The Top Home Models For Real Estate Investors
When it comes to real estate investment, Canada is seeing an increasing number of people who are opting to invest in brand-new homes to attract tenants. In addition to being desirable to renters, new construction homes offer cost savings as they require fewer repairs and are automatically covered by the Alberta New Home Warranty. Here, we present the top home models for real estate investors.
For investors seeking additional advantages, Sterling’s Evolve line of homes provides an excellent option. These homes are specially designed to be more affordable, allowing you to maximize your return on investment. Keep an eye out for these top home models if you want to optimize your earnings.
An Overview of the Different Home Models for Real Estate Investors
In the realm of real estate investing, there’s an abundance of home models available as rental properties, each offering unique benefits to potential investors. Let’s delve into some of these models.
Front-attached homes, characterized by their attached front garages, combine convenience and style. These homes appeal to many renters due to their significant storage space and easy accessibility. Families love this style of home.
Laned homes, on the other hand, offer rear detached garages and are frequently chosen for their traditional aesthetic and added privacy. This is a popular choice for renters who don’t want to be in a unit that shares walls with another home.
Duplex homes, essentially a single building that houses two separate units, are an excellent model for investors looking for a two-in-one investment. They offer the potential for twice the rental income on the same plot of land.
Townhomes, similarly, are multi-family residences and are a favoured choice for investors due to their lower cost per unit, especially when compared to standalone homes.
Lastly, bungalows, typically one-story homes, are popular among renters seeking accessibility, simplicity, and the charm of vintage architecture. Their appeal to a wide demographic makes them a versatile investment option.
All these models have their unique selling points and can serve diverse rental needs, making them ideal for real estate investments.
Pros and Cons of Front-Attached Homes
Front-attached homes are a popular choice among investors due to several advantages they offer. Firstly, they provide a modern design aesthetic that draws in many potential renters. The attached garage provides additional storage and parking space, a feature highly valued in the Canadian rental market, especially in cities with challenging weather conditions.
Moreover, front-attached homes tend to offer more living and yard space, which is attractive to families looking for a spacious yet affordable rental option.
On the flip side, there are a few considerations to be aware of when investing in front-attached homes. The cost of maintenance, for instance, can be higher due to the larger size of the property and the inclusion of a garage. Additionally, these homes can be more expensive to purchase initially compared to other types of home models like duplexes or townhomes.
Lastly, the appeal of front-attached homes can be dependent on location. In densely populated urban areas, where space is at a premium, other models like townhomes or condos may be more sought after. As always, understanding the specific rental market and potential tenant base is key to any successful investment.
Benefits and Drawbacks of Laned Homes
Laned homes, also known as rear-lane or detached garage homes, present unique advantages with real estate investing in Canada. One of the key selling points is their attractive architectural design which often exudes a classic and timeless appeal.
The rear garage contributes to the clean and uninterrupted facade, greatly enhancing curb appeal. This feature alone can make these homes highly desirable to prospective renters. Further, laned homes often come with a private, enclosed backyard, providing an outdoor space for activities, which is particularly appealing to families with children or pets.
However, investors must also be mindful of certain drawbacks associated with laned homes. Primarily, the rear lane access may deter some renters who prefer the convenience of a front garage, especially during the harsh winter months. Snow clearance can also be an added maintenance issue.
Secondly, laned homes often have less interior space compared to front-attached homes due to the rear garage taking up a portion of the lot. This could potentially limit the rental market to smaller families or couples. Lastly, these homes can sometimes be located in neighbourhoods that are still under development, which might not appeal to all renters.
Advantages and Disadvantages of Duplex Homes
Duplex homes carry a unique appeal for investors in many aspects. The most glaring advantage of duplex homes is the ability to generate twice the income from a single property. This dual occupancy setup not only maximizes the space but also provides a higher return on investment.
Duplexes also provide diversification in a single investment; investors can rent out both units to different tenants, thus mitigating the risk of total income loss if one unit becomes vacant. Additionally, new duplex designs have often been praised for their modern aesthetics and functional layouts, making them increasingly appealing to today’s renter demographic.
However, there are also some potential drawbacks to consider when real estate investing in duplex properties. Firstly, the initial investment and maintenance costs for duplexes can be higher compared to other home models. This is because duplexes are essentially two homes in one, which may result in higher property taxes and insurance costs.
Secondly, managing two units can be more time-consuming and demanding than a single-family dwelling. This could mean additional expenses if you decide to hire a property manager. Lastly, duplexes may not be as appealing in areas where single-family homes or larger multi-family residences are favoured.
Townhomes – A Popular Option for Investors
Townhomes, also known as terraced houses, offer several advantages that make them an attractive choice for real estate investors. One of the key benefits is their affordability relative to standalone single-family homes. This allows investors to enter the property market at a lower price point while still offering potential high returns.
In addition, townhomes are generally easier to maintain than larger properties, reducing ongoing costs for the investor. They are also popular among renters, particularly small families, young professionals, and elderly residents who appreciate the community-focused living environment and the convenience of having amenities close by.
