Could becoming a landlord in Alberta be the right investment for your property portfolio?
Choosing long-term rental housing and becoming a landlord can be a smart move to diversify and build your investment portfolio. Countless family fortunes have been made off of this simple strategy; buy property, rent it to cover (or ideally exceed) your costs, and create cashflow. Ideally your nest egg will grow over time, property prices may rise, and your empire may begin to flourish. Sounds easy enough, no?
Being a landlord can come with many pitfalls. Tenant issues, property issues, legal headaches and so much more can happen. Like any business venture, nothing is ever assured. But there are a few things that can be controlled – one of which is where you choose to become a landlord. This can have outsized effects when it comes to the viability of the property, management ease, and finding solid long-term tenants.
Today, let’s explore why its so good to be a Landlord in Alberta:
- Alberta has some of the most landlord-friendly regulations in Canada
- Strong economic and migration tailwinds for Alberta
- Growing property values, increasing rents and NO land transfer taxes!
Note: this article is for informational purposes only and is not intended to advise or create a client relationship. As always, please feel free to reach out to me via email, text or call if you have any questions on becoming a landlord in Alberta or on any properties you’re seeing in Southern Alberta.
Alberta has some of the most landlord-friendly regulations in Canada!
Yes, you read that right. But should you really be surprised?
Alberta is consistently ranked one of the best provinces for business, and has a reputation and drive for cutting red tape wherever possible. So of course the rental business follows suit with landlord friendly regulations.
Three Key Reasons Why Alberta is the most Landlord-Friendly province in Canada:
- There is NO limit to what a landlord can increase rent by to a tenant. Contrast this with provinces like BC (2% cap in 2023; 3.5% in 2024) and Manitoba (NO raises allowed in 2022 & 2023; 3% in 2024).
- Greater flexibility when it comes to terminating tenancies. In Alberta, a tenancy can end with sufficient notice for a landlord or their family to move in to a property themselves, or to complete a “major” renovation. Contrast this with Ontario, where a Tenant does not have to move out if they receive an eviction notice. Yikes.
- Security/Damage Deposits are Permitted in Alberta. Security deposits (which protect landlords) are not allowed in Ontario, for example. A deposit for last month’s rent may be allowed in Ontario., however.
Of course, there are firm rules for landlords and tenants are not just hung out to dry. Landlords may only increase rents after 365 days of tenancy, or from the last rent increase. Landlords must fulfill their obligations to their tenants, and provide sufficient notice for all kinds of items. Tenants and Landlords both can apply to the Residential Tenancy Dispute Resolution Service for assistance to resolve disputes and find solutions.
Strong Economic and Migration tailwinds for Alberta
Alberta is seeing in-migration never before seen in our provinces recent history. In Q3 2023 alone, Alberta welcomed over 53,000 new residents. In the last two quarters of 2022, Alberta welcomed the largest number of international and interprovincial migrants in its history. Contrast this with provinces like Quebec and Manitoba with net negative interprovincial migration for decades as residents “vote with their feet” and leave for greener pastures.
Rising oil prices and robust demand create economic growth and stability in Alberta. While prices have been on a bit of a whipsaw over the past few years, they remain high – and contribute substantially to Alberta’s economy and provincial budget. Multi-billion dollar surpluses allow for the province to invest in infrastructure for new arrivals to our province, and also contribute to a low-regulation and reduced tax environment for everyone from consumers to corporations.
Alberta has Growing property values, increasing rents, and NO land transfer taxes!
Property prices in Alberta are gaining faster than in any province in Canada, with continued Calgary gains of 8%+ expected in 2024. This represents a substantial cushion above the national aggregate expectation of 5.5%.
Rents continue to see steady increases, with the city of Calgary reporting rents rising as much as 25% in recent years. Calgary rents have been increasing faster than anywhere in Canada, according to a report by rentals.ca. This could partially be due to pent up demand for increases from landlords coming to fruition thanks to heavy in-migration, as well as inflationary pressures and increased mortgage interest costs driving rents higher.
Household incomes higher than the national average mean Alberta tenants should be able to shoulder the burden of increased costs better than tenants in other provinces. Alberta offers the highest median after-tax income in Canada. “Families in Alberta typically enjoy a higher family income than other parts of Canada. In a 2020 Canadian income survey, Alberta families earned a median income of $104,000 after tax. This is above the Canadian average of $92,400.”
One key factor for Buyers not to overlook is the lack of a land transfer tax in Alberta. This can represent a substantial savings for investors and in my experience, creates greater liquidity in our marketplace as acquisition and disposition costs are less cost-prohibitive for investors!
Ready to become a Landlord in Alberta?
If you’re curious about what a rental property could mean for your portfolio, the best place to start is by speaking with a licensed real estate professional. I’ve helped dozens of families acquire rental investment properties, providing guidance and service to ensure a favourable outcome on making a property purchase. Markets like Cochrane, Canmore and Calgary could be some of the best places in Alberta to own rental properties, in my opinion.
Let’s connect and make your dream a reality!
