Equity vs Cashflow

[Rushi Shah]

Hi everyone, my partner and I are renting right now and looking to start our landlord journey. We're based in Calgary, where there’s a lot of pre-construction happening, and we’re aiming to buy a pre-con property as our primary residence.

As a first-time homebuyer, I’m weighing two options: 

1. Small multi-family properties starting at over $1M, which is pretty expensive and, resale single family (before year 2000) offer minimal cash flow (~$200-300/month).
2. Pre-construction homes, which could build $50-60K in equity within a year or two.

I can afford a 20% down payment, but I’m torn between focusing on equity (pre-con) or cash flow (resale). My goal is to build my portfolio over time and secure a stable primary residence. 

For those of you who have been in a similar position, what do you think makes the most sense? Would love to hear your thoughts!

[Santhosh Nathan]

One thing to consider is there is no guarantee of building equity in pre-construction. The last few years have been great for investors/homebuyers who bought pre-con, but looking back to the few years after the 2014/15 boom, this wasn't the case, where many had actually committed to buying a property that wasn't quite worth what they signed up for closer to closing because the appraisal weren't matching the contract price, requiring a cash top-up. This is one of the main inherent risks with pre-construction, and the pre-construction market has cooled, and with impeding tariffs, there is some uncertainty around where prices will be in the coming months.

One thing to clarify, are you looking to buy an investment property or a primary residence (or perhaps abit of both where you live in one unit and rent out the other)? In most cases, to achieve cashflow, you would be looking at a property with at least 2 units (main floor + basement suite). Happy to discuss this further on what might make the most sense for your end goal.