On August 9, 2024, the federal government announced its support for the construction of 146 new affordable homes in the Hastings-Sunrise neighbourhood in east Vancouver. The Sunrise Village project is a collaborative effort involving the federal, provincial, and municipal governments along with Brightside Community Housing. This initiative aims to provide affordable housing for seniors, families, and people with disabilities.

The Sunrise Village project replaces an aging building with 64 apartments to significantly expand affordable housing options in the area. The project comprises two new buildings designed to meet the diverse needs of the community, promoting a multi-generational living environment.

The federal government contributed $10.95 million through the Affordable Housing Fund. The Province of British Columbia added $15.9 million through BC Housing, while Brightside Community Housing provided $23 million in land equity. Additionally, the City of Vancouver contributed $5.5 million through the Community Housing Incentive Program (CHIP) and offered a Development Cost Levy (DCL) exemption valued at over $3 million. Metro Vancouver and Translink also provided financial support, contributing $156,512 and $226,884, respectively.

Construction of the Sunrise Village project is already underway, with completion expected in 2026. The project will be built to Passive House certification standards, emphasizing zero-carbon energy efficiency to align with Vancouver’s commitment to sustainability and environmental responsibility. Passive House buildings use up to 90% less heating and cooling energy than conventional buildings. This internationally recognized standard is applicable to almost any building type or design.

This project is one of several receiving funding under the Affordable Housing Fund (AHF). In 2023, an additional $1 billion was allocated to the AHF, bringing the total funding to over $14 billion. The fund prioritizes projects that assist those most in need, including seniors, Indigenous peoples, women and children fleeing violence, and individuals with mental health or addiction issues. Since 2017, the Province of British Columbia has also made significant strides in housing development, with nearly 80,000 new homes completed or in progress. 

For details on B.C.’s new Homes for People action plan, visit the BC Government website. To explore B.C.’s initiatives to tackle the housing crisis, additional information can be found on the Housing – StrongerBC website.

This summer, the Province of British Columbia launched a three-year pilot program aimed at addressing the housing shortage by helping homeowners create rental units on their properties. The Secondary Suite Incentive Program (SSIP) is designed to facilitate the addition of affordable rental suites to homes across the province. 

The initiative is one of many strategies being implemented under the province’s Homes for People action plan. It is expected to create thousands of new rental units over the three-year pilot.

Homeowners in most municipalities and regional districts within B.C. can now apply to the program through BC Housing’s secondary suite website. The program offers forgivable loans to cover up to 50% of renovation costs, with a maximum loan amount of $40,000. These loans are intended to help homeowners add a secondary suite or an accessory dwelling unit, such as a garden suite, laneway house, basement suite, or carriage home, on the property of their primary residence. 

For the loan to be forgiven, the new rental unit must be rented out at below-market rates for at least five years. Specific rent limits have been set for 2024 to 2025, for the different types of units, including bachelor, one-bedroom, two-bedroom, and three-bedroom-plus suites.

Additionally, suites must have received the necessary building permits and meet municipal standards. They are required to be new, legal, and self-contained with a kitchen and full bathroom. Renovations to existing rental units are not eligible. Permits must have been obtained on or after April 1, 2023. Suites also need to pass inspection and receive an occupancy permit from the local municipal government to confirm that the unit is safe and suitable for tenants.

There are criteria for homeowners, too. They must be Canadian citizens or permanent residents listed as the registered owners of the property, living in the property as their primary residence. Their combined gross annual income must be less than $209,420, and the property must have a B.C. Assessment value below the homeowner grant threshold, which is $2.15 million for 2024. 

Eligible costs under the program include expenses directly related to creating the new suite, such as architectural and design fees, structural modifications, electrical work, and building permits. Some appliance costs may also be partially covered. However, expenses related to extensions, conversions, or repairs for the homeowner’s use, as well as landscaping costs and labour performed by the homeowner or household members, are not eligible for reimbursement.

It is important to note that eligibility may change in future phases.

Applications for the SSIP will be processed on a first-come, first-served basis until the annual funding allocation is exhausted. The program is expected to provide forgivable loans to approximately 1,000 homeowners annually, leading to the creation of 3,000 new rental units by the end of the pilot. 

Alberta has a dynamic economy and rapidly growing urban centers, with landlord- and investment-friendly policies, making it an excellent location for real estate investors seeking to diversify their portfolios. 

For those interested in multi-family residential properties, the opportunities for finding excellent properties and maximizing your return on investment (ROI) are significant, especially in Calgary and Edmonton. 

Alberta’s Real Estate Market

Alberta’s economy, traditionally reliant on the oil and gas sector, is now experiencing diversification with growth in technology, agriculture, and renewable energy. This shift has contributed to a resilient economic landscape that supports robust real estate demand. Calgary and Edmonton, as the province’s primary urban centers, are at the forefront of this growth, benefiting from a combination of strong job markets, infrastructure development, and population influx.

