Want in on the Canmore condo craze?
There has been a lot of talk around town lately, and in the news in general, regarding the use of Canmore condos for nightly rentals as an excellent source of income. Websites such as AirBnB and VRBO.com have made it incredibly easy for property owners to market their homes for rent and for travellers to find accommodations outside of the typical hotel/motel environment. Much like the Uber ride-sharing movement, homeowners are able to market their properties for rent at a lower cost than hotels who have to pay for the employment of service staff, cleaning and maintenance personnel and have other expenses such as human resources, marketing and advertising.
The Town of Canmore manages the flow of these nightly rentals with zoning bylaws that specify which properties are permitted to be used as nightly rentals, and which ones are not. Properties zoned for Residential use which, make up the majority of dwellings in town, are not. Only townhouses and condos that are either zoned Tourist or Vacation Use are permitted to be rented out on a nightly basis. There are no single family, detached homes in Canmore that are eligible and as mentioned in this CBC News article, the town recently implemented a $2500 fine for homeowners who are found to be violating this bylaw.
Not to worry! There are plenty of options for savvy real estate investors to add a Canmore condo to their portfolio - if they are willing to wait for the right one to come along. It's a small town with a small real estate market and depending on the time of year there could be 15 of these condos on the market or there could be none. Oftentimes there are other qualified buyers waiting on a unit to come available in a particular complex and it pays to be ready (and willing) to write an offer - possibly even site unseen which, may seem unthinkable to some. The truth is that it is often somewhat difficult to view these condos while they are actively for sale for the simple fact that they are always rented out. The summer months see near 100% occupancy rates in Canmore and sometimes there is only a 2 hour window when the property is being cleaned that it is available for viewings. Regardless, no one is better at getting into these properties than our REALTOR® Ben Maize who will also always negotiate a Condition of Sale that the purchase contract is subject to a satisfactory viewing of the property.
Just how much income are we talking about here, anyway?
As is the case with any type of investing: There are winners and there are losers. Since the beginning, the Canmore.net team has focused on real estate investing and investment condos in particular, and in that time we have collected income information on units from nearly every complex in town. These numbers are for discussion purposes only, and buyers must perform their own due diligence and income verification on each property...but, here are a few of the best money-makers we've come across (please feel free to contact us directly for information on complexes to avoid):
#3. Stoneridge Mountain Resort | 2 Bedroom/2 Bath unit | Sale Price: $450,000 | Income: $28,765 | ROI: 6.4%
#2. Falcon Crest Lodge | 1 Bedroom/1 Bath unit | Sale Price: $300,000 | Income: $26,331 | ROI: 8.7%
#1 Mystic Springs | 2 Bed/2 Bath unit | Sale Price: $390,000 | Revenue: $65,195 | ROI: 14.4%
The owners of this Mystic Springs townhouse set the bar pretty high for self-managing their 2 bedroom unit at the ever popular Mystic Springs Chalets and Hot Pools which, boasts the largest year-round outdoor pool in town. After putting up their Canmore condo for sale which they paid $165,000 for in December of 2015, the sellers announced that they had begun construction on a unique AirBnB style hotel in town... they've taken their success and experience from managing this unit and created a complex of similar units - with an online based reservation service.
Sign me up!
There are few income properties that generate this kind of monthly cash flow and when you consider that the value of the condo will also grow around 5.5% per year then you are really talking serious dollars and outstanding performance from your investment. As with most good things in life though there is a catch: you almost certainly will not get a traditional mortgage on one of these properties as several years ago the banking industry changed its policy regarding hotel-condos. Not exclusive to Canmore, these types of properties have been gaining in popularity in cities across Canada for roughly a decade and while it was possible to finance them at one time, the banking world determined that the commercial aspect and income-earning potential, combined with slightly higher commercial property taxes, meant that condo-hotel properties do not qualify for a residential mortgage. Qualified buyers should instead consider purchasing the property using entirely their own funds or using a Line of Credit.
For prospective buyers of any type of hotel-condo unit, the benefits seem pretty obvious: mountain living, housekeeping, in-house fitness facilities, elegant spas and dining, concierge services, hot tubs and pools, and 24 hour assistance if you require. Vacation Use properties usually allow you to use the unit for a period of the time in the year and the remaining time your unit would be rotated and rented by the onsite rental management company.
If you are interested in purchasing an investment property and would like to speak to an expert please call (403) 678-7600 or click HERE to fill out a contact form.
Posted by Ben Maize on