However, investment in townhomes also comes with its own set of challenges. These properties can have strata fees, which can cut into the rental income. The presence of a homeowner’s association (HOA) can also impose restrictions on what can and cannot be done with the property, limiting the investor’s control. Further, while townhomes are generally more affordable than detached homes, they also tend to appreciate at a slower rate. This could impact the long-term return on investment.
Condos Are A Popular Investment Choice
Condominiums, or condos, have emerged as a popular choice for real estate investors in Canada due to a myriad of benefits. Firstly, condos typically have a lower entry price point compared to other property types, making them an excellent choice for first-time investors or those with limited capital.
Moreover, condos are often situated in desirable urban areas, close to employment centers, entertainment, and amenities, which attract a wide range of prospective tenants such as young professionals and urbanite families. Furthermore, maintenance and repairs for condos are generally handled by the condo association, reducing the hands-on responsibilities and unexpected expenses for the investor.
While the advantages of investing in condos are prominent, there are some drawbacks to consider. A significant consideration is the condo fees, which are mandatory monthly payments made to the condo association for the upkeep of the building and its amenities. These fees can be high and will directly reduce the investor’s net rental income.
Additionally, condos may not appreciate in market value as rapidly as freehold properties, impacting long-term profit. Lastly, the condo association can enforce strict rules and regulations, limiting an investor’s freedom to make modifications or dictate tenant behaviour.
As always, potential investors should carry out in-depth market research and study the condo rules and bylaws thoroughly to understand whether investing in condos aligns with their financial goals and strategies.
The Benefits Of Bungalows
Bungalows have long been a staple in the Canadian real estate market, and they offer several advantages when real estate investing. One of the primary benefits is their broad appeal to a diverse tenant demographic – from young families who appreciate the lack of stairs for safety and convenience to older adults who prefer single-storey living for mobility reasons. This broad appeal can help ensure a steady stream of potential renters.
Additionally, bungalows are often situated in established neighbourhoods with mature trees and larger lot sizes compared to newer developments. Their simplicity of design can also translate into lower maintenance costs since there’s no second storey to contend with.
However, as with any property type, there are certain downsides to investing in bungalows. One significant disadvantage is that bungalows often have a larger footprint than two-storey homes, meaning they can be more expensive to buy due to the larger plot of land. The larger footprint can also mean higher property taxes.
Furthermore, bungalows can require significant investment in renovations and updates, particularly if they are older properties. These renovation costs can add up quickly, impacting the overall return on investment. Lastly, while bungalows have a wide appeal, they may not be as desirable to tenants seeking multi-level living spaces or newer-built properties. Therefore, understanding the local rental market and demand is crucial when considering an investment in bungalows.
Tips for Choosing the Right Home Model as an Investor
When looking to invest in real estate in Edmonton, it’s essential to carefully consider the type of rental property that aligns best with your investment strategy and financial goals. Edmonton’s housing market is diverse and presents various options, including duplexes, townhomes, condos, and bungalows, each with its own set of pros and cons.
In choosing a suitable investment property, start by analyzing the demand in specific neighbourhoods. Understanding the demographic profile of potential tenants in different areas of the city is crucial. For instance, if the area is popular among young professionals, condos or townhouses located close to downtown, job hubs, and amenities might be a worthwhile investment. If the neighbourhood is favoured by families, duplexes or bungalows in suburban areas with good schools and parks may be a better option.
Also, consider the long-term growth potential of the area. Investigate city development plans, employment trends, and historical property price performance to gauge the potential for property value appreciation. A careful examination of the rental yields, capital growth potential (don’t forget to factor in capital gains tax if you plan to eventually sell the property), and the costs associated with each type of property, such as taxes, strata fees, and maintenance costs (which can be different for an investment property compared to a primary residence or a vacation property) will also help guide your choice of the best investment property. You might also consider using a real estate agent, mortgage broker or other professionals to help you navigate the investment market.
As the local market dynamics can significantly impact your investment’s success, it may also be beneficial to consult with local real estate agents or property management companies who have in-depth knowledge of the Edmonton housing market. Above all, remember that while real estate can be a profitable investment, it requires careful planning, meticulous research, and strategic decision-making.
In conclusion, each property type offers a unique set of benefits and challenges, making it essential to consider your investment goals, budget, and the local real estate market when deciding on your next investment. Whether you’re just looking for a single residential rental property to make a little extra money or pay down your mortgage, or you’re one of the growing numbers of ambitious real estate investors who want to build a wider portfolio of real estate assets, Edmonton offers a vibrant housing market that caters to a variety of investment strategies.
At Sterling Homes, we’re committed to helping you navigate through these choices to build the perfect investment property that aligns with your financial goals. Contact us today to start your journey in the Edmonton real estate investment market!
Orginally published Jul 7, 2020; updated Dec 21, 2023
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