Steve Kuiack, of the Kuiack Investment and Property Group, confirms this, saying, “The economic and market trends in Calgary and Edmonton are creating a conducive environment for real estate investment, particularly in certain emerging neighbourhoods or those undergoing revitalization efforts. This is excellent news for property value and rental demand.”

Demographics

The demographic profile of Alberta is a crucial factor in understanding real estate dynamics. With a median age of 39 years, Alberta boasts a relatively young population compared to the national average. This youthful demographic is drawn to urban centers, particularly Calgary and Edmonton, for their employment opportunities and lifestyle amenities. The influx of young professionals and families fuels demand for rental properties, particularly multi-family units, which provide a steady income stream for investors looking to build long-term wealth. Targeting rentals towards a younger demographic, especially in key areas, can increase interest.

Market Demand in Key Cities

A high demand for rental units in Calgary and Edmonton is driven by several factors. Both cities are experiencing steady population growth and diverse job markets to attract professionals across various sectors. Younger individuals often prefer renting over homeownership due to its flexibility and lower upfront costs, among other factors. Given Alberta’s youthful population, there is a higher proportion of residents likely to rent rather than buy homes.

Property Valuation and Appreciation

Investing in areas with high property appreciation potential is critical. Calgary and Edmonton have neighbourhoods that have shown consistent property value increases due to factors such as infrastructure development, proximity to amenities, and overall desirability. Identifying these hotspots through thorough market research can lead to substantial long-term gains.

Strategies to Maximize ROI

Thorough research is crucial for maximizing ROI in multi-family property investments. Understanding market trends, demographics, and economic indicators helps make informed decisions. Use resources such as local real estate boards, market reports, and economic forecasts to gather data. 

Additionally, educational resources to deepen your foundational knowledge and learn more about real estate investing benefit both novice and experienced investors alike. Steve Kuick’s free ebook, Get The Most Money For Your Real Estate Investment, provides guidance on various real estate investing strategies, along with tips and advice to help investors maximize their returns. 

Having access to current and valuable resources will help you identify high-demand areas, anticipate market shifts, and ensure you are not missing out on opportunities to improve your ROI. Being well-informed about these factors increases the likelihood of a successful investment with a good return, and ensures you are prepared for the work involved.

Leverage Landlord- and Investor-Friendly Government Policies and Incentives

Alberta and its municipalities offer incentives aimed at encouraging investment in multi-family residential properties. Leveraging these can significantly enhance your investment’s profitability and sustainability.

Tax Benefits

Costs related to the operation and maintenance of rental properties, such as repairs, utilities, insurance, and property management fees, may be deductible. By reducing taxable income, these deductions can enhance your overall cash flow. Consulting with an accountant or tax professional can help guide your tax strategies to reduce your overall tax burden.

Grants and Subsidies

The Alberta government offers grants and subsidies to support the development of sustainable and affordable housing projects, such as the Affordable Housing Partnership Program. This provides funding to private developers who build affordable rental housing. Grants cover a portion of construction costs, making projects more financially viable. Municipalities may offer various incentives, as well.

Zoning Flexibility and Higher-Density-Friendly 

Certain municipalities in Alberta offer flexible zoning regulations to encourage the development of high-density residential properties.

Calgary has implemented rezoning initiatives to allow higher-density developments. This can increase potential rental income and property value. Edmonton’s “Missing Middle” initiatives encourage multi-family dwellings. This provides investors with the flexibility to choose and strategize a multi-family property investment more effectively.

Choose the Right Location 

Choosing the right location is paramount. Well-connected neighbourhoods with good access to public transit are preferred by renters. Additionally, proximity to schools, parks, restaurants, and shopping centers improves tenant satisfaction, for lower turnover rates and vacancies.

Bear in mind the type of tenant you are aiming to attract, for more effective and cost-efficient marketing. For example, areas near business districts tend to attract professionals, while neighbourhoods around universities will draw students. 

You also need to ensure properties are tailored towards the target market.

Kuiack further clarifies: “The key is to understand the lifestyle choices of your target renter. Determine what demographic is likely to be interested in a location, then ensure a property can provide added value for that group. Properties in a popular downtown area are likely to be of interest to the under 30s. If the property then offers amenities like fitness and games areas and can provide community and social opportunities, along with other lifestyle benefits attractive to this group, you will be able to earn higher rents with lower vacancy rates.”

Leverage Rental Hotspots 

In addition to the overall importance of location, certain neighbourhoods are particularly popular for rentals, making for an easier entry into the market.

Calgary Hotspots

Calgary’s real estate market is characterized by strong demand for rental properties, driven by population growth and a diverse economy. The city’s strategic location, excellent infrastructure, and high quality of life make it attractive for both residents and landlords.

Known for its trendy vibe and proximity to downtown, Beltline attracts young professionals and offers high rental yields. It is a vibrant, trendy neighborhood located just south of Calgary’s downtown core, known for its high-rise apartments, eclectic mix of shops, restaurants, and cultural venues. Its atmosphere, proximity to downtown, and excellent public transit options make it a prime location for rental properties.

