1. In your opinion, what area in Kelowna will probably bring the best investor returns, and why this neighbourhood? Where is this neighbourhood located?
It is hard to pin point one area that will do the absolute best. There are different neighbourhoods that are better for different investments. It would depend if you are looking for a rental property that will cover itself, a property that will go up in value that you can flip or a development property.
The Glenmore area is going to take off as a new profitable rental market once the Glenmore Bypass is completed in late September or early October, 2009. The Glenmore Bypass was first proposed in 1986. It has taken 23 years for the city to finally approve this project. It is currently in the 2009 City Budget. Construction is scheduled to start the beginning of April with a completion date of late September or early October, 2009. The Glenmore Bypass will be a new 2.3km highway with 4 lanes from Dallas to Union and 2 lanes highway from Union to Scenic.
Why is this so important to the Glenmore rental market? Because that short 2.3km highway will go over a hill connecting Glenmore directly to the University of British Columbia Okanagan. Currently the only way to get to UBC Okanagan is to drive all the way into Kelowna and then take Highway 97 out towards the airport. It can take you 20-30 minutes to get there now from Glenmore. Once this road has been completed you will be able to drive to UBC from Glenmore in 5 to 10 minutes. Suddenly students are going to be looking at rentals in Glenmore because of its close proximity. UBC is projected to have 7,500 full time students by 2010. That does not include part time students, staff, facility, etc. that work at the school. The Bypass will also provide a short cut to the airport making Glenmore more appealing to frequently travelers.
Glenmore offers less expensive houses on bigger lots than downtown Kelowna. You get more for your money. There is a house currently listed at 1483 Ayre Avenue in Glenmore. The house has 4 bedrooms, 2 bathrooms, 2158 sq. ft. and 0.20 acres. It is currently listed for $335,000. With 20% down, on a 3.3 variable interest rate, 5 year term, 35 year amortization, your monthly mortgage payments would be $1076.79. That means you only need to rent each room for $269.20 to cover your mortgage payments. Most students are currently paying around $500 per room. If you rented this house for $500 per room you would make (after taking out property taxes) $717.85 per month! This house is assessed at $398,000 so you are buying it $63,000 below assessed value.
2. What type of property is it ideal to invest in within this neighbourhood, for yield on a buy-rent-hold? Please include an example (doesn’t have to be real) of a property with details (2, or 3 bedroom, apartment or detached, etc.), as well as average price and approximate monthly rental rate.
You are going to want to invest in a house in the $300,000 - $450,000 price range. When you are looking at rentals for students you are not going to want to buy high end because most students can’t afford to pay much for rent. You are better to go with a less expensive house with a higher number of bedrooms. Don’t worry about granite and stainless steel. Keep it simple. Ideal choices are going to be houses located near the proposed Glenmore Bypass. These houses will be closer to campus as soon as the highway has been finished. I have seen students pay up to $600 for a room or as little as $400 but the average is around $500 per room.
3. Who are the typical renters?
The new renters in this area will be students from UBC.
*With interest rates as low as they are, bank are actually cracking down on who they will lend money to. It is getting harder and harder for people to get approved for mortgages, which means these people will be stuck renting. Self employed people have a harder time verifying steady income and have a harder time getting approved.
For more information on real estate in the Okanagan, please contact:
OREC REALTY LTD.