Are rents increasing enough to offset high purchase prices?

[Jason Ridout]

Property prices are obviously up across BC. Some places more than others. On Vancouver Island the average is a 20-30% increase in price from a year ago. Great if you own a bunch of real estate, not great if you're trying to get into the market or buy more investments.

I noticed that when prices of houses started to climb in places like Nanaimo, Duncan and Port Alberni, a lot of deals stopped working. The 15% price increase of properties removed any possible cashflow from most properties if you had a 80% LTV mortgage.

I've noticed now that rent prices have shot up drastically and a lot of deals work again due to the new benchmark for rents. In BC we can't just increase rents and require a tenant turnover to get the new market value, but if you're looking at a vacant unit in one of your properties, you can often see a 20%-25% increase in price over a year or two ago. 

This doesn't help an under rented property unfortunately, and I've been seeing 4 plex units sell for well under market value, just due to the low current rents. 

I'm curious how other people are finding the rental market when their units come available. On the island a unit that might rent for $1,500 in 2019 can fetch $2,000 now. However, units in Prince George that would fetch $1,500, might only be up to $1,600 now. 

What are other people seeing? I always have a hard time knowing where market rent prices are, especially when there are so few units listed for rent due to low vacancy rates.