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Top 4 Airdrie Investment Strategies



 


1. BUY & HOLD


Probably the most common investing strategy out there and it’s also the easiest to calculate your potential return. We do have a pretty big renter population here in Airdrie, which means there’s a lot of potential tenants for a long term rental investment. Depending on the market you buy in, and how much of a down payment you make will determine how much you’ll cashflow, but this style of investment here in Airdrie is and always will be a good one for the long term minded investor. If it doesn’t cash flow now, it likely will in the future, and all the while you’ll be paying down the mortgage, and gaining the equity as it appreciates.


Starting first with condos. Our current benchmark price for a 2 bedroom condo is $265,000. Using that as our purchase price, and assuming we’re putting 20% down that gives us a mortgage payment of $1,420 per month, that’s using a 6.5% interest rate. In addition to the mortgage, we need to add in the condo fees, insurance and taxes. For a 2 bedroom I’d say you’d be looking at about $500 in condo fees on average per month, and about $100 for taxes and insurance each month as well. So added all up we have $2,120 of expenses for that 2 bedroom condo. Now looking at rental rates for a 2 bedroom condo here in Airdrie. On average you’re looking at about $1800-1900 in monthly rent from that condo. So at our benchmark condo price, you would not quite cashflow with that property. But there are plenty of condos that sell under that price! So lets say we bought one at $230,000. That would bring our mortgage down to $1,232 and our total monthly expenses to $1,932. At this price you’d be looking at more of a break even cash flow situation, but you would be able to take part in potential equity increases over time.



Now let's look at investing in a townhouse instead of a condo. Our Benchmark price for townhouses is $354,000 right now. So again using that as our purchase price, your mortgage would be $1,897 per month. At this price, your townhouse is going to have a condo board, so we still need to add in condo fees, taxes and insurance. For this townhouse you can expect about $350 for condo fees on average, about $150 for insurance, and $150 for taxes per month. In total your expenses for the month will be $2,547. Now for rental rates for this townhouse will probably be in the $2,200 rage or so. So again you’d be looking at a few hundred dollars a month of negative cash flow. But there are plenty of townhouses in Airdrie that don't have a condo fee at all. But those ones will cost you more, probably more around the $425,000. So recalculating with our new higher mortgage, and no condo fees, our monthly expenses are nearly the same at $2,577 per month. But this townhouse can fetch a slightly higher rent of around $2,300. So still not looking great for cashflow on the townhouses.


Well last but not least let's look at our detached homes. For this one we’re going to use a purchase price of $500,000. At this price you can get a small resale 2 story home with 3 or 4 bedrooms and possibly a garage. Your mortgage on this home will be $2,679 per month, plus about 200 for taxes and 150 for insurance, bringing your total monthly cost to $3,029. For a rental at this home you’d likely get around $2,700-$2,800 for monthly rent. So again here you can see in our current market conditions, buying a rental with 20% down can be a bit trickier.




I have 1 last scenario for you that is likely to be better than the previous 2. If you spent a little more and found something around $550,000 that had a suite, your expenses on that home would be more like $3,100, but you could rent the upper suite for about $2,200 and the basement suite for about $1,100. Which would give you a couple hundred dollars a month cash flow! Now these are all very generic numbers, and there are cash flowing investments to be found in our city right now, we just have to get a bit more strategic with it! So if you’re looking for a rental investment property here in the city be sure to reach out so we can have a chat and find you the right property.



2. FIX & FLIP


I find in the HGTV real estate world, flipping homes is made out to be this easy money, no problems investment strategy. While thats not exactly the case, there is money to be made in renovating old homes and reselling them, but does that work here in a small city like Airdrie?Well I have personally never done any flips here in the city, but I know there has been some done. So I dove into the last few years of sales history to see what I could come up with. What I found, was in the last year, there has only been 6 flips that sold in Airdrie, that were purchased on the MLS strictly for the intention of flipping for a profit. Of course I can't see the data of any off market private sales. So there’s more than 6 that happened, but I found 6 specific homes in my research.



Now, when it comes to flipping, if you get a home under market value, or that is damaged and needs a lot of work you can flip houses anywhere you are. But in bigger cities like Calgary, in some neighbourhoods you can buy homes in certain neighbourhoods at market value, and be able to renovate and flip them for a profit, but that's not what I found for Airdrie. For each of the flips that I found, they were either purchased at a significant discount, and they renovated and made a profit, or if they weren’t bought at a discount, you can see by the numbers that not much profit was made. So, not a whole lot to say about flips right now in Airdrie. I wouldn’t bank on it as an investment strategy here, but if you find a good deal below market value than you can definitely make some money!



3. SHORT TERM RENTALS


My wife and I actually operated 2 Airbnb units here in Airdrie from October 2021 to April 2023. First off, if you’re buying a property strictly for investment purposes, and you want to give short term rentals a try, make SURE that its a property that will make a decent long term rental if you decide to move away from short term rentals in the future. We’re seeing many cities around the world creating more strict regulations around short term rentals, so you need to know that that could be coming up for Airdrie as well.


