Real Estate News

Where to buy a rental property in Greater Vancouver

Vancouver is a tough market to buy a rental property but not impossible. Check out these 46 neighbourhoods where becoming a Vancouver landlord might be possible
Where to buy an investment property in Greater Vancouver
Whistler Village in Vancouver British Columbia Canada.

It’s a tough rental market in Greater Vancouver. Even areas that were once considered affordable for renters — such as Langley and Abbotsford — are now seeing rental increases of 6% to 10%, or more, in just a year! For those looking to invest in real estate, we did the research on where to buy a rental property in Greater Vancouver to aid in the buying process.

It’s during these moments when some renters start to consider whether it’s worth buying — and when some prospective real estate investors start to seriously consider jumping into the property investment market.

As a new real estate investor, the big question is how to determine the best neighbourhood to buy a condo or townhouse as a rental property. The bad news: There is no easy, simple answer. Like any investment, you will need to crunch the numbers, assess the drawbacks, calculate the possible (and future) cash flow and come to a conclusion.

But that doesn’t mean you couldn’t use a bit of help. To narrow down the list of potential neighbourhoods we examined almost 400 neighbourhoods across the Greater Vancouver Area using the price to rent ratio, to find the best possible places to buy an investment condo or townhouse.

The result is a list of the 8 best neighbourhoods to buy an investment townhouse and 38 neighbourhoods to buy a Greater Vancouver condo as an investment property:

8 Neighbourhoods to Buy an Investment Townhouse in the GVA

38 Neighbourhoods to Buy an Investment Condo in the GVA

But, what is price to rent ratio?

The price to rent ratio is a simple calculation that measures the relative affordability of a property in a given housing market. It’s calculated by dividing the home price (or in this case, the average home price in a given neighbourhood) by the annual rental rate.

For example, the price to rent ratio for condos in Greater Vancouver is 25.03. This is based on the average condo price divided by the annual average rental rate, or $540,912 ÷ ($1,692 x 12) = 25.03.

But what does 25.03 mean?

Consider the price to rent ratio as a quick method of determining whether or not to rent or buy a specific property or in a particular geographic region. (For seasoned real estate investors, it’s also a helpful tool that can be used to compare the relative costs of buying and renting across different markets.)

As a general rule of thumb, it’s better to buy when ratios are below 15.49. For good bets, look for ratios between 15.50 and 21.49. Buyers should steer clear of any neighbourhood with a ratio above 21.50. Of course, as a prospective landlord, you need to make sure the neighbourhoods with ratios below 21.50 will allow you to charge enough rent to cover costs and still earn a profit. If the numbers don’t match, walk away.

How should real estate investors use price to rent ratio?

In general, a lower price to rent ratio indicates that it’s better to buy, while a higher ratio indicates a better rental situation. But how does this help real estate investors?

For new or prospective landlords, these properties will probably put you in a better cash-flow position. This doesn’t mean you’re going to get a dirt-cheap property and get to charge sky-high rent. More than likely, you’ll have to do your due diligence to make sure you can attract a good tenant and charge enough rent to cover the mortgage, maintenance fees, property taxes, utilities, incidentals and still have cash left over at the end of the month.

As a general rule of thumb, it’s better to buy when ratios are below 15.49. For good bets, look for ratios between 15.50 and 21.49. Buyers should steer clear of any neighbourhood with a ratio above 21.50. Of course, as a prospective landlord, you need to make sure the neighbourhoods with ratios below 21.50 will allow you to charge enough rent to cover costs and still earn a profit. If the numbers don’t match, walk away.

Top 8 neighbourhoods to buy a townhouse as a rental property in Greater Vancouver

  1. Hemlock, Mission: Price to Rent Ratio 14.72, Average Townhouse Price $203,000
  2. Salt Spring Island, Islands & Gulf: Price to Rent Ratio 16.39, Average Townhouse Price $330,000
  3. Cedardale, West Vancouver: Price to Rent Ratio 17.34, Average Townhouse Price $833,940
  4. Aldergrove, Langley: Price to Rent Ratio 17.40, Average Townhouse Price $382,940
  5. Halfmoon Bay, Sunshine Coast: Price to Rent Ratio 17.59, Average Townhouse Price $344,667
  6. Central Coquitlam, Coquitlam: Price to Rent Ratio 19.42, Average Townhouse Price $460,667
  7. Langley City, Langley: Price to Rent Ratio 21.18, Average Townhouse Price $466,113
  8. Killarney, Vancouver East: Price to Rent Ratio 21.37, Average Townhouse Price $672,278

Top 10 neighbourhoods to buy a condo as a rental property in Greater Vancouver

  1. Hemlock, Mission: Price to Rent Ratio 8.06, Average Condo Price $99,750
  2. Granville, Richmond: Price to Rent Ratio 12.28, Average Condo Price $230,315
  3. South Arm, Richmond: Price to Rent Ratio 12.83, Average Condo Price $240,721
  4. Aldergrove, Langley: Price to Rent Ratio 14.38, Average Condo Price $242,966
  5. Woodwards, Richmond: Price to Rent Ratio 14.72, Average Condo Price $276,000
  6. South Vancouver, Vancouver East: Price to Rent Ratio 14.79, Average Condo Price $369,259
  7. Cedar Hills, Surrey: Price to Rent Ratio 15.14, Average Condo Price $219,455
  8. Killarney, Vancouver East: Price to Rent Ratio 15.15, Average Condo Price $378,100
  9. Annieville, Delta: Price to Rent Ratio 15.63, Average Condo Price $220,360
  10. West End, New Westminster: Price to Rent Ratio 16.98, Average Condo Price $259,167
Romana King
Romana King

Romana is an award-winning personal finance writer with an expertise in real estate. She is obsessed with the property marketplace and is the current Director of Content at Zolo.