Kensington combines a vibrant community atmosphere with excellent amenities, making it popular among renters. It is known for its pedestrian-friendly streets, boutique shops, and lively social scene. Its appeal to both young professionals and families makes it a versatile investment location.

Calgary’s oldest neighbourhood, Inglewood, offers a unique blend of historic charm and modern conveniences, appealing to a diverse tenant base. It boasts a strong sense of community, numerous parks, and a growing arts and culture scene. 

Edmonton Hotspots

Edmonton offers excellent affordability and growth potential. The city’s economic resilience, coupled with ongoing urban development projects, makes it an attractive investment destination.

Edmonton’s downtown area is undergoing significant revitalization, making it a prime location for rental properties. Since 2015, over $4.7 billion has been invested in downtown development, resulting in more than 7 million square feet of new residential, office, cultural, educational, and entertainment buildings.

Strathcona is a highly popular area, known for its historic character and vibrant arts scene. It is also close to the University of Alberta. The area’s unique character and amenities attract a diverse tenant base.

Oliver is centrally located, with excellent amenities and also attracts a diverse tenant base. It is one of Edmonton’s most densely populated areas.

Consider Strategic Fixer-Uppers

Investing in properties that require minimal or cost-effective renovations and upgrades can offer substantial ROI, as long as the costs of renovations are carefully assessed and managed effectively. Focus on improvements that increase rental value and attract high-quality tenants without being excessively expensive.

For example, modern kitchens and bathrooms are high-impact areas that significantly influence tenant decisions, so investing in upgrades in these key areas will likely offer a higher ROI, through increased property value and greater demand. Energy-efficient windows, appliances, and insulation can not only lower utility costs but also appeal to environmentally-conscious renters. Landscaping, exterior painting, and lighting enhance the property’s attractiveness, creating positive first impressions to attract tenants.

In some cases, however, a building may have historic charm; try to preserve this, while incorporating modern upgrades.

Optimize Tenant Management

Effective tenant management is crucial for maximizing ROI. This includes effective marketing to attract potential tenants, and thorough screening processes to ensure reliable and responsible ones. 

Maintaining good tenant relationships is critical. Promptly address maintenance issues and other concerns to reduce turnover and vacancies. Regular property inspections are essential for maintaining the condition of your investment and preventing costly repairs, as well as for tenant satisfaction. Scheduled inspections can help identify issues early.

Streamlining rent collection and lease management processes can minimize financial disruptions, maintaining your regular income.

Investing in multi-family properties offers significant advantages for property management, primarily through operational efficiencies. With multiple units under a single roof, managing maintenance, repairs, and tenant communications becomes more streamlined. This centralized management reduces travel time and expenses associated with overseeing multiple single-family properties. Additionally, economies of scale are achieved by contracting services for a larger number of units, often resulting in cost savings on services like landscaping, pest control, and routine maintenance. These efficiencies not only simplify the property management process but also enhance profitability and the overall investment return. A property management company can simplify this aspect of your investment for you.

Diversify Your Portfolio

While focusing on multi-family residential properties, consider diversifying within this category to balance risk and return. Investing in both small apartment buildings and larger complexes can spread risk. Mixed-use properties are another way to diversify and hedge risk. Combining residential and commercial spaces can even improve income potential, as well as protect against market fluctuations.

Diversifying geographically is another good strategy. Even within Alberta choosing properties in different types of neighbourhoods and different cities, such as in Calgary and Edmonton, will provide good diversification.

Consider Multi-Use Properties

Consider properties that offer a mix of residential and commercial spaces. Mixed-use buildings can provide a steady income stream from both residential tenants and commercial leases, enhancing overall ROI.

Offer Convenience for Higher Rents

Invest in properties that offer modern conveniences and amenities, such as in-unit laundry, fitness centers, and secure parking, as well as access to key external amenities. These features attract higher-paying tenants and reduce vacancy rates. Be sure, however, that the amenities you offer will cater to your target market.

Properties that offer easy access to universities will attract student renters. Furnished units and other conveniences cater to this demographic who often are looking for a turn-key experience and easy relocation for the school year.

Also, pay attention not only to existing neighbourhood amenities, but research the area thoroughly to discover any planned developments that could increase the desirability of the area. Properties near major redevelopment projects or planned infrastructure improvements are likely to see increased demand and will see property value appreciation once the developments are completed.

Kuiack recommends that investors should “pay close attention to government infrastructure projects, like the Green Line LRT in Calgary. This draws tenants, especially families and younger, eco-conscious professionals, and adds to property values. Properties near these developments are not just about convenience—they’re future-proofing investments against market fluctuations.”

Leverage Financing Options

Exploring various financing options and investigating several thoroughly can lead to significant savings. Through spending less on the costs of borrowing, your ROI is improved. Traditional mortgages, private lenders, and government-backed loans each have their advantages. Assessing these options in the context of your financial goals and risk tolerance, and getting several quotes, is essential. Remember to consider all terms, not just the rates; some lenders may offer more flexible terms that will meet your needs better. 

