Buying an investment condo in Downtown Vancouver, BC - And keeping your costs down.
Purchasing an investment condo to rent out in Downtown Vancouver, BC is a way that many real estate investors are building equity. The idea is straight forward - buy a condo, rent it out, wait for the market to rise, sell and live happily ever after.
In order to achieve the happily ever after there is a fundamental ground rule to consider before you buy that Downtown Vancouver condo: keep your costs down.
The following factors should be considered before purchasing that Downtown Vancouver condo -
- Purchase price
- CMHC mortgage insurance fees
- Interest rate
- Current monthly rents (furnished and unfurnished)
- Monthly maintenance/strata fee
- Yearly taxes
- Property Transfer Tax
- Building condition
It goes without saying that you want to buy your Downtown Vancouver rental condo for the lowest possible price and that you also want the best interest rate available. In order to keep your costs to an absolute minimum you will want to avoid any CMHC mortgage insurance fees and this requires 20% down payment on the property.
- E.g. a purchase price of $300,000 would require $60,000 for 20%. This leaves you with a $240,000 mortgage to be serviced by your tenants -
The key to a successful Downtown Vancouver rental condo is to find popular rental buildings with high rent. Vancouver Craigslist is the best place to start. You can get an idea of what people are asking for rents and you can check out your competition. And it's free.
Often overlooked until you wonder where your extra cash is: monthly strata fee and taxes. Monthly strata fees are a fact of life for the Downtown Vancouver condo investor. This is why I like studios/bachelors with their smaller monthly fee. Unless this is your primary residence you won't qualify for the home owners grant from the BC Government.
The Property Transfer Tax is something that cannot be avoided in BC unless you are a First Time Home Buyer. You may qualify for the exemption if you are. If not, it's 1% on the 1st $200,000 and 2% on the balance. E.G. A $300,000 purchase price will cost you $4,000 in PTT.
Equally important to consider is the quality of the building that you purchase your Downtown Vancouver rental condo in. Is there potential for any assessments in the foreseeable future? A low purchase price isn't as attractive if there's a $15,000 assessment for re-piping 2 years after purchasing. Look for well built buildings that have excellent maintenance programs.
Keller Williams Realty VanCentral