Canada Mortgage and Housing Corp. (CMHC) recently released their spring 2011 study and reported that Regina’s vacancy rate was at 0.7%. What most people don’t realize is that CMHC only collects data on multi-family apartments with four or more suites per building.
They do not study data pertaining to rental homes. However, if we could include the vacancy data for affordable, average rental homes in Regina, the number would most likely not be much different. However, having said that, good tenants continue to find places to rent provided they qualify as low-risk, good tenants. Tenants with a good credit rating, a previous rental history with supporting landlord references and an employment history, can and do find housing in Regina. These days, landlords have the tools and the ability to check this history and have the right to choose the best tenant. It’s true (and imperative) that everyone must have shelter to survive in Saskatchewan, but it is not a landlord’s obligation to approve tenants that do not qualify. The key to choosing the right tenant should not be left up to luck.
According to CMHC April 2011 data, a two-bedroom apartment in Regina currently rents for $897.00 per month which is in line with the mortgage payment that would need to be covered on that same suite, as we are currently seeing apartments suites appraising and selling at $80,000+ per door. Multi-family buildings have been difficult and continue to be difficult to find as real estate investments in Regina as they sell quickly and sometimes don’t even hit the MLS market. They are still a very hot commodity in Regina as the supply was decreased in 2007 and 2008 with record number of condo conversions in Regina. Although some units were returned to the rental pool since then, and although there is some new apartment construction underway in 2011, the demand for affordable apartment suites is still very high and multi-family buildings are difficult to find as an investor.
According to our own Regency Property Mgmt. data on single family homes and up/down duplexes, the average rental rate is $1100.00 per month utilities not included. Our data includes houses spread throughout the city, except in the Core areas.
The most popular areas for investors purchasing rental homes these days are in Broders Annex, General Hospital area, Assiniboia Place, and Arnheim Place. There is so much rejuvenation going on these areas and some good deals are still to be found if you can spend the time doing some renovations. We are seeing ‘fixer-uppers’ selling in these areas between $180-220,000 and after renovations getting rents in the $1200 -1500.00 per month range and in some cases, even more. However, not every investor has time to do renovations, so most investors are now buying decent two to three bedroom homes in that $200,000 to $250,000 range and getting rents in and around the $1200 to $1400 per month which should cash-flow with the required 20% down-payment. These kinds of properties are always available on the market but don’t last too long. A buyer has to be ready and willing to act fast and will probably pay close to asking price in this market.
All this real estate activity and low vacancy rates are the result of Regina’s low unemployment rate, record high levels of continuous immigration into the province and the booming provincial economy across all sectors including construction, oil, potash and mining. Regina is seeing very stable, balanced market conditions in both the real estate and the rental market this year and expects more of the same into the future. Although housing prices and rental rates have more than doubled over the past four years, the average cost of a great rental home is still very reasonable and although rents continue to increase, the rate of the increases is moderating. Regina is still a great place to consider for long-term real estate investing.
Cautionary note on property managers
No matter where you invest, good property management looks effortless and easy. But it’s not. There certainly skill involved, and the key to choosing a good property manager should start with the registration. Many investors who buy a rental property are not even aware of the difference between a ‘registered property manager’ and a ‘non-registered property manager.’ The Real Estate Act states: “No person is permitted to trade in real estate as a property manager until notified by the registrar of his or her registration. A person who is not registered and is not part of a registered brokerage shall not collect or attempt to collect any commission or other remuneration for services rendered in connection with a trade, including property management fee.” (Section 67 of The Real Estate Act).
However, investors should be cautioned that these non-registered property management companies exist. They are operating and collecting rents and charging fees and do not disclose to their clients that they are not registered with the provincial Real Estate Commission. Therefore, if something goes awry with the management of the property, the client has no recourse. So the first thing to do when looking for a property management company is ensuring it is ‘registered’ and not just ‘licensed.’ These companies do hold business licenses and do pay taxes, but they are not legally entitled to trade in real estate under The Real Estate Act. They have no formal education in real estate, their bank accounts and their books are not audited annually and they cannot be held accountable for their mistakes. And most importantly, your rent money is not insured, as it is with a registered brokerage. It’s a huge double standard that these companies are even allowed to exist and operate. But as an investor, you must be aware that if your property manager is not registered with your provincial Real Estate Commission, you are not protected under the Real Estate Act.
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