Francois: We have Natasha Phipps and she started her real estate investing career at 20 years old and it's a family business and new construction, and she has a love for entrepreneurship. One of the top realtors, real estate investors and developers in Calgary. Natasha has the inside scoop on the local markets.
In this segment we're talking about short term rentals in Calgary and Canmore, and there's much more happening out in Calgary and Canmore. There's a resort, there's short term rentals. So what do we need to know Natasha?
Natasha: Thank you for having me here. There's been lots of great information already shared. I am gonna share. I just put together a couple slides cuz there's a couple things I wanna show. I'm just gonna share my screen here and then we'll get started. But yeah, there's been some excellent information shared this evening. So let's see how that might tie in with Calgary.
Yes, I am a real estate investor here in Calgary, a realtor. I do property management and have invested in all kinds of different strategies over the years. I'm excited to be talking tonight about short term rentals in Calgary and Canmore as an investor. This is something I really spent some time during Covid to dive into.
It didn't make a lot of sense here in Calgary for the last five to seven years prior to Covid because of just where the market was at. It was challenging. It was something that we're excited about. Again, there's like a renewed excitement here for this in the last 12 to 18 months.
It is a unique time for the market as an investor to look at this. What I'll chat about first is the demand for short term rentals in Calgary suddenly seems very high. As it is everywhere, tourism is back. But to add the icing for Calgary, there is just a lot of activity happening here in Calgary.
A lot of people are coming to explore the city as a new place to relocate their business or to move their family to drive affordability, interest and economic activity to Calgary. That's really exciting times. It feels very different here on the ground. Some specific reasons why we might wanna consider Calgary right now.
And this does overflow to Canmore and the mountains as well is really to do with economic activity and as we all know interest rates are difficult right now. It's making long term buy and hold rentals a little bit more difficult to reach those cash flow numbers on. And so I'm seeing a lot of our clients considering converting existing property to short term rentals. I love the strategy of always having plan A, B, and C that was previously discussed. And that is something that's really valuable to be able to pivot with the market as the market changes.
Francois: Natasha, are you seeing, I know Calgary, there's a lot of suited houses, so single house with a basement suite on a walkout. Is that what you're seeing? That maybe the top unit is long term and the basement is short term or vice versa?
Natasha: I'm seeing two main things. One is absolutely that in the residential space outside of downtown with these suited type homes. Those landlords who have a variable interest rate are seeing their monthly mortgage payment creep up, and so they're trying to squeeze a bit more cash flow out of these properties.
The nice thing about Calgary, specifically over Canmore is we do not have nearly as much legislation or control around the short term rental market. Canmore is highly regulated. You can only have specific areas you need a development permit. There's a whole process to try to convert here in Calgary. You have a lot more flexibility on the residential side, so that makes your numbers a little bit better.
Also for people who are maybe just purchasing something and wanna redevelop it or something down the way you're seeing those people turn to short term rentals for the intern period. The second place where we're seeing a lot of excitement is downtown. And the reason I'm pointing this out for downtown Calgary, because I do think there's an excellent opportunity right now, downtown Calgary was the hardest hit during the recession.
If you remember the headlines during the recession with the big numbers of vacancy, high price drops. That was mostly downtown. The suburban Calgary fared pretty well and wasn't nearly as dramatic as I think the media made it sound. But downtown was a different story. Whereas we saw values significantly come down. They've been slower to recover in the last two years as well, but now we're starting to see those numbers pick up in terms of property values.
It's a good time to look at condos again in Calgary. Finally seeing some green appreciation there every month. Whereas for several years it was red. It was really quite challenging. Combined with increased economic activity, needing to squeeze more cash flow out. And a market downtown that is just starting to come out of the trenches here in terms of some difficult years. That yields a good opportunity where the price to entry is low compared to maybe other major Canadian cities.
You can get into something well under 400,000 that cash flows really well. And so lower price point to entry. I am a big proponent of, like I said, running your numbers for short term rental, mid and long term, and there is some flexibility there.
Francois: Yeah, it's a beautiful downtown. Lots to do great transportation. If you fly into Calgary, you can hop onto the light rail going to the airport, but anyway, you can get to that.
Natasha: Not yet, unfortunately. You absolutely can. Easy to get around. Calgary's not such a large city that it's difficult to get around in and Calgary's restrictions. Let's talk about that. In terms of rules and things you need to know about Calgary, when it comes to condominiums as a realtor, I am always worried about what could go wrong as an investor and then as a realtor, you wanna do our homework.
As realtors, we have a list of what are the rental friendly condo buildings? We really try to only suggest people go to those buildings because the rules can change very quickly. And I like to look for buildings that have a longstanding history of Airbnb allowances. The city requires a permit, but I think it's like a hundred bucks a year. It's a couple hundred bucks.
