Harpreet’s perspective
Real questions. Real properties. Real numbers.
You found a Calgary rental property. The pictures look good. The Realtor says it's a great investment. The basement has a separate entrance. And you've already calculated the rent in your head. Beautiful. Now let's ruin the excitement with a spreadsheet.
Before discussing the mortgage, I want to know why this particular property deserves your money.
Start With Realistic Rent
What can the property actually rent for? Not the highest listing you found online. Not what the seller told you. And definitely not: ‘My cousin's friend gets $3,200 somewhere nearby.’ Let's understand realistic market rent for the actual property.
If there's a secondary suite, we need to understand the suite itself and what rental income may reasonably be supported. Then we can look at how the applicable lender may treat rental income for mortgage qualification.
Now Show Me the Expenses
Rent is not cash flow. From the rental income, we still need to consider expenses such as the mortgage, property taxes, insurance, maintenance, vacancy and utilities where applicable. Condo? Add the condo fees. Older property? I want even more breathing room for repairs.
That $3,500 monthly rent can look very handsome until everyone else starts taking their share.
What's the Property's Second Move?
This is where I really get interested. Could you renovate it? Could you improve the rental income? Is there potential for a legal secondary suite, subject to applicable approvals? Is the lot interesting? Is the location improving? Are there municipal plans, infrastructure changes or redevelopment considerations worth researching? Could the property have a completely different highest and best use years from now?
I'm not saying every rental needs a secret redevelopment strategy. But I want you asking: ‘Why could this property be better five or ten years from now?’
Stress-Test the Property
Some properties may provide stronger cash flow today. Others may have weaker immediate cash flow but characteristics you believe provide stronger long-term potential. Neither strategy is automatically right. But you should know which one you're buying.
What happens if rent is $200 lower than expected? What if there's a month of vacancy? What if a major repair happens? What if financing costs are higher at renewal? Can you still comfortably own the property? A good rental shouldn't require every assumption in your spreadsheet to behave perfectly.
Send me the listing. I'll look at the mortgage. But don't be surprised when I start asking questions about the property itself. The mortgage tells us whether you may be able to buy it. The numbers help us decide whether we should.