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Investment-Real-Estate

Mid-summer update

With the first half of the year on the books, I wanted to summarize where we are during these interesting times. 

As you might expect with two years in a row of double-digit property value growth in the Okanagan, and the headlines that go with it, we have seen the number of properties purchased for investment increase by 40 per cent.

This is a combination of baby boomers looking to augment their retirement income and out-of-towners catching wind that Kelowna’s market is in the full swing of a real estate boom and looking to get a piece of the action.

Now not all real estate investments in Kelowna have performed equally. Some have really exploded. Those holding properties in the new RU7 designations are seeing huge gains as values on war times houses in the North and South end of downtown have gone from the mid 400s to the low 700s in many cases.  

This is all due to the infill development potential that these city lots hold, as four units are now permitted on a regular-sized city lot

Multi family properties from duplexes, fourplexes and apartment buildings have become so scarce that prices have jumped nearly 40 per cent. A duplex in Rutland, for example, that could have been purchased for $550,000 last year, can fetch $750,000 in today’s market.

Suited homes have also seen dramatic equity gains. Gone are the days of buying a single family home with a suite for under $500,000. Even the most affordable of neighborhoods like Glenrosa are posting sales in the low 500s for a 1970s Bi level home with an income suite.

Rising rents have kept up with sky rocketing values reasonably well but CAP rates have fallen from six per cent to five per cent to fourper cent over the past two years.  

This means investors from markets such as Vancouver are coming in search of yield. Because of our relative affordability compared to their market, and the prospect of a few more years of property value increases, they are willing to forgo the huge positive cash flow, satisfied with breaking even as they watch their equity pile up from mortgage pay down and capital gains.

Many people that have been holding property since before the boom are electing to cash in at this stage. With thousands of units of purpose built rentals coming down the pike in the next one to two years, we expect to see the vacancy rate climb a little and rents on older units to soften.  

With this we may see prices stabilize on the multi-family properties. Good news for renters in the Okanagan, a sell signal for many landlords.

It appears the best strategy for this market is a buy-fix-sell-in-a-year strategy. If you are wanting to purchase a holding property before they no longer cover themselves, a five-bedroom home with a suite will still cash flow nicely, and will always fare well in any downturn as it always in high demand for both investors and first time home buyers alike.

Always remember, investors don’t put themselves in negative cash flow situation chasing capital gains, that’s called speculating and it’s how people go broke.

Stick to the fundamentals and buy well located real estate that is positive cash flow and has the opportunity to add value. That is a strategy that never goes out of style and is a fast track to building real, multi-generational wealth.

For the entire Vantage Report that dissects the data neighbourhood by neighbourhood, spotting trends and opportunity in our Okanagan market, view the entire report here.



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About the Author

AJ is the owner of Kelowna’s downtown boutique firm, Vantage West Realty. The firm takes pride in breaking the mould when it comes to how they practice real estate. With a well-deserved reputation as a real estate renegade, Hazzi has been shaking up the Kelowna real estate scene since 2002.

Having been a student of real estate through two market cycles, AJ has come to see an absence of truly qualified professionals specializing in investment real estate. This has become AJ’s role within the firm and the community: To educate clients on how to achieve financial freedom through real estate.

Arming his clients with knowledge on where to find positive cash-flow, how to renovate for profit, and other creative avenues that most agents completely ignore, Hazzi has carved out his niche as a real estate investment advisor (REIA), and loves nothing more than educating people on the right strategy to capitalize on both boom and bust years.  AJ is a firm believer that the Kelowna market is rich with opportunity, if one knows where to look.

If you are in search of an advisor who practices what they preach, consider that AJ has built his own real estate portfolio up to include multi and single family cash-flow rental properties, development property, resort property, fix and flips, and commercial properties. By sharing the lessons learned from his own experiences, his clients get the knowledge and confidence to invest without having to make the expensive mistakes he and many new investors have made along the way.

His goal is to impart on people, especially of the X and Y generation, that depending on RRSPs and Government Pension Plans to look after us down the road is risky business. Most people don't realize that as little as one or two properties added to your real estate portfolio now, can secure a comfortable, even lavish, retirement.

Bringing a consultant's approach rather than the tired, old-fashioned sales approach, AJ and his partners offer a world class service from finding, pre analyzing, and negotiating your next acquisition, to property management, all tailored to today’s busy investor.

To hear what AJ Hazzi's clients have to say about his service view the testimonials.

Contact Information

For more details or to reach AJ Hazzi, please visit www.vantagewestrealty.com

Email [email protected] Cell 250.864.6433



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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