Why Invest in Kamloops Real Estate?
I have lived in Kamloops almost all of my life and I have never seen so much buying demand, so little inventory, and skyrocketing rental rates. I've read countless reports of the hundreds of renters staying in hotels waiting for a home or suite to come on the rental market. My clients who are purchasing investment properties tell me experiences of advertising suites and having people offer to pay them just to view the suite and have a chance at getting it. I'm hoping the madness stops as it simply isn't sustainable nor is it fair to those who cannot afford a down payment in an ever rising housing market, yet it's the perfect storm for investors.
The other attraction for those able to buy a rental home, is that real estate prices in Kamloops are still relatively affordable compared to the Lower Mainland, yet we are only 3 hours away from the center of Vancouver. Despite the less expensive purchase price, rental rates are fairly close to being equivalent with rates being charged by our neighbors to the south. It is no wonder why people want to live in Kamloops with cheaper housing, less traffic, less rainfall (although admittedly we do get snow in the winter), a full-fledged university, and so many other benefits. Love the outdoors? There are over 100 lakes within 30 min of Kamloops and countless recreation, camping, and other opportunities available.
So let's get back to housing. The average price of a single family home in Kamloops is currently around $725,000 while in Vancouver a single detached home would cost you about $1.87 million. If you are looking for homes with basement suites in Kamloops, there are regular options in the $600,000 to $675,000 range. Most investment properties require a minimum 20% down payment, so at a price of $650,000 you would need to come up with an initial down payment of $130,000 plus closing costs. The average single family home in Kamloops with a basement suite would offer 2-3 bedrooms upstairs and a 1-2 bedroom suite. Typical rental rates, depending on the level of updates in the home and the location, would bring in $1800 to $2200 per month for upstairs and $1200 to $1600 downstairs for an average of$3000 to $3800 per month. After factoring in a mortgage rate of 2% for the remainder of the purchase price, property taxes, insurance, and utility costs, these properties generate significant monthly cash flow and a return on investment (ROI) ranging from 18%-25% per annum. That's a great return on investment and doesn't include price appreciation as the Kamloops real estate market continues to climb.
For those who are looking for a less expensive option to get into the real estate market, I have had many clients recently purchase half duplex investment properties or townhouses. The average cost of a half duplex in Kamloops currently ranges from $450,000 to $550,000 and townhouses can be anywhere from $300,000 to $450,000. Keep in mind that most half duplexes come without strata fees, while townhouses will have strata fees of $200 to $350 per month. The good news is that rental rates remain high for both half duplexes and townhouses with some still up in the $3000 per month range. A half duplex with 4-5 bedrooms bringing in $3000 per month will get you up in the 20-25% ROI range.
For those investors from out of town it is important to focus on homes which will require minimal maintenance requirements, or you can hire a property manager which generally has a cost of about 10% of net monthly revenue. There are investment options for just about everyone in Kamloops.
With high demand and limited supply, it will take some patience, and you have to be ready and willing to act quickly when the right property comes up. We are still seeing full conditions of financing, inspection, etc. for most purchases. I am happy to generate a cash flow analysis for any investment opportunities that are of interest, and I offer walk-through videos and recordings for those from out of town. I am always available to answer any questions.
Owner / Sales Representative Century 21 Desert Hills Realty