3 bedroom tough to rent out?

[Nitin]

I'm looking at purchasing either of a 1 or 2 or 3 bedroom condo in an Edmonton neighborhood called Callingwood.



I'm guessing a 1 or 2 bedroom could be rented fairly easily but am concerned that there'd be some difficulty renting a 3 bedroom, because if they could rent a 3 bedroom condo for around $1200, why not just go rent a house?



Any thoughts? - thanks in advance for all your energy and contribution of ideas.



Nitin.

 

[REINteam]

Hi Nitin,



There will always be a family wanting to live in a house, have a yard and everything else that goes with it...and on the other side there will always be a family that would prefer the ease of living in a townhome (almost zero maintenance).



I know a few members who invest in only SF homes and say they never have issues with vacancy (but I'm sure others do have issues). Location will play a role, proper pricing, the quality of your unit AND of course marketing -- you can have the best house at a steal of a price, but if no one knows it's for rent then vacancy will still be an issue!!



Don't know for Callingwood in particular, but there was a glut of 3 bedroom townhomes in Edmonton for a while, definitely hurt rents, but not as bad right now and should be getting better over the next few months.



Market, market, market!!! Even if Edmonton had 20% vacancy there are still people looking for a place, so find them!

 

[ChrisDavies]

I love 3-bedroom townhouses, and find them easier to rent out (and with better cashflow) than 1 or 2 bedroom options. They're more appealing than a SF home simply because they're cheaper ($1200 vs $1500+maintenance for a house).

 

[johnsu]

Hi Nitin,



Also remember, the "Lower the quality the rental, the lower quality of renter you will attract" Brent Davies told me this and also Arlen Dhalin. They said basement suites and 1bd rm attract more transient and lower quality renters. I'd personally go with 3 bd rm townhouse/duplex or nice 2 bd rm condo apartment.



Sure a house is nice but cashflow is out of whack and the rental market is smaller.

 

[bizaro86]

https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?lang=en&cat=79&itm=43&fr=1297868496812



The following link has the CMHC rental market report for Edmonton. I'm not precisely sure where the neighbourhood you're discussing is, but the average for the Edmonton metropolitan area for 3 Bed apartments is $1171/month, while the average for 2 bedroom apartments is $1015/month, which is a pretty significant rent difference. The CMHC also reports that average Vacancy for 3 bedroom apartments is 3.7%, while average vacancy for 2 bedrooms is about the same at 4.2%. (That's a difference of 1.8 days of vacancy per year).



I'm not sure what it is that makes 3 bedrooms more attractive in Edmonton, but I don't see any reason to doubt the data. Based on that I'd be ok buying a 3 bedroom in Edmonton as long as the increased rent covered the increased purchase price and operating costs (higher taxes and condo fees or expenses).



I doubted this data initially, because it doesn't square with my experiences in Calgary. So I looked up the data for Calgary. Average 3 bedroom rents are 1057/month and average 2 bedroom rents are 1069/month. So in Calgary, 2 bedroom apartments are renting for more than 3 bedrooms.



Hope this helps,



Michael

 

[RussellWestcott]

Love the 3 bedroom townhouses.



More specifically 3 bedroom and 2 bath. This is my bread & butter property. Picture and describe your ideal tenants, and what to they 'fit' better into a 2 or 3 bedroom place?



I have a greater chance of attracting a family to a 3 bedroom property. Plus on the exit I have a better chance to sell or rent to own to a family just starting out and buying their first place.



Plus some great stats above from Michael.

 

[Nitin]

Hey guys,



This has been TREMENDOUSLY helpful, I really appreciate the REIN philosophy showing through here in terms of you seasoned folk saving me days/months/years off of my learning experience by allowing me the opportunity to 'ridealong' as a member while I develop my real estate wings.



Michael: fantastic statistical info - kudos to you!



Cheers,



Nitin.