Strata property or single family home; which is better?
Well, the answer to this real estate investing question is, not surprisingly, it depends! It depends on what your goals are, where you live, how much time you have, to manage your rental property, how much money you want to invest, etc.
If you are looking to buy a rental property for investment purposes in Vancouver, it will really depend on your investment goals. If you are looking for cash flow, then I would stay away from single family homes. Single family homes will generally give you a negative cash flow return, unless you are looking further out in the valley, like Abottsford or Chilliwack, and even that can be tough these days.
On the other hand, strata buildings and condos can provide you with cash flow if you buy the right property. You may not get the same appreciation over time as with a single family Vancouver house, but then again you may…
I would recommend an older strata unit in the West End. There are many small strata buildings that need a little bit of TLC, and these can be where the real value lies! If you’re willing to put in a little sweat equity and repaint, refloor, and perhaps redo the bathroom and kitchen, you can increase the value of your rental property dramatically.
There are a few ways to squeeze some extra cash flow out of your downtown strata condo as well. Rather than renting it out unfurnished, rent it out fully furnished. You may have higher turnover and some wear and tear on your furnishings, but you can command a much higher rent. And if you really want to super size your cash flow, try the Air BNB route! This will lead to a lot more work (and likely hassles from strata management), but may well be worth it for the rental upside!
The upsides to buying a strata/ condo property;
- potential cash flow
- short term rental options (VRBO, Air BnB, etc.)
- no exterior and common maintenance (you pay for this in your strata fees)
The downside to strata/ condo properties;
- There is a lot that is simply out of your control. The strata management team (Council) can ban pets, rentals, etc.
- Lousy neighbors. Let’s face it, when everyone is living in tiny spaces with shared walls, the potential to have a crappy neighbor is a reality. Hopefully you will get lucky…
- Potential special levy. No ones likes these, but they are often times unavoidable! Do your due diligence on the strata building prior to purchasing, and at least there won’t be any surprises!
- You don’t own the land. You, along with the rest of your condo-mates own a shared interest in the land, so it’s not as easy to knock down the building and put up a new one when you get tired of it. Of course, this is happening with strata buildings all over downtown Vancouver, so it’s certainly not impossible, just takes more of a group effort.
Interested in learning more about investing in Vancouver strata condos and Vancouver small strata management? Contact us here!
Chris Stepchuk April 15, 2017