Should I Own a Canmore Vacation Rental or Flip It?

Should I Own a Canmore Vacation Rental or Flip It?If you're looking for your next real estate investment in Canada, Canmore is an obvious choice. It has a strong rental market for both short and long term rentals, rapidly appreciating properties, and opportunities in a wide range of budgets.

One of the decisions you will need to make about investing in Canmore real estate is whether you are going to look for a property you can turn into a lucrative vacation rental, or something you can buy, fix up, and sell at a quick profit (also known as flipping a property). If you're not sure which strategy is the right one for you, here are some things to keep in mind as you decide. 

Flipping a Property

Flipping involves purchasing a property, renovating it, and then selling it for a profit within a short timeframe. In Canmore, this strategy can be particularly lucrative due to our area's high demand for real estate. Many buyers are in the market for a turn key property, so being willing to buy an outdated home or a fixer upper and transform it can be a potentially profitable endeavor.

Advantages of Flipping a Property

These are some of the reasons investors choose to flip a property:

  • Flipping a property can generate a substantial profit in a relatively short period, often within a few months to a year. This can be appealing if you’re looking to reinvest or diversify your portfolio quickly.
  • Canmore’s real estate market is robust, driven by its popularity as a tourist destination and a desirable place to live. High demand can lead to quick sales, bidding wars, and potentially higher selling prices.
  • Flipping allows you to avoid the ongoing responsibilities and potential headaches associated with property management, tenant relations, and maintenance.

Disadvantages of Flipping a Property

In any decision, it's essential to also consider the downsides. These are some of the potential drawbacks of choosing a flip:

  • Real estate markets can be unpredictable, even in a historically strong market like Canmore. Economic downturns or changes in local demand can impact your ability to sell the property quickly or at the desired price. While experts don't see any downturn coming in Canmore, there is always some level of risk and unknown. 
  • Renovations often come with unexpected costs and delays, which can erode profit margins. Managing contractors and ensuring quality work can also be challenging. Make sure you're ready to be flexible with the changes in timeline and budget that can come with a major renovation like this. 
  • The profit from a property flip is typically subject to higher taxes, including capital gains tax. This can significantly reduce your net profit, so make sure you talk with your financial advisor or tax professional to have accurate expectations.

Vacation Rental Property in Canmore

Keeping a property as a vacation rental might be the right fit for you if you want to hold on to an asset and benefit from the appreciation over time, or if you would like to use the property for personal vacations sometimes and let it pay for itself when not in personal use. Canmore’s tourism appeal makes this a viable and potentially profitable option.

Advantages of Owning a Vacation Rental

Here are some of the reasons investors decide to own a Canmore vacation rental:

  • Vacation rentals can provide a consistent income stream, especially during peak tourist seasons in a destination like Canmore. We have tourists visiting from around the globe for multiple peak seasons each year. This income can cover mortgage payments, property taxes, and other expenses.
  • While generating rental income, the property can appreciate in value over time, increasing your overall return on investment. You can leverage the equity toward other investments, or simple enjoy the peace of mind knowing your property is passively increasing your net worth.
  • As a vacation rental owner, you can enjoy the property for personal use during off-peak periods or by blocking out a week during your favorite time to visit, combining investment with personal leisure.

Brian Percy with The Home Search says, "Owning a vacation rental property offers the unique opportunity to generate a consistent income stream while simultaneously building equity and benefiting from property appreciation. Beyond the financial advantages, it provides a personal retreat for your own vacations and the chance to meet diverse travelers, so it's going to be profitable in more than just a financial way."

Disadvantages of Owning a Vacation Rental

There are always some drawbacks to keep in mind, too. Here's what you need to know about the potential cons of owning a vacation rental in Canmore to make an informed decision:

  • Managing a vacation rental requires effort and resources. This includes marketing the property, handling bookings, cleaning, maintenance, and dealing with guest issues. Alternatively, you can hire a property management company, with the understanding that your profits will be impacted.
  • Income from vacation rentals can be seasonal, with fluctuations based on tourist patterns. Off-season periods may result in lower occupancy rates and reduced income, so you'll need to plan accordingly.
  • Short-term rentals are subject to local regulations and taxes. Compliance with zoning laws, licensing requirements, and hospitality taxes can be complex, so make sure you're ready to handle these details. 

Ultimately, deciding between flipping a property and keeping it as a vacation rental in Canmore depends on your investment goals, risk tolerance, and management capabilities. Ready to learn more about investing in Canmore real estate? Contact us any time to get started.

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