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Renting as an Alternative to Buying a Home

Exploring the Kelowna Housing Market: Renting as an Alternative to Buying a Home In recent times, the Kelowna housing market has witnessed a surge in home prices and the overall cost of living. As aspiring homeowners find themselves grappling with these increasing costs, it becomes crucial to explore alternative options. This week, we turn our attention to renting—a viable solution that offers flexibility and an opportunity to live in desirable areas without the commitment of buying a property. To shed light on the rental landscape in Kelowna, we turn to Curtis Baszucki, a renowned expert in the field of property management. Baszucki, affiliated with Associated Property Management, compiles a seasonal rental report that provides valuable insights into average rents in the area throughout the year.

Let's start by examining the rental prices for apartments in Kelowna. Suppose you're seeking a cozy studio unit in the Cambridge building on Leon, offering approximately 350 square feet of living space. In this case, you can expect the rent to start at around $1,450 per month. However, as you move up to slightly larger units, such as a downtown concrete tower with a 1 bedroom and den, ranging from 500 to 600 square feet (think One Water St), the pricing begins at $2,400 where other concrete tower 1 bed and a den units are going for $2,100. The higher cost can be attributed to the plethora of amenities offered by One Water St compared to the others.

If you're still determined to buy a home but haven't been able to find exactly what you're looking for, there is another option to consider—purchasing a property with a suite. Including a suite in your home can significantly alleviate mortgage payments and increase your budget. The value of suites in homes and their contribution to mortgage payments is worth examining. Let's take a look at the rental rates for suites in Kelowna.

According to the rental guide, a 1-bedroom basement suite in Rutland typically starts around $1,750 per month. In contrast, a 3-bedroom upper unit in Upper Mission commands a higher starting price, beginning at $2,750—an indicator that it's the most sought-after area in terms of rental rates. Just like the housing market, rental prices are influenced by factors such as supply, demand, and property conditions. Now, let's delve into the financial implications of owning a home with a rental suite. By utilizing the additional rental income towards your mortgage payments, you can potentially afford a higher purchase price. To illustrate this point, let's consider a scenario where you're contemplating a $1 million property purchase, amortized over 25 years at a 6% interest rate (note that rates may be lower). Assuming a 20% down payment, your monthly mortgage payment would be approximately $5,118. However, if you were to acquire a home with a 1-bedroom suite that generates $1,750 in monthly rent, your increased budget might enable you to qualify for a mortgage of up to $1,350,000. It's important to note that becoming a landlord and managing tenants may not be suitable for everyone. However, if you're struggling to find a home within your desired budget, exploring the option of a rental suite can significantly expand your possibilities. To better understand your financial capabilities and explore different scenarios, it's advisable to consult with your mortgage professional and accountant to make sure it is doable and you are OK to cover a vacant rental suite while your in between tenants and

I hope you have a great week, please feel free to reach out with any questions or comments. Mark and Maddie


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