Investing in Calgary Real Estate

Lessons I’d share with my 20-year-old self about investing in today’s market

With Calgary’s red-hot real estate market continuing to outperform historical records, many clients have been asking us about the pros and cons of investing in Calgary real estate, what properties they should look for, and how best to position themselves for long-term success.

As a real estate investor, I’ve learned much over the years about what works and what doesn’t. Whether maximizing income potential through property management or leveraging new financing options, the key lies in making informed decisions that align with your personal and financial goals.

To help new investors along the way, I thought I’d share a few pages from my playbook by considering the advice I’d give my 20-year-old self if I were starting my investing journey in today’s competitive real estate market.

Where there’s a will…there’s a hack 

The cost of housing today is significantly greater than when I entered the market over 20 years ago—many struggle to enter the market or buy a home in an area they desire to live in. 

While the cost of home ownership is higher than ever before, house hacking is a valuable strategy that—although not in existence when I invested in my first property—can open the doors of homeownership and allow those willing to exercise more creativity and flexibility to enter the market.  

Simply put, “house hacking “involves renting out portions of your primary residence to generate income that is used to offset the cost of your mortgage and other expenses associated with owning a home.” 1

House hacking can involve anything from renting out your garage for someone’s storage or work purposes to renting out an extra bedroom to a friend, coworker or ideal renter or converting your basement into a rental suite or Airbnb.

If you’re willing to think creatively and trade some of your creature comforts, you can offset some of the costs of homeownership to get into the market.

What’s old is…old

When I started investing in Calgary real estate, the common strategy was to buy an older property with suites that could be rented independently to separate tenants. The logic here was pretty simple: buy an older home at a cheaper price and generate more revenue with multiple renters. 

However, this often leads to many unforeseen costs in acquiring and maintaining those properties. 

Firstly, finding the right property with an ideal floor plan (with the electrical panel in a common area, common laundry area, or detached garage) can be akin to finding a needle in a haystack. When a suitable property does come along, you usually face a boatload of competition from other bidders and multiple offers, which drive up the initial investment price.

Additionally, older homes can present costly maintenance and repair issues, making forecasting costs and preserving cash flow difficult. 

A new approach 

While older properties with suites once seemed promising, the realities of maintenance and market competition have led me to embrace a different strategy: buying new builds. 
Whether you’re purchasing your first rental property or your first home, investing in brand-new homes offers several advantages:

      • Turn-Key Ready: New builds are move-in ready, minimizing maintenance costs and allowing for immediate rental or occupancy.

      • Lower Maintenance: Modern construction and warranties reduce the likelihood of costly repairs, preserving cash flow.

      • Attractive to Tenants: New properties tend to attract higher-quality tenants who appreciate modern amenities and energy-efficient features.

      • Long-Term Value: Properties in new communities often appreciate as infrastructure and amenities develop, enhancing the neighbourhood's appeal.

    In addition, recent changes from the Government of Canada allowing for 30-year amortizations on new builds make financing more flexible, especially for first-time buyers. 

For those young investors, particularly those interested in house hacking, consider laned homes with detached garages and legal basement suites as they provide:

          • Additional Income possibilities: Renting out the suite and garage separately adds to your monthly revenue stream.

          • Lower Initial Costs: You can enter the market with a lower down payment (as little as 5%), freeing up capital for future investments.

        For those not buying a personal residence or house hacking, you can still focus on buying rentals before investing in your primary residence. I purchased several rentals before moving out on my own, and when the time came, I moved into one of my rentals. 

In summary

Regardless of your chosen strategy, investing in Calgary's real estate market demands foresight and adaptability. 
By learning from others' past experiences and adapting to market trends, today's investors can position themselves for long-term success in Calgary's evolving real estate landscape.

As Calgary continues to grow and evolve, so will the opportunities for savvy investors willing to embrace innovation and foresight in their investment strategies.

Don't hesitate to reach out if you’re interested in exploring real estate investment strategies or options.