5% of Canadian households own an income property

A recent report found that one in every 20 Canadian households owns at least one income property, citing that the stability of income afforded by rental investment is a strong motivator compared to other asset classes.

“A lot of people are getting into the market right now and buying rental properties because they love the fact that it’s a fixed asset,” said Shawn Maher, an investor and owner at GS Maher Property Holdings. “They can actually see it and they don’t have to worry about it melting away.”

The Altus Group report, which was published this week, also found that, on average, landlords were able to obtain rent increases of around 2.5 per cent in the 12 months ending October 2014. This is based on average rents for two-bedroom units in buildings.

Interest among large investors in buying rental buildings in the major markets has been increasing in the past two years – in particular in Calgary, Edmonton and Ottawa.

Meanwhile, smaller rental investors, which accounts for households that own one or a few units, or renting out flats or basement apartments, also play an important role in Canada’s housing market.

According to the report, the incidence of owning at least one rental unit is slightly higher in the under-50 age groups. Income, however, is a more important factor than age.

“A lot of people get in at the wrong time when it comes to real estate cycles,” added Maher.

“Investors need to make sure those rental properties are positive cash flow or else they have to wait until the market corrects and then come in and buy it.”


 

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