Partner With Experts

Partnering with real estate investment experts, like the Kuiack Investment and Property Group, which specializes in the Alberta multi-family property market, can make a significant difference in finding suitable properties for the best chances of success. Taking advantage of resources provided by experts in the industry, such as the free ebook, Get The Most Money For Your Real Estate Investment, also helps, ensuring that you are well-prepared and informed before committing to an investment. By staying informed and partnering with experienced professionals, investors can improve their long-term success and financial growth.

Hamilton’s downtown core is set for a significant transformation with the upcoming development of The Design District, a new landmark located at 41 Wilson St. This ambitious project is poised to reshape the city’s skyline and redefine urban living in Hamilton, with a scheduled completion date in early 2027.

The Design District promises to be a focal point of modern living, offering a blend of innovation and timeless design. The development, a sleek 31-storey condominium, will house 931 units ranging from studio apartments to spacious three-bedroom residences. Each unit will feature furnishings by Louis Vuitton, highlighting the project’s commitment to luxury and high-end design.

Strategically situated in the heart of Hamilton’s transportation hub, The Design District offers a high level of convenience. It is within close proximity to the planned LRT line which was announced in 2021, as well as the Hamilton GO train station, making it an ideal location for both residents and visitors. The project is also just minutes away from major highways and the international airport, ensuring easy access for commuters and travellers alike. 

For students, McMaster University will be just four stops away on the forthcoming LRT, making this development a prime option for those seeking off-campus housing.

The surrounding West Harbour area is also undergoing a transformation, through an ambitious revitalization project. $140 million has been committed to improve the area, and developments are already underway. Improvements to this waterfront area include new cultural, residential, commercial, and recreational spaces. The project is designed to create a vibrant, mixed-use community that will be both transit-supportive and pedestrian-friendly, turning the West Harbour into a key destination.

The Design District will offer residents an array of modern amenities designed to enhance their urban lifestyle. These include an outdoor pool, a fully-equipped fitness center, a yoga studio, and business-focused facilities such as meeting rooms and co-working spaces. The development also boasts designer lobbies, outdoor dining areas, an outdoor bar and lounge, visitor parking, and a 24-hour concierge service, ensuring both comfort and convenience for its residents.

As Hamilton continues to grow and evolve, The Design District is set to play a central role in the city’s ongoing revitalization, offering a new standard of living in one of Ontario’s most dynamic urban centers. More information on the development, including prices, are available on the Investor’s Playbook Marketplace.

About the Author

Ryan Coyle is a distinguished real estate investor and the founder of the Connect Group of Companies. With over 18 years of real estate investment experience, Ryan has built a personal portfolio of over 40 properties and has facilitated the creation of over $2 billion in wealth for his clients. 

Maximizing the appeal and profitability of properties is essential. One strategic way to achieve this is by partnering with a professional furnishing service. Whether you’re preparing a rental property for high-end tenants, enhancing the marketability of a property for resale, or setting up a model or show apartment, a professional furnishing service can streamline your processes and significantly boost your return on investment.

What Is a Professional Furnishing Service?

A professional furnishing service offers a comprehensive solution for outfitting a property, handling everything from design consultation and furniture selection to delivery and installation. For real estate investors, this turnkey service is invaluable, especially when you’re managing multiple properties or when expertise in interior design is needed to meet the demands of a particular market segment.

Optimizing Furnished Rentals for Maximum Returns

In the rental market, particularly within the executive or luxury segments, offering furnished properties can significantly increase rental income. Tenants in these markets expect more than just functional spaces; they look for well-designed, cohesive interiors that reflect their lifestyle and status. However, achieving this level of quality in a rental property can be resource-intensive and challenging without the right expertise.

By partnering with a professional furnishing service, real estate investors can ensure their rental properties meet or exceed these high standards. The service takes care of every detail, from selecting high-quality furniture and decor to ensuring that the design aligns with the preferences of target tenants. This results in a more attractive rental property that can command higher rates, attract discerning tenants, and maintain low vacancy periods. Ultimately, this translates into enhanced profitability and a stronger, more competitive rental portfolio.

Enhancing Property Appeal for Show or Resale Units

Presentation is key to attracting buyers and renters, for higher sale prices and rental rates. Professional staging is a proven method for enhancing the appeal of a property, making it more memorable and desirable to potential buyers. However, effective staging requires more than just placing furniture in a room; it involves a strategic approach that highlights the property’s best features while appealing to the tastes of the target market and creating a cohesive overall look.

A professional furnishing service offers expert staging solutions that can transform your property into a showpiece. These services typically begin with a design consultation to assess the property and develop a staging plan that is tailored to its unique characteristics and current market trends. This tailored approach can make your property stand out in a crowded market.

Versatile Solutions for Various Real Estate Needs

At times, unique real estate scenarios may arise, such as when a previous tenant of a furnished rental has caused damages or following a flood. Professional furnishing services can provide interim and partially furnished solutions to meet a wide range of needs if only a portion of the space needs furnishings. For real estate investors, this flexibility means you can rely on the service to enhance the value of your investments, regardless of the specific challenges you face.