If it's a multi-unit, it's not a major barrier whatsoever. The city's not taxing it or getting in your way. Canmore on the other hand, there's a map. If anyone is interested to see this map, I can send it to you, but it's on the Canmore site and you look at the whole town of Canmore and there's a few little areas that are permitted use for Airbnb. I see you have to buy there. You have to buy there.
I see a lot of people looking online. Oh, this would be so good for a short term rental and it would be, but the town is really not for it. Do your homework there. Make sure you have the zoning. If you're buying something that's not permitted use, then there's a second tier of use. That's a discretionary use.
If you buy something at your discretion, You could buy it and get turned down for your permit. So I have to be aware of what those pathways are. We were lucky enough this year to invest into a couple of buildings that are fully permitted use for short term rentals in Airbnb. Those are my first investments into Canmore. But that was always what kind of held me back to was the fear of the rules changing and the town not being on board.
If you're looking at Canmore, the numbers are consistent and very good, and always in high demand, even through covid and everything else. You have really good demand. You just have to be very specific and strategic on the zoning in particular.
Francois: I'm sure the price tag goes with it as well. Those properties are probably more expensive.
Natasha: Canmore is absolutely getting up there. The outskirts like where we purchased is just outside of Canmore. It's actually outside of the town lines. And it was reasonable, like we got a one bedroom unit for under 400,000 there or earlier this year, which for the Canmore area is a bargain. That was a good deal. We're excited about that. But certainly those prices really creep up as you go into Canmore.
The only other downside of Canmore is if you purchase something, really plan B and C with mid and long term rentals. The numbers are very difficult to work with, and how high the price tag is. You've gotta make sure that your short term rental strategy is gonna set you up for success there. That's the big difference, Canmore and Calgary.
Canmore from a demand perspective, you will always hit it out of the park there and the rates just keep going up and up there. Calgary you can choose between this inner city condo or in terms of what property types work. We've actually partnered with a new short term property manager who's phenomenal.
We've been looking at numbers in purely residential areas like townhouses, smaller houses with suites, fourplexes even, and they can all work. What I love about that is being able to combine all the different strategies so that it can work for Calgary. A hundred percent.
I do have a kind of an opportunity. People are always interested in that, going, okay, what do the numbers actually look like and we're all dealing with interest rates. If this is too hard to see, I can send a link to this later as well. Cause I know it's hard to see always when we're sharing screens.
I can send it out after. But this is a condo unit that's for sale in the colors building downtown Calgary. Tried intrude, proven building. I always like to be conservative. We're not taking into consideration stampedes or anything like that here. We're just, kind of minimum rates, 70% occupancy. This is, you will outperform this, but that's how I always like to look at it.
This building is for sale right now for $385,000. And speaking with our short term managers the average rent we can expect per month is 3,850, 1% rule. The 1% rule, we came up perfect on this one. And then if we, of course, have all of our expenses here, this one is giving us a cash flow of 4 85 a month after we pay our property managers. One little tidbit is that even if you need a property manager for short-term rentals in Calgary, they do give us a preferred rate.
I'm happy to introduce anyone who may need a short-term rental manager in Calgary. It's not our team, but she's just fantastic and gives our team a preferred rate of 20% instead of the 25% that is mostly out there. That's a substantial savings. And so to be able to get up to $500 and more, you'll outperform this. Per month right now is hard to achieve on investment for under 400,000.
You can see why people are starting to look at Calgary and why these numbers are making sense from a short term rental perspective. And we put together whole reports and stuff for people on these short term rental opportunities or if you have something and you just ever wanna know, we're here to help in any way. But this is what you can expect from a condo anyway in Calgary.
Francois: I love it. And this goes with our slogan for The REITE Club is "Customize your Life". Let's say you have one of these beauties. Why not go visit Calgary and go to Canmore? It's an hour and 15 minute drive, so enjoy it yourself and get the cash flow. Yeah, it's just amazing. So why not?
Natasha: I'm most excited about that. It's like lifestyle investing, right? Saving your lifestyle. We're building an A frame cottage in Muskoka right now, and then we have these Canmore properties coming from an investment standpoint.
I'm really excited about that. You can build this around whatever it is you're trying to achieve. That's one thing I love about short term rentals.
Francois: Very good.
Natasha: Yes, is there anything else or, I think we're at our time on it now, but if there's any questions or anything.
Francois: I didn't see any questions in the chat. If anybody has some questions, we're gonna be doing the virtual networking and Q and A in a few seconds, so yes, feel free to reach out. I think the chat section is just not working. We'll have to take a look at that. We'll do it at the end.
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