Ultimate Guide To Buying Property in Canmore
Canmore, Alberta is one of the top tourist destinations in the province, generating over $350 million in visitor spend each and every year. The local economy is well diversified between real estate, retail, tourism, and accommodation, while the broader Albertan economy is fueled primarily through oil and natural gas. Canmore provides a lucrative real estate investment opportunity for anyone looking to take advantage of the local tourism.
Benefits of Buying Property in Canmore
There are plenty of benefits to buying real estate in Canmore. This small town contributes huge tourism dollars to the province, while also providing locals with a beautiful place to live.
Close Proximity to Banff National Park - Canmore is a quick 20-30 minute drive to Banff and as a result it is able to tap into the large number of tourists that are driving from Calgary to Banff. Due to its close proximity a lot of tourists struggle to decide between staying in Canmore or Banff.
Easy Drive to Downtown Calgary - Driving from Canmore to Calgary is an easy 1-hour commute. With such close proximity to one of Canada’s largest cities, it has a considerable number of locals that live in Canmore and commute to their office jobs in Calgary.
Freehold Vs. Leasehold - Unlike Banff, almost all of the real estate in Canmore is classified as “Freehold”, which is your most common property type. Since real estate in Banff is technically within the national park, none of the homeowners actually own the land that their property is built upon. This type of property is classified as a “leasehold” and is much less desirable upon resale.
Extremely Low Property Tax Rates - Canmore has some of the lowest property tax rates in the province. While the tax rates are low, the cost of real estate is substantially higher, which causes upward pressure on the actual cost of property taxes.*
Population & Household Income Growth - For the last two decades, Canmore has experienced steady growth in both base population and median household income. This is an excellent indicator that Canmore’s future growth will continue to flourish.
What Are The Types of Zoning in Canmore?
If you’re thinking about buying real estate in Canmore it is important to understand the main zoning classifications. In this case, there are four (4) primary zoning types that you need to be informed on.
Residential - Zoning
This zoning type is most common for buyers looking for a conventional home. This property may be a single-family home, duplex, triplex, townhouse, or apartment. The homeowner has the choice to live in it full-time, casually, or rent it out on the long-term rental market.
It is worth mentioning that, residentially zoned properties cannot be used for the sole purpose of operating as a vacation rental (Airbnb, VRBO, HomeAway, etc).
Visitor Accommodation - Zoning
This zoning classification is typically reserved for hotel-condo suites, which are only allowed to have limited personal use and can only be rented out for short term stays. These types of properties are perfect for anyone who intends on hiring a vacation rental management company to operate their property for them. Most Visitor Accommodation complexes are restricted to a maximum stay of consecutive 30 nights, meaning you cannot rent these properties out to long-term tenants. Visitor Accommodation zoning is what most hotels are classified under.
Note: You cannot live in Visitor Accommodation property full-time.
Tourist Home - Zoning
This type of property is very flexible. You can choose to live in it full time, part-time, casually, rent it out long-term, or even short term. Tourist Home properties are often the most desirable property type in Canmore. As a result of the being the most desired, they're also the most expensive. In many cases these properties are 25-50% more expensive than Visitor Accommodation properties. If you’re planning on renting your property on Airbnb, then this is the proper zoning for you.
Note: This zoning is the most flexible, but also the most expensive.
Employee Housing - Zoning
This type of property is intended for locals to have convenient and affordable housing. If you intend to buy this zoning type make sure that you intend on working in Canmore for at least 20 hours/week. Many of the strata council's will monitor the building to ensure that the units are not being operated as short term rentals.
Note: You have to work at least 20 hours per week in Canmore.
Buying A Vacation Rental In Canmore
Buying real estate in Canmore for the purposes of operating it as a vacation rental can be a very lucrative and wise investment if done correctly. Our team at Lifty Life Hospitality has extensive experience in the vacation rental industry and has a thorough understanding of what is required to make a successful vacation rental.
How much do vacation rentals in Canmore earn?
