(October 25, 2022)

From a First Time Home Buyer’s perspective

Probably one of the most opportunistic places in Canada where a young adult can seek employment, start a family, and purchase a single family dwelling home all at the same time.  Calgary is not a Vancouver/Toronto sized city (in terms of population and big-city amenities), but it’s not a sleepy small town either.  The city is large and efficiently spread out into geometric quadrants, the downtown is situated right in the middle of the city with all roads leading to it, it’s clean, organized, increasingly diverse, sunny all the time (even when it’s -30 degrees!)…the list goes on.  Don’t move to Calgary and expect Toronto or Vancouver – it just isn’t.  Manage your expectation and you will love this city because it offers all that it possibly can and constantly progresses, always punching above its weight class.  Unlike Vancouver and Toronto, in Calgary you can live in a neighbourhood with $2M homes, then drive 10 minutes and enter a zone of $600,000 homes.  Drive another 10 minutes and you’ll find homes for $400,000.  Truly, one of the only places in Canada where you can still sell high, and buy low.  Calgary…a city for everyone.

The table below illustrates Calgary’s property ladder and the corresponding mortgage qualification criteria:

As you can see from above, the affordability of purchasing a property in Calgary is far more attainable than in other major cities in Canada.  Not only is the price of real estate substantially lower, but so are the minimum down payment requirements to qualify for the mortgage.  For properties under $1M, the minimum down payment requirement for a mortgage is 5% for the first $500,000, then 10% on the balance thereafter up to $1M at which point the minimum down payment increases to a whopping 20%.  So if you’re looking to purchase a single family home in Vancouver, you require upwards of (at least) $200,000, but in Calgary you only need $33,500!  

From a Temporary Resident Perspective (work permit holders, not yet attained Permanent Residence status or Canadian citizenship):

• All the same income and down payment thresholds apply for temporary residents just as they do for standard Canadians or Permanent Residents.  The only difference is that temporary residents are able to provide alternate sources of credit verification if they haven’t yet been able to establish a standard 2 year credit history.  For example, if a Temporary Resident is not able to provide a 2 year history of credit usage in Canada, they can alternatively provide a letter of good standing from their bank from where they departed.  This is just one example, there are many other forms of alternative credit verification sources (call Marko right now and ask him!)
• Temporary Residents can purchase a property with as little as 5% down payment
• But here’s the big draw for Newcomers to Canada when looking at Calgary (or any other city in Alberta) as their destination – there’s NO LAND TRANSFER TAX, and more importantly, there is NO FOREIGN BUYER TAX!  Ok, there is one little fee and it ties in with the Land Transfer, but it’s nowhere near the 20% tax you would pay in BC or Ontario.  Here are the fees you can expect when purchasing a property in the province of Alberta:
  • Land Transfer Registration Fee: $50 base fee PLUS $2 for every $5,000 in property value
  • Mortgage Registration Fee: $50 base fee PLUS $1.50 for every $5,000 of mortgage
  • For a $600,000 Purchase with a $300,000 mortgage, you would have to pay a total of $490 in registration fees.  For the same $600,000 home in BC and Ontario, a work permit holder would have to pay $120,000 is Foreign Buyer Tax in addition to the respective provincial Land Transfer Tax ($10,000 in BC, $16,950 in Ontario).

From an Investor’s Perspective

With Calgary’s recent draw of interprovincial and international newcomers, the rental property market is also an appealing proposition.  Here are some key points that attribute to a strong rental market (from an investors perspective):

• Calgary has historically led the country with inflows of interprovincial migrants, but more recently the gates have opened wider as the provincial government has embarked on a nationwide campaign to promote the affordability and employment prospects of Alberta.  People from across the country (and abroad) have responded and are on their way to Alberta many of whom will be seeking short to medium term rental accommodation before considering the prospects of home ownership.
• Calgary has always been labelled as the oil and gas capital of Canada, but in the past decade more emphasis and commitment has been directed towards the diversification of the economy.  Calgary is making substantial strides in other economic sectors such as Aerospace, Agribusiness, Environmental Technology, Digital Media, Life Sciences, Transformative Technologies, and Transportation/Logistics.
• to further support the growing demand for rental accommodation, Calgarians have consistently ranked at the top when it comes to employment earnings with an average annual income of ~$65,000

Key mortgage qualification guidelines to be aware of when purchasing a rental property in Calgary:

• As long as you reside in one of the units, you can purchase a property that contains a rental suite within it with as little as 5% down (i.e. a half duplex property with a self-contained rental suite, or a full side by side duplex).  
• As long as you reside in one of the units, you can purchase a 4-plex with as little as 10% down
• if you plan on purchasing a rental property where you will not be residing in the property yourself, the minimum down payment increases to 20%
• Rental income that is generated from the property can be used to further boost your mortgage qualification.  The allowable income threshold for mortgage qualification purposes varies from lender to lender with some lenders allowing as high as 100% of the rental income as eligible qualification income.   
• mortgages for rental properties can be amortized as high as 30 years 
• Calgary’s affordable rental market makes it one of the few cities in Canada where an investor can yield a positive cash flow (when your monthly rental income is greater than your monthly mortgage payment)

Wondering if a move to Calgary makes sense for you?  Call Marko Gelo right now at 604-800-9593, or Click Here to schedule a call that is convenient for you.

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