This perspective on real estate investment is provided to readers by Mortgage Dave, a longtime Lynn Valley mortgage expert.

Given the North Shore’s high prices, current investors sometimes wonder if buying in North or West Vancouver can possibly provide a decent return. In fact, a well-thought-out real estate purchase can provide not only a decent return, but also one that’s far more lucrative than many current stock and mutual fund portfolios.

I decided to take a closer look at the new Seylynn Village development being offered by Denna Homes in the Lower Lynn District.  The Beacon building will comprise the first stage of new development in an area that is ripe for change. Being situated close to transportation, recreation, the downtown bridge, and Capilano University, it promises to be attractive to renters in an area that is already one of Greater Vancouver’s strongest rental markets (North Vancouver has a current vacancy rate of 0.9%).

The entry-level 1 bedrooms are currently selling for $264,900, and the same 2 bedrooms are selling for $418,900 (based on the price list provided to me).  If one was to invest in either of the two, based on 20% down, they would need to pay $57,528 and $91,408 respectively.  Using stats provided from an independent study, suites should rent for approximately $2.40 per square foot.

 

UnitDown paymentMonthly costsRentAnnual ROIReturn in 5 years5 yr. rate of return
One Bedroom$57,528$1,199$1,37020%$78,254136%
Two Bedroom$91,408$1,735$2,01818%$119,304131%

 

Why is the return so good?  It’s the power of leverage combined with a low purchase price and decent monthly rental income.  As an investor you also have three forms of return:

  • Positive monthly cash flow – the 1 bedroom has $170 positive monthly cash flow and the 2 bedroom has $215 monthly.
  • Paying down the mortgage
  • Potential real estate market appreciation

Now the great thing is you will get the monthly cash flow even in a flat real estate market.  You are still looking at a substantial return on investment if the market stays flat.

Feel free to contact me at 604-315-DAVE (3283) or Dave@mortgagedave.ca for more details.

Calculations were made using very conservative numbers and taking into account factors such as inflation, vacancy, closing costs, taxes, condo fees, insurance, etc.
Investing can be risky.  This analysis used some basic assumptions.  Make sure you are fully educated before you invest.  Contact me for the details on these calculations.