Partnering with a professional furnishing service offers real estate investors a strategic advantage in an increasingly competitive industry. By ensuring that your rental properties are optimally furnished and your resale properties are expertly staged, you can enhance your ROI, attract high-quality tenants and buyers, and ultimately achieve greater success in the real estate market.

Effective property management is a key aspect of success in multi-family real estate investments. While investing in a multi-family property can be a lucrative move, the ongoing management of that property determines whether it becomes a profitable venture or a financial burden. From tenant relations to maintenance and financial oversight, property management plays a critical role in maximizing the return on investment (ROI) for multi-family properties.

Tenant Management: The Foundation of Cash Flow

One of the most significant aspects of property management in multi-family investments is tenant management. Unlike single-family homes, where a single tenant may occupy the property, multi-family buildings house multiple tenants, each contributing to the overall income stream. Maintaining positive relationships with tenants is critical so that you continue to enjoy consistent cash flow and minimize vacancies. 

Effective property managers use various strategies to manage tenant relations, including regular communication, responsive maintenance services, and fair but firm enforcement of lease agreements. These practices not only reduce tenant turnover but also enhance the property’s reputation, attracting quality tenants who are willing to pay market rates.

Furthermore, a strategic approach to rent increases and other measures can help to ensure rents stay aligned with similar properties in the area, and ensure you are not missing out on the full potential of the property.

Cash-for-Keys: A Strategic Approach to Tenant Turnover

In markets with strict tenant protection laws, such as Ontario, property managers often face challenges when trying to increase rents or renovate units. While a cash-for-keys strategy, where landlords offer tenants a financial incentive to vacate the property voluntarily, can be effective as well as mutually beneficial, this can be very challenging.

The cash-for-keys strategy requires careful planning and execution. Property managers must understand the legal implications thoroughly and ensure that the agreements are mutually beneficial. Moreover, they need to be aware of the local market conditions to determine the appropriate amount of compensation that will motivate tenants to move while still being cost-effective for the property owner.

Maintenance and Upkeep: Protecting the Asset

Maintenance is another critical component of property management in multi-family investments. Regular maintenance not only ensures the safety and satisfaction of tenants but also protects the property’s value. Deferred maintenance can lead to costly repairs down the line and can negatively impact the property’s NOI and valuation.

A proactive maintenance plan should be in place. This includes routine inspections, timely repairs, and preventative measures to address potential issues before they escalate. A well-maintained property not only retains its value but can also garner higher rents, contributing to a stronger ROI.

Property managers must also be prepared to handle emergency situations, such as plumbing failures or HVAC breakdowns. Having reliable contractors and a responsive management team can make a significant difference in minimizing the disruption to tenants and maintaining the property’s operational efficiency.

Financial Management: Maximizing ROI

Effective property management also involves scrupulous financial oversight. From collecting rent and paying bills, to managing budgets and forecasting future expenses, property managers play a crucial role in ensuring the financial health of a multi-family property.

With excellent financial management, investors can optimize their cash flow, reduce operating expenses, and make informed decisions about capital improvements or refinancing. In multi-family properties, the financial management aspect extends beyond day-to-day operations. Property managers need to work closely with investors to develop long-term strategies that align with the investors’ financial goals. This could include planning for major renovations, adjusting rents in response to market conditions, or exploring opportunities for refinancing to take advantage of lower interest rates.

The Strategic Role of Property Management to Ensure Success

Property management is not just about maintaining the status quo; there is a strategic aspect to it that can significantly impact the success of a multi-family investment. Effective property management ensures that the property remains fully occupied, well-maintained, and financially sound, all of which contribute to maximizing the return on investment.

About the Author

Simeon Papailias is a leading finance expert and influential figure in the industry. Known for his extensive connections and respected insights, Simeon stands out as one of the top professionals in the nation, offering valuable market knowledge and straightforward advice. Beyond his role as a Commercial and Investment Broker, Simeon is a dedicated advocate for the real estate sector and a passionate entrepreneur committed to guiding others toward their goals and purpose.

The multi-family real estate market offers excellent stability and growth in a changing and complex real estate environment. While other asset classes in real estate can be volatile or more vulnerable to specific economic conditions, multi-family properties have consistently shown resilience and profitability, for a variety of reasons. 

Consistent Demand and Market Resilience

One of the primary reasons multi-family properties are considered the strongest asset class is the consistent demand for housing. Unlike commercial real estate sectors like office spaces or retail, which can be influenced by economic cycles, the need for residential housing remains steady. Even during economic downturns, people need places to live. This intrinsic demand makes multi-family properties a safe bet, providing a consistent income stream for investors.

Rental demand is strong, especially in urban centers. Building properties also tend to appreciate in value. As a result, multi-family properties can offer investors the opportunity to capitalize on both rental income and property value appreciation. In high-demand markets like Toronto, where rental prices have soared, multi-family properties become even more valuable as their net operating income (NOI) increases, directly influencing property valuation.