Let’s look at the listing competition first. When we first opened our Airbnb’s in Airdrie in 2021, there were 23 listings in all of Airdrie and we owned 2 of them. Right from the get go our suites were fully booked and bringing in great revenue. But overtime, as it became a more popular investing strategy, we saw more and more hosts coming to the market. Now on Airbnb you can find 168 listings within Airdrie! This means there’s much more competition for hosts, and vacancy rates will be higher than they once were.


Starting off, I wouldn’t suggest doing a short term rental in anything with a condo board, because I find thats too risky as you could get shut down at any time. So no condos, or townhomes with a strata. So we’ll use numbers for our freehold townhouse, and detached home we used in the long term rental examples. For the freehold townhome at a $425,000 purchase price, again your mortgage, taxes, and insurance came to about $2,577 per month. But now we’re doing a short term rental with it, so we also have to add in utilities, about $300 per month, internet, about $100 per month, and re-stock items such as toilet paper, coffee, cleaning supplies, and things like that, which you could budget about $100 per month or so. So after all that we’re looking at a monthly expense of around $3,100. After looking around on airbnb, it looks like you could charge anywhere from $120-$150 for this home per night. Taking into account weekly and monthly discounts for longer stays, lets say you average $130/night. So at that nightly rate, if you rented it out 100% of the nights in a month, that would give you $3,900 in monthly revenue. Which sounds pretty good, but in looking at the availability of townhouse units on Airbnb, they didn’t seem to have many bookings. Honestly looked like they were getting about 25-50% occupancy. So at 50% occupacy you’d be looking at only about $2,000 for the month, which is not nearly enough to cover costs. So I’d say unless you own the townhouse with a much lower interest rate, it’s probably not going to be worth it.





No lets look at detached homes. And we’ll use the same detached home we used earlier. That was a $500,000 detached home and our monthly expenses were $3,029. Again lets add in utilities, internes, and re-stock items, and we’re looking more like $3,600 for expenses on this home. Now looking at airbnb for this type of home. From what I found it looks like you could charge anywhere from $140-$180 per night currently. And again with the weekly and monthly discounts lets say you averaged $160 per night. At 100% occupant, 30 nights rented, that would be a revenue of $4,800. Which is great, but we still have to factor in a more realistic occupancy rate. Now for the detached homes, their occupancy looks much better, more like 60-70%. So lets say you’re on the higher end at 70%, that would mean your revenue would be about $3,400 for the month. Which unfortunately again comes up slightly short from cash flowing. And keep in mind we didn’t factor in any of the additional work hosting a short term rental requires. Things like managing guests, cleaning between every guest, dealing with issues at the home during guest stays, and things like that.


So in our current market I’d say it doesn’t make sense to buy an investment property strictly for short term rental, but there is a scenario that could possibly make more sense. This would be a version of house hacking, where you buy a home with an upper and lower suite, rent one out and live in the other. If you did a short term rental this way it makes it much easier to manager since you live on site, and you wouldn’t really be worried as much about cash flow, because your rental would be more of a mortgage helper. Short term renting out a basement and living upstairs could bring in about $1,200 per month or so. But if you want to make a bit more, than living downstairs and short term renting the upper floors could make about $2,000-$2,500 per month. Which nearly pays for the entire mortgage. Looking at those house hacking numbers though, you’d get similar numbers with long term rentals, so it would really just be a matter of which way you preferred to do it. All-in-all, right now in our market I’m not a huge fan of short term rentals as a primary investment strategy. I think there’s just far too much competition right now in the market.



4. BUILDING INFILLS


Now, believe it or not we have had some infill activity in recent years here in Airdrie. Mostly in the downtown area where you can find those older homes and bigger lots. There’s actually one for sale right now, where the lot was purchase for around $200,000 and a HUGE HOME is being built thats listed for sale at $1,295,000. Now I don’t know the build cost details on that one though, so I cant say how much profit will be made by the builder, as ititss also not sold yet either. We don’t have a lot of numbers for infills right now as we’ve only seen a few be complete, and most were for a personal residence, and not resale profit. But just know that as the city ages more, we’re more likely to start seeing more and more of this type of investment. So while at the moment we’re not personally considering it for our investments, in the not so far future we’ll likely be looking into it further to see what potential there may be.



5. ASSIGNING BEFORE POSSESSION


One that you did not see on our list today is buying pre-construction homes to assign at a later date before possession. This has been a big strategy out in Ontario for quite a while. You buy a pre-construction condo, hold the contract while its being built for 2-4 years, and then sell it before you take possession to profit the difference. This worked very well in Ontario when the market was exploding up, but now you pay such a premium for new build homes that this very rarely works, unless it’s timed extremely well, which is just gambling at that point. So I would highly advise against attempting this strategy here, or anywhere right now in our current market conditions!


So as far as investing in Airdrie, I think the best option is currently, and will continue to be long term buy and hold investments. Because even though huge cash flow is not as easy to find as it was a few years ago, you still have to remember that with each mortgage payment on that investment you’re paying down that mortgage principal. So even if your cash flow is break even, you’re still coming out ahead every month because your tenant is paying down your mortgage.


 

Check out my YouTube video below where I go over everything in this blog post and subscribe to my channel if you want to see more Airdrie related content!


- Brad Walker



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