6 worst cities to buy an income property

You may not get enough rent to cover your costs

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Buy a rental property in one of these six cities and you’ll struggle to get enough rent to cover your monthly mortgage payments, never mind all the other costs associated with rental properties. (Based on the analysis from 2016 Best Deals in Real Estate: Where to buy now report that was just released.)

Best Deals in real estate 2016 income property

And if you missed it, here are the six best cities to buy a rental property in.

Read more from Romana King at Home Owner on Facebook »

4 comments on “6 worst cities to buy an income property

  1. I live in Edmonton and I rent properties in the Edmonton area and I achieve far better returns than 53% of my monthly mortgage. In some cases a multi suited house can net you $1500/month in positive cash flow, which works out to be about 100% extra on mortgage. So I think its important to consider more than a simple straight “average rent” divided by “average mortgage” in determining rent viability in certain areas. Vancouver is another area where rents simply don’t cover the cost of housing, but unlike Edmonton, many houses in the Vancouver area are not subject to a max. 2 suite zoning restriction. So houses in Vancouver can easily have 4 rental suites in them, which can make the housing decently or somewhat profitable in a market where, the majority of profits are derived from capital appreciation of the housing asset. So while the article probably provides realistic results, I don’t think these results are very indicative of realistic returns from experienced local landlords.

    Reply

    • Jeff,
      Absolutely agree — and I actually make that point during a Facebook live video that we just uploaded to our site today (see our Facebook page: https://www.facebook.com/MoneySenseMagazine/). If an investor can get two or more units in cities where rent doesn’t cover an average mortgage, then the investment could be smart. But it’s all about cash flow.
      Thanks for your comment, though, and for your insight as an investor. You make valid points and your insight shows that you educate yourself on the business of real estate investments. Smart!
      Take care.
      Romana

      Reply

      • I’d like to know how you have London as number 2 on the list. i I about fell over laughing at this. What prices and data did you use? I cash flow on everything each month. I have tons of clients who have the same. Please explain.

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        • Hi Klaud,

          The information used was based on our Best Deals in Real Estate analysis. It examines each city’s average household income, average monthly rent and average household earnings. Using these metrics we compare a monthly mortgage payment with the monthly rental amount. Cities where rental rates aren’t able to cover mortgage payments are considered worse off, from a cash flow perspective. Of course, this assumes you have only one rental unit in a single family home. This is often not the case and there are many landlords in London and in other cities across Canada where cash flow is excellent even in very expensive markets like Vancouver. For us, the metric is a way to compare apples to apples, but any landlord should do their own due diligence and determine if their market and their plan would work for them based on their own calculations. Hope this answers your question.

          Reply

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