Investing in outer city townhomes/condos as rentals...what to consider

[The BMW Guy]

The wife and I are in a pretty good position right now. My student loans are all gone and our payments on the house are steady. We have some extra money that I think would do better in an investment rather than sitting in the bank. We are also looking at outer city exclusively for a rental property, as we can't really afford much inner city.

Now, being that I have never bought a condo/townhome let alone rented a place before, what things should I be considering when looking at outer city units as a rental property? I just want to make sure I don't overlook anything and end up with a unit that is just a money black hole.

Some things I have come up with:

-rental vacancy
-location (related to previous point)
-builder (any certain builders to avoid, how can I check their reputation?)
-condo fees

Feel free to add to the list. Any help would be appreciated.

[ercchry]

for calgary in the burbs, cant go wrong with a unit near the new south hospital

avoid point of view aka carlisle group

new builds are probably best. so see if you can find info on the management company and checkout their track record. seems like a lot of projects tend to get a healthy bump in fees after a year or two

[The BMW Guy]

Originally posted by ercchry

new builds are probably best. so see if you can find info on the management company and checkout their track record. seems like a lot of projects tend to get a healthy bump in fees after a year or two

Any resources to check the track record of a company? I can't seem to find much when I search for certain builders...just a lot of advertising by them instead of reviews.

On the note of fees increasing, are there any resource to view historical rates of a building? It'd be nice to see the average increase in fees for new condos/townhomes so we can do calculations accordingly.

[Asian_defender]

Talk to Jordan, he made condo investing easy for me, knows the good/bad builders. He's actually looking for me right now just outside of the core, I can send you what hes sent me

[ercchry]

yeah Jordan is a good resource. he personally holds units near the new hospital too. so knows the area really well. he will also have access to all the info on existing buildings too

[Xtrema]

Keep an eye on AGMs and reserve fund. If more and more stuff goes wrong, reserve fund goes down and condo fee goes up and inflate your cost.

But most of the time, on brand new condos, you are good for at least 4-5 years with no surprises.

[The BMW Guy]

I actually have my own realtor lined up already, just doing some of my own research.

Originally posted by Xtrema
Keep an eye on AGMs and reserve fund. If more and more stuff goes wrong, reserve fund goes down and condo fee goes up and inflate your cost.

But most of the time, on brand new condos, you are good for at least 4-5 years with no surprises.

Good to know. We are thinking a new condo would be good to look at then. The newer condos we have visited offer an abundance of upgrades (sinks, appliances, tiles, etc.) to be built, how much should we realistically spend on upgrades if we do go this route? (or none at all, assuming everything isn't complete garbage/low quality)

Not sure how much we should spend to be cost-effective in balancing cost with attractiveness of a unit.

[Asian_defender]

Originally posted by The BMW Guy
I actually have my own realtor lined up already, just doing some of my own research.



Good to know. We are thinking a new condo would be good to look at then. The newer condos we have visited offer an abundance of upgrades (sinks, appliances, tiles, etc.) to be built, how much should we realistically spend on upgrades if we do go this route? (or none at all, assuming everything isn't complete garbage/low quality)

Not sure how much we should spend to be cost-effective in balancing cost with attractiveness of a unit.

You'll want some of the expected upgrades
granite, SS applicances but don't go all out
a nice laminate will do well, if you do carpet then do a dark carpet (won't be able to see stains)

[Xtrema]

Originally posted by The BMW Guy
Good to know. We are thinking a new condo would be good to look at then. The newer condos we have visited offer an abundance of upgrades (sinks, appliances, tiles, etc.) to be built, how much should we realistically spend on upgrades if we do go this route? (or none at all, assuming everything isn't complete garbage/low quality)

Not sure how much we should spend to be cost-effective in balancing cost with attractiveness of a unit.

Asking for more rent to cover the cost also make you less competitive. Aiming at people who cares about these upgrade also reduce you potential client pool. Most renter are not long term.

It may also cost more to fix or replace. Remember, you only have 1 month of security deposit.

On the other hand, you may have more quality applicants by having them which may come in handy if rental market ever goes south again.

[The BMW Guy]

Thank you for the insight, good things to consider all around.

As for calculating a good rental rate for ROI numbers, are rentfaster rates generally accurate? Or do rental rates on there get negotiated down quite a bit? Any other websites to consider when calculating market rental rates?

[ercchry]

rentfaster can be good... but right now anything thats sitting on the market is sitting for a reason. i used rentfaster as a gauge. but with an older detached home no two are the same so it seemed to work well for a ballpark for me. never had anyone try and negotiate, and never had a shortage of applicants. im happy with my numbers too so, win, win?