How to Decide if Investment Property in Edmonton is for You

Posted by Braden Equities Inc. on May 16, 2017 8:35:00 AM

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It takes much consideration on behalf of investors to choose an excellent location for their investment property. The location will impact the success of it: is there a high tenant turnover in that area, are amenities close by, is it a good location for your ideal tenants, is the economy strong, etc. Such questions need to be asked and answered before a decision can be made.

Why Choose Edmonton as the Location for Your Next Investment Property?

Besides being the City of Champions and exhibiting a strong sense of community that many find appealing, Edmonton is a stable city in terms of growth. Within city limits, the population of Edmonton grew 14.8 per cent since 2011 when the last federal census was conducted. With a population count of 932,546, it is the fastest growing major city in Canada. This increase in growth was largely centered in the suburbs south of the Anthony Henday ring road but was also seen in the downtown core, too. According to Mayor Don Iveson, Edmonton is on track to break the one million population threshold within a decade.

Compared to other major cities in Canada, Edmonton is the most enticing location to buy a rental property. While Calgary has been an appealing city in the past for businesses and prospective residents, it has been hit hard by the recession, resulting in job loss spanning all industries. Calgary also has a large inventory of rental properties at 8,102 compared to 5,233 the same time last year. With this many units on the market, finding tenants will be challenging. As for other provinces, B.C. rental property prices still remain high. The capital expenses required in Toronto are high as well. Significant capital expenses, along with a capped market, makes these locations questionable for investors. Edmonton, on the other hand, still sees reasonable prices and has a strong natural population growth.

Anticipating Investment Property ROI in Market Conditions 

Although Edmonton has a large tenant pool to choose from, it also has a higher than normal inventory of rental properties due to the current economic state of the province. Though this is not favourable for ROI expectations, it is a good time to break into the Edmonton real estate investment scene. Property sales are directly linked to the health of an economy and fall with restricted economic activity. As a result, you will find a greater supply of houses and multi-family buildings at attractive prices, which can be turned into profitable investment properties.

When ROI is considered, it must be thought of over an extended period of time. In this current market, you will not see a high ROI. However, if the property is kept for many years, you will see a significant increase because of the cyclical nature of the real estate industry. It is only when the market has recovered that you will see a healthy ROI from your rental property. Therefore, you must calculate the expected ROI of the building you are considering to determine if you can be successful with the amount generated.

Related: How to Calculate Potential Income From Your Multi-Family Property

Although ROI is largely influenced by market conditions, investors can do things here and there to increase it. A general rule of thumb is that the less money an investor puts into a real estate deal and the more they mortgage, the better their ROI will be. If an investor puts more money down and mortgages less, their ROI will be lower, but their net income will be greater. Certain upgrades to a multi-family building, such as providing better amenities and sprucing the building up, can increase the building's ROI and overall value, too.

Investment properties are more profitable for investors over a long time frame, especially if they are purchased in a location staked for growth such as Edmonton. It is during this time that an ROI grows and generates cash flow. In a recession, ROI will not be as high; that's an aspect investors must consider before purchasing.

Read our case study to learn how to increase your ROI on an underperforming investment property.

Read our Case Study:  Transforming Multi-family Property Performance



Topics: Investing with Real Estate

With nearly 40 years in business, Braden Equities Inc. is one of the premier property management companies in Edmonton and the surrounding area. Our management style is tailored to the unique needs of each one of our clients, and we work as a team to ensure that every project is treated with the care and attention it deserves. We pride ourselves on having the best staff in the industry, backed by strong, proven management systems that deliver results. We firmly believe that paying attention to the details can make all the difference.
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