July 18, 2022 | Investors

Is Now A Good Time To Buy An Investment Property In Guelph?

As news of the shifting real estate market continues to dominate the headlines, many potential buyers are starting to shy away from investment properties. Buying real estate is a big decision, and there will always be some level of risk involved. 

However, sometimes the best advice is to zig when everyone else decides to zag. More people moving away from investment properties means more opportunities for those who step up.

Guelph is the fifth fastest-growing city in Canada, making it one of the safest and most profitable places to own a rental property. The best time to invest would have been twenty years ago. The second best time is now, for several reasons. 

Housing Prices Are Down

Since 2020, prices have risen uncontrollably all over the country. Pent-up demand brought on by the pandemic and ultra-low interest rates fueled a buying frenzy unlike anything we’ve ever seen. A few months ago, soaring prices came to a standstill after several interest rate hikes. Now, interest has further increased, and inflation is rising, which has finally impacted the real estate market. 

Many first-time buyers put their ambitions on hold to wait things out. At the same time, we’ve seen an influx of new listings come available. As demand goes down and supply goes up, the high prices of houses are finally starting to settle.

In May, the average price of a house in Guelph stood at just over $1 million. By the end of June, the average sold price dropped to $858,331, according to Zolo. Will prices go down even more? It’s impossible to say for certain. In any case, it is the best time to buy than at any point in the last two years or more.

Knowledge and education are vital to your success as an investor. Here are some additional resources to bring you up to speed:

Rents Are Up

Isn’t it risky to buy an investment property as the market shifts? Not necessarily. More people are moving into Guelph, but fewer are buying houses. These additional residents still need a place to live, which means that they are renting.

As the prices of housing went up, so did rent costs. The difference is that rents aren’t likely to come down even as housing prices drop. Buying an investment property while prices are down makes generating a positive monthly cash flow easier.

  • A quick search on the website Zumper shows the average rent in Guelph at $1899 for a one-bedroom unit. 
  • A two-bedroom apartment would earn approximately $2199. 
  • A three-bedroom could pull in $2500 or more every single month.

Why is the local rental market so hot?

Guelph’s population is growing fast at the rate of 2%, outpacing national and provincial averages.

Vacancy Is Low

Buying a rental property only to have it sit empty is the biggest fear for many potential investors. If you can’t find a tenant, you’re forced to carry the mortgage cost for a house you don’t even live in. However, that is not a situation you’re likely to ever encounter in Guelph, which is experiencing an urgent shortage in available housing. 

From 2016 to 2021, the population in Guelph has increased by nearly 10%, but the supply of housing has not kept up. The latest report by the Canada Mortgage and Housing Corporation shows a vacancy rate of 1.9%, which is approximately half of the national average. In fact, rental units are at such a premium that some building managers have started to see bidding wars on apartments. 

While there are never any guarantees for investors, owning a rental unit in Guelph now is a very safe bet. 

  • You gain an immediate source of monthly passive income that you can depend on whether you’re working or not.
  • Your net worth and equity will grow the longer you hold on to the property.

Why Guelph Is An Excellent Place To Invest

Guelph is quickly gaining a reputation as a very desirable place to live and work. It is a very safe city with low crime, a high standard of living and high employment. The median household income sits at $77,984, far above the national average. 

Of course, a significant part of Guelph’s population growth comes from university students who are always looking for rentals. 

Retirees are also flocking to Guelph in droves, attracted by top-notch healthcare, entertainment activities and highly rated retirement communities.

To top it all off, a study by Point2 ranks 14th for the best places in Canada for millennials. Employment opportunities, healthcare, safety and a top-notch education system are just a few of the draws for young adults.

No wonder MoneySense Magazine ranked Guelph as the number one Canadian city to invest in! 

Want to know more about the city? Check out some of our community posts below:

Can You Afford To Buy An Investment Property?

Many potential investors shut themselves out of the market unnecessarily because they believe they can’t afford to buy a rental property. However, there are many creative ways to finance your purchase. One of the most obvious ways is to pull equity out of your existing home to fund the down payment. The rental income should cover the mortgage payments with some leftover at the end of each month. 

Another option is to make your purchase with a partner. Going in together means lower upfront costs for both parties, and your risk is also greatly diminished.

We recommend talking to a financial advisor to explore your options. The sooner you break into the market, the faster you can begin building your portfolio.

No matter how you look at it, Guelph is one of the best places to buy an investment property. 

Single-family homes, townhouses and condos are all in demand for rentals. If you want to talk more about investment opportunities, reach out to us today.

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