Whistler is a unique real estate market with a high concentration of investors and recreational property owners. When purchasing a property for investment purposes additional criteria should be examined outside of purchase price and days on market. As a world-class tourist destination Whistler presents some features that make it much different than other markets in terms of real estate investment. Here we look at six important metrics to assess when considering an investment property. If you are thinking of buying an investment property in Whistler I would be happy to help you qualify the investment and answer any other questions you have.
Understanding the vacancy rate of a particular area is important when assessing investment potential. If your intention is to rent out your investment then researching the vacancy rate, which is the percentage of available rental properties out of all housing inventory, is important to know. A high vacancy rate (lots of available rental properties) is not a good sign for investors. This could mean there could be periods of time when your rental would not be tenanted and would also put a downward pressure on rents. A low vacancy rate, such as Whistler’s which currently has a rate of 0%, ensures an adequate supply of renters and an upward pressure on rental prices. Investors will want to look for a vacancy rate of 2 percent or less.
The location of an investment property is important to consider when determining the demand for the property, and the rents to be charged. Generally speaking, a rental property near schools, public transportation and shopping centers are safer investments. The resort community of Whistler is insulated from this to some degree due to the proximity to the mountain from every neighbourhood in Whistler. Rental properties in the Village, with ski-in and ski-out potential, are obvious favourites for tenants and holiday-makers however properties in the out-lying suburbs are also in demand with long-term renters.
Cash-on-cash return tells investors if an investment is cash flow positive or cash flow negative. Obviously a cash-flow positive investment is the most desirable, and the quicker an investment starts making money the better. To find out what the cash-on-cash return is, take the investments cash flow and divide by the cash equity investment in the property. For example, if $100,000 was invested in the property and it earned $10,000 a year profit after all expenses, that is a 10% cash-on-cash return, and a positive investment.
Gross Rents Multiplier
The Gross Rents Multiplier is a great way to compare investment properties to find the better investment. To find the GRM take the property price and divide it by the annual gross rents the property generates. For example, if a property price is $1 million and the annual rent is $50,000 the GRM is 5. Properties with a higher GRM are more lucrative investments. This calculation does not take into consideration expenses therefor should be used alongside other metrics.
Growth in Valuation
Growth in valuation looks at the market growth and is the biggest indicator of price gains in a given property market. Investors can look at year-on-year price gains to get an idea of valuation. Property assessments are another way to determine if home values are going up or down. In 2016 property assessments increased on average in Whistler by 20.27%. This indicates property prices are going up, good news for investors.
Need help finding that perfect Whistler property or choosing a suitable investment? Contact Dave Burch today and let me help you on the hunt for an investment or recreational property in Whistler.