Scalability and Diversification

Investing in multi-family properties also allows for scalability and diversification within a single investment. Owning multiple units under one roof diversifies the income stream. If one unit is vacant, the income from other units can help cover expenses, reducing the overall risk. This built-in diversification makes multi-family properties a more stable investment compared to single-family homes, where a single vacancy can lead to financial strain.

Furthermore, multi-family properties allow investors to scale their efforts more efficiently. Managing ten units within a single building is often easier and more cost-effective than managing ten separate single-family homes spread across different locations. This efficiency in management, coupled with the potential for economies of scale, enhances the overall return on investment (ROI).

Favourable Financing and Market Valuation

The transition from residential to commercial real estate for properties with five or more units offers significant financial advantages. These properties fall under commercial real estate, which is evaluated based on the property’s income potential rather than just comparable sales. This shift allows for higher valuations, particularly in markets with strong rental demand.

Cap rates play a crucial role in this evaluation. A property with a low cap rate in a high-demand market like Toronto may still be highly valuable due to its potential for stable, long-term income. Understanding how cap rates influence a property’s valuation is key for investors looking to maximize their returns. Banks are more willing to finance properties with higher cap rates at favourable terms, making it easier for investors to secure funding for multi-family properties.

It is important, however, to tailor strategies to the specific market the property is in, as lending criteria and market dynamics can vary significantly from one location to another. For example, a property in Windsor may require a different financing approach than a similar property in Toronto. Local knowledge is crucial for investors looking to optimize their investments. Working with an independent mortgage broker who understands the intricacies of different markets can help, allowing investors to further enhance their returns and reduce risks.

Overall, the multi-family market’s inherent stability, scalability, and potential for high returns make it a very strong asset class in real estate, allowing investors the opportunity to capitalize on the growing demand for rental housing and achieve long-term financial success.

About the Author

Simeon Papailias is a leading finance expert and influential figure in the industry. Known for his extensive connections and respected insights, Simeon stands out as one of the top professionals in the nation, offering valuable market knowledge and straightforward advice. Beyond his role as a Commercial and Investment Broker, Simeon is a dedicated advocate for the real estate sector and a passionate entrepreneur committed to guiding others toward their goals and purpose.

The Canadian labour market has been undergoing significant changes due to the retirement of the baby boomer generation, which began in 2011. A Statistics Canada study, Canadian Labour Force: What Will Happen Once Baby Boomers Retire?, was released on August 6, 2024. This study explores the future of the Canadian labour force through 2041 as the baby boomer generation moves into retirement. It analyzes various scenarios to assess the impact of different immigration levels and participation rates by age group on the labour force.

Projections were based on the 2024–2026 Immigration Levels Plan set by the IRCC in November 2023, along with recent demographic changes, including the impacts of COVID-19 and the rise in permanent and temporary immigrants to Canada in 2022 and 2023.

The baby boomer retirement trend has led to a noticeable decrease in the labour force participation rate, which dropped to its lowest point in 20 years in 2023, at 65%. However, the study expects the labour force to continue growing over the next two decades, partly due to immigration and potentially due to higher participation rates among older workers.

Key Findings and Projections

Continued Growth of the Labour Force

Despite the retirement of baby boomers, Canada’s labour force is projected to grow, thanks to high levels of immigration. Canada saw record numbers of immigrants in 2022 and 2023, with over 468,000 immigrants arriving in just one year. Under the study’s “reference scenario,” which assumes 500,000 new permanent immigrants annually and a stable proportion of non-permanent residents, the labour force is expected to grow from 21.7 million in 2023 to 26.8 million by 2041.

Different immigration scenarios highlight the significant influence of immigration on the labour force size. For instance, if Canada were to admit 750,000 immigrants annually, the labour force could reach 29.5 million by 2041. In contrast, if immigration were halted, the labour force would decline slightly, stabilizing at around 20.5 million by 2041, the same level as in 2021.

Stabilization of Labour Force Participation Rate

The overall labour force participation rate has been declining since the early 2000s due to the retirement of baby boomers. This decline is expected to continue until 2030, when the last of the baby boomers reach age 65. After this point, the participation rate is projected to stabilize, remaining around 64.6% by 2041.

Participation of Older Workers 

The participation rates of older workers could significantly impact the overall labour force. If participation rates were to rise to levels seen in Japan, where older workers are more active, the Canadian participation rate could reach 69.7% by 2041. This highlights the importance of policies that encourage older Canadians to remain in the workforce.

The proportion of workers aged 55 and older in the Canadian labour force has doubled from 10.9% in 2001 to 22.4% in 2021. This trend is expected to stabilize as baby boomers continue to retire, with the proportion of older workers remaining around 22-23% by 2041.

Regional Variations

Labour force trends will vary significantly across Canadian provinces and territories. While the national labour force is expected to grow, some regions, particularly in Atlantic Canada, may see declines. For example, Newfoundland and Labrador could see a 20.2% decrease in its labour force by 2041. Conversely, provinces with younger populations and higher immigration levels, like Ontario and Alberta, are expected to maintain or increase their labour force participation rates.

