would I pay the same for a 500-square-foot condo in Vancouver when I can get a 750-square-foot unit for the same price in Coquitlam?”
The answer always comes down to one factor – the ability to have the property rented on a consistent basis.
Sure, your dollar doesn't get you as much in downtown Vancouver, but it's always easy to find a renter. This is a critical factor to look at when assessing whether a property is worth investing in. Access to amenities is often high on the priority list for renters, and you just can't beat that access in the city. Renters don't need a car for the most part in Vancouver, and have access to number of different public transportation options. Property values always go up in the city before they do in the suburbs, like we are seeing in the current spring sellers’ market.
The one factor than Lower Mainland suburbs have that keeps them in the running is access to rapid transit with the SkyTrain. Major cities like New York and London provide suburban dwellers easy access to get to work without having to get in the car. This increases the likelihood you'll always have a renter available to pay your mortgage. While the Lower Mainland is nowhere near the level of the cities mentioned previously when it comes to transit options, there are a number of emerging investment markets that provide value with the extension of the SkyTrain. Any time your investment unit is unoccupied by a renter, it's losing money. This is why central locations are traditionally a more logical choice for a real estate investment, because they are easier to rent. The key to a successful property investment is having someone else pay your mortgage, so this is the most important factor to keep on top of your list.