Top Three Locations to Buy a Rental Property
Numerous investors are attempting to find the best locations in Canada to purchase a rental home for investment purposes. Investors are familiar with markets in Canada such as Toronto and Vancouver, but the housing prices in these areas have nearly doubled in the last 10 years.
Investors are seeking other markets where they can earn more from their investment. Some savvy investors use the Purchasing Power Parity (PPP) index or Big Mac Index, which allow global investors the opportunity to determine how home prices compare in various countries. If you want to buy a rental property, you need to look at home prices, possible rental income, and the attractiveness of the location.
Calgary is one of the most expensive cities to purchase property in, but it also has a lot of intriguing reasons why it might be the right area for your rental home. This Canadian city has an average mortgage price of $393,574, according to statistics taken in October 2010. Though this is above the average price of homes in Canada, experts still consider Calgary a good place to invest because of the location. The housing prices are higher in Calgary because the incomes are also slightly higher. The city receives enough incoming traffic to create a demand for a rental home.
Mortgage Payments. The average cost of a mortgage in Calgary is approximately $1,893.72 monthly.
Rental Income. In order for the rental property to be profitable, investors must find renters willing to pay more than the mortgage costs. Because the average mortgage costs are $1,893.72, the renter of the home should be willing to pay at least $2,200 or more monthly, which is fairly standard for Calgary.
Halifax, Nova Scotia
Halifax, the capital of Nova Scotia, is home to the central operations for Canada’s Department of National Defense. Nearly 375,000 residents enjoy the proximity of Nova Scotia to the water. Nova Scotia is also home to one of the most important ports in North America. Halifax is expected to employ more people as the growth of offshore and gas production increases. Nova Scotia also has a thriving service industry and private sector companies. The average cost of a home in this area is $207,000.
Mortgage Payments. The average monthly mortgage payment of a home in Nova Scotia is $1021.51 per month. This is relatively low compared to the rest of Canada.
Rental Income. Individuals working in the area from out of town may benefit from a rental home. Investors have the opportunity to make a significant amount of rental income if they pay cash for the home. Investors save on interest payments if the home is paid in full, and in Nova Scotia, this is possible. If the home owner charges $1,200, he or she may make a small profit. Most home owners may expect to pay at least $1,200 for renting a three bedroom home.
While Saskatoon is considered an expensive place to live, it is below the average in home prices. Saskatoon is considered a good value for the money, and is a major city in Saskatchewan built near Saskatoon River. The area is also known for numerous festivals and events.
Mortgage Payments. The average mortgage payment for a home in Saskatchewan is $1238.64.
Rental Income. Currently, many landlords are earning a good amount of passive income from their properties. Experts anticipate the housing market to continue to be strong and profits to increase. Most investors are earning on average $300 per month (the profit excludes the costs of mortgages and maintenance) on each investment property in Saskatoon.
These three locations are good places to buy because of the cost of living, potential income earning potential and job availability. Attractions also factor into the top three choices. Prince Edwards Island and New Brunswick have the lowest home averages, but they do not offer as much as these three cities, which can make them better candidates for rental home purchases.