Challenges and Implications

The retirement of baby boomers presents challenges, particularly in maintaining a stable labour force participation rate. The participation rate may continue to decline in the short term. However, increasing the labour force participation of older workers could help mitigate this decline.

The size of the labour force directly influences Canada’s economic growth potential. A smaller labour force could lead to a shortage of workers, potentially limiting economic growth unless offset by increased productivity or longer working hours.

The retirement of the baby boomer generation is reshaping Canada’s labour force, leading to a decline in the participation rate and an aging workforce. However, through sustained immigration and potential increases in older worker participation, Canada’s labour force is expected to grow through 2041. The future composition and size of the labour force will vary by region, with some areas facing more significant challenges than others.

The full paper is available on the Statistics Canada website.

New legislation has been passed by the Ontario government that will impose a statutory 10-day cooling off period for buyers after they sign a purchase agreement for a new freehold home. During debate on the matter, both Liberal and New Democratic Party MPPs backed the move.

In essence, the legislation, known as Bill 200, or the Homeowner Protection Act, 2024, will allow buyers to cancel an agreed-upon deal if they choose – without fear of a financial penalty. The change would match a similar review period for buyers of new condominium units.

However, there is a downside to all this.

The new regulatory changes will only add uncertainty, needless new paperwork and additional upfront and ongoing administrative costs to the already beleaguered new home sales market – at a time when it is already difficult to build houses people can afford to purchase.

Items such as updates to an addendum to an agreement of purchase of sale and creating  information sheets that builders will have to provide to buyers of new freehold homes pose another logistical and financial hurdle, according to a government analysis of the regulatory impact of the changes.

Considering the hefty taxes, fees and levies that already add a third to the cost of buying a new home, it will only further boost the price tag of a purchase.

Changes will come into force in 2025

The legislation repeals and adds various definitions related to requirements for purchase agreements and construction contracts and sets out when a purchase agreement is binding on purchases of new freehold homes as well as provides for when a buyer can rescind an agreement.

To rescind an agreement, a buyer must give written notice to the vendor within 10 days of when the buyer receives a copy of the purchase agreement. The rules require the vendor to promptly refund, without penalty, all money received from the purchaser as well as interest. Builders violating the rules could be fined $50,000, matching the penalty under Ontario’s Condominium Act.

The legislation changes the New Home Construction Licensing Act, 2017 and the Ontario New Home Warranties Plan Act. It received Royal Assent June 6.

The government is now consulting on how to implement the regulations. The Ministry of Public and Business Service Delivery and Procurement is accepting feedback from the public until Sept. 16. The ministry is anticipating the changes will come into force sometime in 2025.

New rules will complicate matters

The Toronto Regional Real Estate Board (TRREB) and Ontario Real Estate Association (OREA) have applauded the cooling-off period for new freehold homes and thanked the government for not proposing to apply the same cooling-off period to resale homes. I find this strange, as their argument is that doing so would undermine certainty in resale real estate transactions.

Pardon me, but why is the new home sales market any different?

The same sentiment applied by TRREB and OREA to the resale market is also applicable to vendors of new freehold homes.

The regulatory changes will only complicate matters and throw a wet blanket over the sales process. Instead of a straightforward exercise, there will now be a loophole that creates uncertainty.

Developers and builders must finance the cost of land, labour, materials, equipment and myriad other items when building a new home. When a buyer signs on the dotted line, there needs to be assurance that the deal will go ahead. Under the new set of rules, that will not be the case.

While adding more costs for the new home buyer, the cooling-off period will further complicate the homebuying process. Instead of firm commitments, the deals will be subject to change.

Developers and builders are already at the mercy of myriad rules, procedures to follow, and hurdles to overcome when building and then selling a home. Making it more complex serves no one.

The homebuying process is already very open and transparent. Many new freehold home vendors make their agreement of purchase and sale available online to potential buyers for review before they even enter a sales office. This enables them to make clear and informed decisions.

By the time a buyer signs on the dotted line to purchase a new home, they have had ample time to assess their situation, ask questions, consult experts, and decide if they want to proceed.

Present system is working

There is some solid evidence that a new process is not needed and, in fact, would be a waste of money. 

In B.C., for example, legislation was introduced Jan. 3 that gave buyers of resale homes three days grace to reconsider a property purchase, 

The new Home Buyer Rescission Period in B.C. gives homebuyers who make a subject-free offer three business days to rescind an accepted offer on a property. If they decide to walk away, they pay 0.25 per cent of the offer amount. On a $2-million deal, the cancellation fee would be $5,000. Under the law, buyers are not required to give a reason for rescinding their offer.

Granted this applies to the resale housing market, but according to B.C. realtors there hasn’t been a single cancellation as a result of the new rescission period. 

Why would the new home market be any different?

There is no need to rock the boat in Ontario by imposing a 10-day cooing-off period for buyers of new freehold homes.

If the system isn’t broken, why fix it?

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.

