We often say that any time is the right time to start building your real estate empire. While that’s true, technically some times are better than others.
And that time is right now.
Those who are planning to build new income-producing properties will find that now is one of the absolute best times of the year for investors to start that process. Fall is perfect timing for new construction investment properties.
Still not sure when you should get started in real estate investing? Here are some of the best reasons to start building your investment property now.
Understanding The Tenant Season
Edmonton’s prime tenant season usually runs from March to September. Let’s be real; it gets cold here and you don’t often see people trying to find a new rental unit in the dead of winter - especially Edmonton winters!
Some of this has to do with the school calendar, so you’ll see even more activity in the summer months as people want to get settled before the school year starts. Mostly, though, people want to move when the weather’s nice. It’s hard to bring all of your things into a new place in the middle of a snowstorm!
As an investor, you need to think about this. Trying to rent a property in December is usually more difficult than warmer months, and you might have to take a lower price just to get a tenant in the property. On the other hand, if your property becomes available sometime during those prime months, you’ll have people competing for it.
Now, it might seem counterintuitive to buy in September to hit this timing. However, you have to plan for the entire building process.
The New Home Building Process
In general, building a new home from start to finish takes around 8-10 months. This includes selecting the model and lot, applying for building permits, breaking ground for the foundation, and the actual construction of the property.
If you were to make your purchase in September, the home should be completed just in time for next year’s prime tenant season.
Starting it this way allows you to completely design the home with your tenant’s needs in mind. If you want to save a bit of time, you could go with a quick possession option. While you won’t get much control over the design, you do get most of the popular features people are looking for, and in less time.
Getting The Best Lots
When you’re building a property, you get to choose the lot you want. Some lots are better than others. For instance, some lots have bigger backyards or they’re closer to amenities like the neighbourhood playground.
You may also need a particular type or size of lot to build the style of income property you want. When you buy in the fall and get a head start on next year’s market, you tend to have better lot selection, and you can choose an ideal lot before it goes on the retail market next spring.
The Current Low Market
In comparison with other major metropolitan areas like Vancouver and Toronto, the Edmonton home prices are low, but how much longer will this last?
We’ve already seen an increase in construction material costs and the recent boom in homes sales across the nation has absorbed available inventory trending us towards a seller’s market. We all know what happens to house prices when there are more buyers than inventory available… Up, Up and Up.
Placing your property order this fall will allow you to get the property you want at a better price. Build easy equity by locking in your price at the bottom of the market cycle!
Coordinating With Others
As an investor, you’re going to need a team on the ground working for you. This team would have people like a mortgage broker, insurance provider and possibly even a property management company.
While your home is being built, we connect you with these other professionals. You have lots of time to learn, ask questions and make the decision to engage in relationships that are a good fit for you.
By starting to build your investment property in the fall, all of the pieces to the puzzle will click into place when the home is finished. You’ll be able to move a tenant in right away and start collecting your cash flow.
Lease Renewal Timing
A typical rental contract is a one-year lease. When you start building your property in fall, it should be ready in the following summer months. This means the tenant’s lease will be up in the summer months of the following year. Hopefully, the tenant decides to stay on and sign a new lease, but if they choose to move out, you’ll be marketing your home for rent during the prime tenant season again.
On the other hand, if a tenant signs their lease in November, it will be finished again in November, and you’ll be looking for new tenants during the slower and colder winter months.
Ideally, you want tenants to renew their leases during the prime tenant season of March - September. When you time property availability like this, you’ll have a much easier time placing tenants if needed.
Clearly, now is the time to buy a new construction investment property. At TriUrban, we can help you explore all of your options to find a property that meets your needs. Contact us for an appointment today.
