As you might expect with two years in a row of double-digit property value growth in the Okanagan, and the headlines that go with it, we have seen the number of properties purchased for investment increase by 40 per cent.

This is a combination of baby boomers looking to augment their retirement income and out-of-towners catching wind that Kelowna’s market is in the full swing of a real estate boom and looking to get a piece of the action.

Those holding properties in the new RU7 designations are seeing huge gains as values on war times houses in the North and South end of downtown have gone from the mid400s to the low 700s in many cases.  

This is all due to the infill development potential that these city lots hold, as four units are now permitted on a regular-sized city lot.

Multi-family properties from duplexes, fourplexes and apartment buildings have become so scarce that prices have jumped nearly 40 per cent. A duplex in Rutland, for example that could have been purchased for $550,000 last year, can fetch $750,000 in today’s market.

Suited homes have also seen dramatic equity gains. Gone are the days of buying a single family home with a suite for under $500,000. Even the most affordable of neighborhoods like Glenrosa are posting sales in the low 500s for a 1970s Bi level home with an income suite.

Rising rents have kept up with sky rocketing values reasonably well but CAP rates have fallen from six per cent to five per cent to four per cent over the past two years.  

This means investors from markets such as Vancouver are coming in search of yield. Because of our relative affordability compared to their market, and the prospect of a few more years of property value increases, they are willing to forgo the huge positive cash flow, satisfied with breaking even as they watch their equity pile up from mortgage pay down and capital gains.

Many people that have been holding property since before the boom are electing to cash in at this stage. With thousands of units of purpose built rentals coming down the pike in the next one to two years, we expect to see the vacancy rate climb a little and rents on older units to soften.  

With this we may see prices stabilize on the multi-family properties. Good news for renters in the Okanagan, a sell signal for many landlords.

It appears the best strategy for this market is buy fix sell in a year. If you are wanting to purchase a holding property before they no longer cover themselves, a five-bedroom home with a suite will still cash flow nicely, and will always fare well in any downturn as it always in high demand for both investors and first time home buyers alike.

Always remember, investors don’t put themselves in negative cash flow situation chasing capital gains, that’s called speculating and it’s how people go broke.

Stick to the fundamentals and buy well located real estate that is positive cash flow and has the opportunity to add value. That is a strategy that never goes out of style and is a fast track to building real, multi-generational wealth.

Selling or buying a home is the largest transaction most of us ever become involved in. Yet people sometimes take less time over it than they do when buying a new car. That’s because it’s unfamiliar territory to many of us. We don’t all understand the process. We don’t know what questions to ask. We may take things for granted, rely on others when we should’t, and sometimes we later wish we had known more about the process involved.  

Designated Agency, Dual Agency or no Agency?  How would you like to be represented?   
  
Designated Agency is the normal relationship with a Realtor,  they represent you solely and provide undivided loyalty.  Disclosing all that is involved in your transaction.  They will negotiate for you.

?Limited Dual Agency means your Agent will represent the seller and the buyer in the same transaction, equally without bias.  So if you are the seller your Agent's representation will be limited to the buyer as the Agent will not be able to disclose to them any motivation or bottom lines of the seller.  They will no longer be exclusive with your interests in the transaction either. The Agent will not be able to suggest or recommend pricing, your Real Estate Agent will draw up the contract for the buyer. 

No Agency or "Customer relationship"  may happen when the seller's agent is showing the property to the buyer and the buyer doesn't have an Agent, they can be a "Customer" of the selling Agent.  In this case the Agent can draw up the contract, explain terms, practices and forms, assist in screening or viewing properties, prepare and present offers, inform the buyers of lenders and their policies, and identify and estimate costs involved to protect the buyer.  The Agent is not allowed to recommend or suggest a price, negotiate on your behalf, inform you of their client's bottom line price or disclose any confidential info about their client unless authorized by the client.

1% on the first $200,000 and 2% on the portion of the fair market value greater than $200,000 up to and including $2,000,000 and 3% over $2,000,000