Like anything else, “it varies”, but in general the vacation rental revenues will greatly subsidize the costs of homeownership. In many cases, the revenue generated far exceeds the cost of ownership and as a result, generates the homeowner with a healthy annual profit. In order to make the best decision for yourself, look at the revenue estimates prior to buying a vacation rental in Canmore. Click here for additional information on the local vacation rental industry.
What zoning classification is needed for a vacation rental in Canmore?
As mentioned above, the necessary zoning classification for a vacation rental in Canmore, Alberta, will need to be either a Visitor Accommodation or Tourist Home zoning classification.
All other zoning classifications will not be able to legally operate as a vacation rental.
Which buildings can operate as legal vacation rentals?
Even if you’re right about the zoning classification, you may need to ensure that vacation rentals are allowed by the strata corporation. Here are some properties that historically have allowed for vacation rentals:
- Canadian Rockies Chalet
- Grande Rockies
- Solara Resort
- Blackstone Mountain Lodge
- Windtower Lodge
For a complete list of buildings that allow short-term rentals, contact our team!
Buying A Long-Term Rental in Canmore
Many investors flock to Canmore due to its desirable location, high rents, and expected long-term appreciation. It is worth noting that in Canmore, the cost of real estate is much higher than elsewhere in Alberta, and as a result, it might not be the most cost-effective long-term rental investment. The cost of real estate as a comparison against the long-term rents are often worse here than in other markets within Alberta.
That being said, if you’re looking for a market with a high likelihood of price appreciation, then Canmore might be the right fit for you.
What are the monthly rents in Canmore?
Again, the monthly rents compared to the cost of real estate is not very attractive strictly from a cash flow perspective.
One Bedroom = $1,200 - $1,600 / month
Two Bedroom = $1,700 - $1,900 / month
Three Bedroom House = $2,400 - $3,200 / month
Common Costs of Homeownership in Canmore
Adjustment costs - ($300 – $500) - You’ll need to reimburse the previous owner for any payments that have been paid beyond the closing date. Some examples of adjustment costs could be strata costs, property taxes, and utilities. The adjustment costs are typically rolled into the cost of the mortgage and do not account for significant amount of money.
Legal fees - ($800 – $1,200) - Lawyers will need to do paperwork. This includes assisting with the transfer of funds, facilitating the land title transfer, and all of the typical legal stuff.
Title insurance - ($300 - $500) - Your mortgage provider will require this. But this is good—it may save you the higher costs of a property survey. Title insurance will protect you against fraud and forgery, encroachments, easements, and zoning non-compliance issues.
Property insurance - (Varies) - Your mortgage provider usually requires you to have insurance to cover the replacement value of your home and its contents. Insurance costs vary by property size, when it was built, the materials it was built with, natural disasters, and the likelihood of water damage claims.
Utilities - ($75 – $100 per month) - Calculate your electricity usage, heating, and water expenses. You can ask the seller's to provide a rough estimate on the cost of utilities, often times your utility costs will be similar to what the seller discloses.
Home inspection - ($400–$800) - Before you buy real estate in Canmore, make sure you get a home inspector to walk through your home and take notes of all repairs that need to be completed. A lot of homeowners try to skip this step in an effort to save a few hundred dollars, but the value of home inspection is worth much more than the measly several hundred dollars. What if the home inspector discovers the roof has been neglected for the last 20 years and could collapse at any moment?
Goods & Services Tax (GST) - (5% of purchase price) If you’re buying a new home or a vacation rental you will be charged GST. In some cases, typically when purchasing as a business, you’re able to defer the GST payment. That being said, always consult with your tax attorney and/or accountant.
Property Taxes - (0.46 - 0.5% of assessed value) - Every municipality in Canada has a property tax system that funds public education and many other civic projects.
Planning on Buying Property in Canmore?
Our team and Lifty Life would be happy to connect you with experts who understand the nuisances of the local real estate market and help you take the next step in your buying decision. Call our realtor recommendation, Scott, today - (403) 493-4855
If you want to connect with our recommended realtor, click here!