12 hot areas in Edmonton to invest in

Late last year we reported that Edmonton was the top place in Alberta to invest in real estate. Now, we’ve identified 12 of the hottest areas in the city that are worth a look – and five others to keep an eye on.The Real Estate Investment Network (REIN) crowned Edmonton the champion destination for real estate investment dollars, in the organization’s latest provincial ranking. One of Canada’s leading real estate research and education organizations for investors and homeowners, REIN cited Edmonton’s strong economy, population growth, infrastructure and political climate among the contributors to a strong housing market there.Indeed, the key things to look for when investing in real estate are a solid and growing local economy, stable employment conditions and minimal new apartment construction. These combine to produce a tight rental environment – the perfect storm for investor-landlords. Investment strategyUsing the investment strategy known as “buy, hold and rent,” where you buy a property and rent it out over a period of five to seven years, you benefit in three ways:

• You generate positive cash flow, meaning you rent it out for more than your expenses (mortgage, taxes and other costs)
• Your tenants pay down your mortgage
• You benefit from any property value appreciation over time

Achieving positive cash flow means renting out your investment property for more than your monthly mortgage payment and other costs. These costs include condo fees, taxes, insurance, property management fees, maintenance and advertising.Buyers of investment properties are required to have a minimum 20-per-cent down payment. But a larger down payment also means you have to borrow less and your monthly payments will be lower.Vacancy ratesAmong the key things to learn about are vacancy rates and average rents. Canada Mortgage and Housing Corp. (CMHC) summarizes these in twice-annual rental market reports. REIN and other investment experts stress you also need to research "street rents" – what's actually being charged in your target area.An increasing rate means rental supply is growing, and renters have more units from which to choose. Declining vacancy rates mean supply is tightening and your property may be in higher demand.A vacancy rate between two and three per cent is considered a balanced market, so anything below that is ideal.As an investor, you’re looking to select areas where:• The vacancy rate is low and ideally tightening further• The economic fundamentals are strong• The area is desirable for renters and the building type is suitable for the local tenant profile• Tenants in the area will pay what you have to charge for rentEdmonton overallThe overall vacancy rate for Edmonton rose slightly to 1.7 per cent in October 2014, from 1.3 per cent a year earlier. Average rents increased to $1,227 from $1,141, a 6.1-per-cent increase, following a 5.6-per-cent jump from 2012 to 2013. An expansion of the rental universe contributed to the increase in vacancy rates, CMHC says, as landlords sought to capitalize on the strong employment growth and net migration over the last few years. A prolonged oil and gas slump could dampen things slightly, but most observers say the long-term rental demand from other sectors will afford healthy conditions. Here are the top 12 areas in Edmonton to consider investing in, based on CMHC's Rental Market Reports as of October 2014, for two-bedroom units (generally considered the most desirable for renters, and therefore wise purchases for investors). One important note: unlike other provinces, there are no controls on the amount of rent increases in Alberta. Rent can be increased as long as there hasn't been an increase in the last 365 days, or since the start of the tenancy, whichever is later. 1. MILLWOODSVacancy Rates2014: 0.8%2013: 0.4%2012: 0.9%Average Rents2014: $1,3122013: $1,2282012: $1,091 2. SPRUCE GROVEVacancy Rates2014: 0.8%2013: 0.7%2012: 1.3%Average Rents2014: $1,2242013: $1,1622012: $1,053 3. SOUTH WESTVacancy Rates2014: 1.1%2013: 0.3%2012: 0.8%Average Rents2014: $1,2742013: $1,1842012: $1,112See a profile of the Windermere neighbourhood in South West 4. UNIVERSITYVacancy Rates2014: 1.2%2013: 0.6%2012: 0.5%Average Rents2014: $1,3282013: $1,2652012: $1,216 5. WEST JASPER PLACEVacancy Rates2014: 0.5%2013: 1.4%2012: 0.5%Average Rents2014: $1,2972013: $1,2122012: $1,144 6. WEST CENTRALVacancy Rates2014: 1.2%2013: 0.9%2012: 1.6%Average Rents2014: $1,0872013: $1,0112012: $971 7. DOWNTOWNVacancy Rates2014: 1.6%2013: 1.3%2012: 1.6%Average Rents2014: $1,3302013: $1,2522012: $1,190 8. JASPER PLACEVacancy Rates2014: 1.8%2013: 0.9%2012: 2.1%Average Rents2014: $1,1212013: $1,0402012: $981 9. HUDSON BAY RESERVEVacancy Rates2014: 1.7%2013: 1.7%2012: 2.3%Average Rents2014: $1,0892013: $1,0122012: $975 10. ST. ALBERTVacancy Rates2014: 2.8%2013: 1.3%2012: 0.3%Average Rents2014: $1,3552013: $1,1902012: $1,087 11. STRATHCONA COUNTYVacancy Rates2014: 2.7%2013: 0.4%2012: 1.2%Average Rents2014: $1,3112013: $1,2252012: $1,161See a profile of the Old Strathcona neighbourhood 12. EAST CENTRALVacancy Rates2014: 2.3%2013: 1.5%2012: 1.8%Average Rents2014: $1,0962013: $1,0312012: $986 We've also noted five other areas to keep an eye on. In some of these areas, vacancy rates seem to be trending in the wrong direction, which could make for a challenging investment purchase.1. LEDUCVacancy Rates2014: 1.7%2013: 3.8%2012: 0.6%Average Rents2014: $1,2852013: $1,2092012: $1,145 2. STONY PLAINVacancy Rates2014: 2.3%2013: 1.3%2012: 4.1%Average Rents2014: $1,1412013: $1,0752012: $1,024 3. NORTH EASTVacancy Rates2014: 3.5%2013: 2.1%2012: 1.9%Average Rents2014: $1,2022013: $1,1002012: $1,026 4. NORTH CENTRALVacancy Rates2014: 3.4%2013: 3.9%2012: 2.8%Average Rents2014: $1,0032013: $9492012: $903 5. FORT SASKATCHEWANVacancy Rates2014: 3.0%2013: 2.8%2012: 2.3%Average Rents2014: $1,1872013: $1,1442012: 1,046 Related reading:More neighbourhood profiles in Edmonton7 Canadian real estate markets to consider investing in for 20155 things to watch in Canadian real estate in 2015Falling oil prices: Canada's gain could be Alberta's painEdmonton housing outlook: let the good times roll3 reasons to love EdmontonIn this Battle of Alberta, Edmonton wins