With an average property value of about $810,000 for a modest two-story detached house in the Metro region, renting with positive cash flow is pretty much a lost cause.
If you're looking to do it in Vancouver proper, the challenge is even more extreme: with an average property value of $1,100,000, you've got a better chance finding a dinosaur strolling around within city limits than you do finding an attractive cap rate.
The city's new laneway house initiative could change all that. The idea is a simple one: instead of a one or two-car garage at the back of a standard 33-foot by 122-foot city lot, build a small, eco-friendly rental house that faces the lane. Ostensibly, the idea simultaneously solves a number of urban planning problems.
First among them: the lack of rental housing. Vancouver has historically been a renter's nightmare, with vacancy rates in the city hovering around the 1% range.
Laneway houses would be one solution to this problem, creating a large stock of purpose-built rental housing. Another plus: the initiative would allow for that densification without destroying the character of existing neighbourhoods or a massive buildup of city infrastructure.
"It's one cog in a bigger process," notes Robert Bradbury. As an architect focusing primarily on residential homes throughout the Greater Vancouver region, Bradbury has had the opportunity to design a handful of laneway homes since the initiative was given the green light back in the fall of 2009.
"The intent with laneway housing was: how can we maintain a sort of single-family appearance, how can we maintain that residential character of older homes, but increase the density?" Sounds good in theory.
But, according to Bradbury, the initiative has not been without hiccups. He notes that there was considerable discussion among existing homeowners about whether populating the alleys and byways of the city was actually a good idea.
"There was a lot of apprehension among people," he says. "They didn't know what this was going to be. [Is this] a bunch of low-income housing dumped on their neighbourhood along the back laneway? Was it going to be a bunch of cruddy garages, [that] wouldn't fit well?"
The proof, as they say, is in the pudding. As Bradbury indicates, the more laneway houses people see, the more people get used to the idea.
"People are slowly buying into the concept that the lane can be a secondary street - and that's a key transition in people's minds," he says. "People in Vancouver have always thought the laneway as where they put their garbage bins, where they park their old bikes. The idea of putting large numbers of people back there caused some concern.
The more they see samples being done, and it working, that they'll start to get used to that." As Bradbury explains, the 500 to 750 square foot limit (the exact number is calculated based on lot size) isn't a lot to work with. But that's all part of the challenge.
"You have to be very creative in terms of how it's planned," Bradbury says. "There's absolutely no room for waste space." For the architect, the challenge becomes creating an illusion of wide-open rooms where there really isn't one. "If you can create a sense of airiness and openness, by vaulting spaces, small spaces will seem generally larger."
Even so, Bradbury doesn't necessarily see small spaces as a drawback. "Given real estate prices, and given the diversity of people who are looking for housing options, there's definitely demand for small units," he notes.
"Single people, a working couple, a young family, a senior - they're not necessarily looking for an enormous amount of space, but they would very much like to live in this community."
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Investment Hot Spots:
Alma, Canwood, Alma, Indian Point, Spruce Grove
You could run a marathon. Climb a mountain. Write a novel. But if it's a real challenge you're looking for, try making a real estate investment in Vancouver with positive cash flow. Vancouver real estate investors have long struggled to wring cash out of their properties.