Real returns: Why it’s time to invest in a purpose-built rental
An expert answers your pressing real estate investment questions
“Alberta Is Calling.”
And, it appears, people are listening. Since 2022, these three words have appeared on billboards across the country, beckoning thousands of newcomers to the prairie province as part of a multi-year campaign by the provincial government to draw skilled workers to Alberta. In just the first quarter of 2024, Alberta’s population grew by nearly 50,000 that’s an average of 540 people moving to the province every day.
For the savvy real estate investor, this moment holds unprecedented opportunity. In Edmonton, demand is rising for purpose-built rentals, as the city’s rental vacancy rate dropped to its lowest point in almost a decade last year at only 2.4 per cent, according to the Canada Mortgage and Housing Corporation. Plus, it’s simpler than ever to construct rental properties in desirable central neighbourhoods, thanks to the city’s new zoning bylaw. The updated regulations allow investors to build up to eight units on lots previously restricted to single-family homes or duplexes.
So, the investment forecast certainly looks favourable… but where do you start? Constructing a purpose-built rental is a major financial commitment, and you need to know what you can build, what kinds of properties attract tenants, and how to ensure you actually get a return on your investment.
We sat down with Danielle Soneff, our brand manager here at ArtHouse Residential, to answer your most pressing questions about building a multi-unit investment property in Edmonton.
What kind of purpose-built rental can I construct?
Investors in Edmonton have a lot more flexibility when it comes to designing a rental property since the city launched its new zoning bylaw in January, says Danielle.
Now, single family lots, also called small-scale residential zones (RS zones), can hold up to eight units and stand three storeys high, vastly expanding layout options for investment properties.
ArtHouse has designed a number of sample plans offering creative multi-unit layouts, from stacked duplexes to row houses to duplexes with basement apartments and garage suites.
Many investors are opting for the garage suite model, as it provides separate residences for more tenants, says Danielle. While backyard housing certainly has its perks, Danielle urges investors to also consider the stacked duplex model, where each side of the building hosts a four-bedroom apartment on the top floor, a two-bedroom suite on the ground floor and another two-bedroom in the basement, totalling six complete units with separate entrances.
“This specific typology saves you money during construction and with utilities later on, as the shared walls mean less siding costs and increased heat efficiency — especially in an Edmonton winter,” adds Danielle.
How does the building process work?
First, potential investors look through ArtHouse’s sample plans, exploring different types of purpose-built rentals. Once you select a specific model (or work with ArtHouse for a custom typology), the ArtHouse team carefully considers how to situate the building on your lot for the most efficient and appealing use of space. They consider everything from privacy needs to window placement for natural light.
“The sample plan is just a starting point,” says Danielle. “We ask, ‘What’s your overall budget and goal?’ Then we maximize the return for the project you’re considering.”
And while the basic building form is standardized, ArtHouse works with you to customize the aesthetics of the build, whether you’re drawn to an ultramodern, craftsman, or traditional style.
What building types attract and keep renters?
Regardless of the model, ArtHouse designs each of their purpose-built rentals for tenant privacy, comfort, and flexibility.
“Our houses are not the same as a lot of other investment properties, which can feel impersonal,” says Danielle. “Our builds feel like a home. That's what helps retain tenants for the long-term.”
For example, a few of ArtHouse’s plans feature three and four-bedroom suites to accommodate families and those who work from home. “People are using their houses for more things now than ever before. And that trend is not likely to go away because we've seen the benefit of it. We design for that livability component.”
The builder also cuts out hallways to provide additional living area and ensures all suites have access to outdoor space, creating density without sacrificing quality of life. It’s these purposeful details that help the property owner keep long-term, responsible renters.
This basement suite has a cozy outdoor walk-out patio area that serves as a functional gathering space.
“It’s a lot of work to have people move in and out. When tenants stay, they start to care about the place they live. They start to pay attention to things,” says Danielle. “You end up getting stewards for your building. It’s a way to protect your investment.”
How do I get my return on investment?
ArtHouse not only designs their builds to attract and retain tenants, but to last long into the future and provide a reliable source of income.
“We build properties that stand the test of time from a use and energy perspective. We always ask ourselves, ‘Is this going to last a hundred years?’ And if not, we don’t consider it worth doing,” says Danielle.
ArtHouse opts for commercial-grade materials, which are higher quality than typical builder’s products. They choose particularly durable finishings that can withstand renters and select quality insulation and windows that keep out the elements and reduce utility costs.
“The last thing you want is to build a place and have all the cheap stuff break immediately. And there's a lot of that right now. Things wear quickly and you end up on-site doing repairs,” says Danielle. “We don’t build that way. We aim for our buildings to take care of themselves as much as possible.”
Beyond using materials that last, ArtHouse also designs their homes to remain relevant for decades to come, providing a more stable investment. They call this “future-proofing.”
“We make our properties adaptable for what may come — whether that’s a change in how the investor is planning to use the space or shifting energy systems. We think of the most challenging parts of owning a property and pre-plan for them,” says Danielle.
A flex room in a recently constructed Parkallen custom home. This space can easy be converted from a playroom to a guest bedroom, primary suite, or other space.
For example, ArtHouse builds their two or three-bedroom models to be easily convertible to accommodate different uses. For example, they recently constructed a home in Edmonton’s central Parkallen neighbourhood with flex rooms — spaces that can easily be converted from a playroom to a guest bedroom to a primary suite (and more!). They also include off-grid energy systems on the property, such as solar panels and geo-thermal energy. These systems provide a safety net when extreme weather stresses the energy grid, driving up prices or causing loss of power. Whether there’s a heatwave, storm or cold snap, on-site energy production mitigates risk of your tenants losing power.
These thoughtful additions mean you’re investing in a sustainable property that will provide financial dividends long into the future. Plus, you’re also offering more Edmontonians the opportunity to rent comfortable housing and reap the many benefits of life in the city’s core.
“We make living denser more enjoyable and doable,” says Danielle. “There’s a lot of heart that goes into our purpose-built rentals.
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