Real estate investing offers significant potential for long-term wealth building, but it also comes with challenges and concerns. Cash flow is one such concern, and for many, it is a big one. Investors are often worried about the possibility of negative cash flow, where rental income doesn’t fully cover a property’s expenses. These concerns are valid, but there are times when the long-term potential of a property may counteract a temporary negative cash flow situation. With a strategic and disciplined approach, cash flow concerns can be managed effectively, allowing you to achieve your investment goals.

Understanding and Mitigating Negative Cash Flow

Negative cash flow, where the costs of owning a property exceed the rental income, can understandably seem like a significant drawback. However, it’s crucial to consider the broader context of your investment before making a decision to sell a property or to pass on an investment opportunity. 

While negative cash flow might initially appear disastrous, it’s important to evaluate the long-term potential of the property, including factors like appreciation, equity building, and market conditions, which can significantly impact the overall success of your investment.

Long-Term Appreciation and Equity Building

Even if a property generates negative cash flow initially, the value of the property may appreciate significantly over time. This appreciation, coupled with the gradual reduction of your mortgage principal, builds equity – a central foundation of long-term wealth accumulation. The key is to focus on the long-term potential rather than short-term cash flow challenges.

High-Demand Rental Markets

Investing in properties located in areas with strong rental demand can help mitigate the risk of negative cash flow. Urban centers, growing suburbs, and neighbourhoods near major employers or universities typically have higher rental demand. Selecting properties in these areas means that despite a temporary negative cash flow, there is a good likelihood of consistent rental income to exceed expenses in the future.

Potential to Enhance Property Management

Effective management of your property plays a crucial role in improving cash flow. This includes setting competitive rent prices, minimizing vacancies, and keeping operating costs under control. By refining your property management practices—whether you are managing the property yourself or hiring a professional—you can enhance your property’s profitability over time. 

High operating costs, including maintenance, repairs, and management fees, are often a key factor in creating negative cash flow situations. By improving budgeting, implementing strategies to effectively reduce unnecessary expenses, and other measures, these expenses can be managed effectively. Successful investors often turn initially negative cash flow situations around through strategic management and gradually increasing rental income.

Interest Rate Challenges

Interest rates have a direct impact on your real estate investment, influencing both your mortgage payments and overall returns. Many investors are concerned about buying an investment during periods of high interest rates or when rates are expected to rise. As an investor, understanding and managing these impacts are key when trying to maintain a profitable portfolio.

Understanding that interest rates will fluctuate over time is important. Maintaining a long-term investment perspective can help you ride out periods of higher rates, as the market often adjusts over time. Additionally, strategic use of financing options, such as hybrid loans or adjustable-rate mortgages (ARMs), can provide flexibility and potential savings. One way to manage the risk of rising interest rates is by opting for a fixed-rate mortgage, which locks in the current rate for the life of the loan. This provides stability and predictability in your mortgage payments, allowing you to plan your finances with greater certainty.

If interest rates decrease in the future, however, bear in mind that refinancing your mortgage is an option. This can lower your monthly payments, thereby improving your cash flow. While refinancing does come with costs, the long-term benefits, such as reduced payments and increased financial flexibility, may outweigh these expenses.

Long-Term Perspectives

If a negative cash flow is likely only a temporary situation, due to required renovations or upgrades, or early-stage financing, it can be helpful to remember to look at the long-term picture. The challenges you face in the early stages of an investment can be overcome with careful planning and strategic adjustments, setting you up for future success as the property begins to generate positive cash flow.

Options and Solutions for Riding Out Temporary Negative Cash Flow

If you are confident a negative cash flow is temporary, and you do not want to sacrifice an investment, there are strategies to help you through this period. Generally, it is ideal to set aside a cash reserve before purchasing a property to cover short-term deficits. However, if you do not have a reserve or have used it up, you could consider exploring short-term financing options, such as a home equity line of credit (HELOC), to manage cash flow gaps. Be careful to assess the impacts of borrowing rates on your overall profitability.

Another strategy is to adjust your rental terms temporarily, such as offering shorter leases or incentives to attract tenants quickly, thus reducing vacancy periods. You might also consider negotiating with service providers or contractors to defer some costs or spread them out over time. The key is to stay flexible and proactive in managing cash flow during challenging periods. A financial adviser can guide you through these situations.

Managing cash flow concerns in real estate investment requires a combination of strategic, long-term planning, market analysis, and effective property management. With thorough research and careful analysis, you can determine whether concerns about negative cash flow are justified or simply a hurdle to overcome on the path to long-term growth and wealth accumulation.

About the Author

Ryan Coyle is a distinguished real estate investor and the founder of the Connect Group of Companies. With over 18 years of real estate investment experience, Ryan has built a personal portfolio of over 40 properties and has facilitated the creation of over $2 billion in wealth for his clients. 

* The information provided in this article is intended for general informational purposes only and should not be considered as professional advice. It is not a substitute for consulting with qualified professionals regarding real estate investing. The author and publisher do not assume any responsibility or liability for any actions taken based on the information provided. This article does not constitute an offer, solicitation, or recommendation for any investment product or strategy.