BCBusiness

25 B C B U S I N E S S . C A J A N U A R Y/ F E B R U A R Y 2 0 2 5 S h u t t e r s t o c k set of problems. Amateur landlords who don't know what they're doing. Investors who are primarily interested in studios and one-bedrooms as they try to get into the market as inexpensively as possible, which skews the overall stock of new con- struction that way. A pool of rental homes that is unstable, because individual owners can decide to sell or move in themselves at any time if they get sick of the challenges of dealing with tenants—a sentiment that is being expressed with increasing frequency by current small landlords. Inexperienced investors who rush in too quickly when things look good and panic when they look bad, creating huge wobbles in the overall market. That's what's happening in B.C. these days, as those small investors have noticeably disappeared from the pre-sale condo market, leading to a major slow- down in new projects and over- all housing supply. In spite of these challenges, the gates that have opened to small-time investment con- tinue to attract hundreds of thousands of average BCers and Canadians with professional- level incomes. People like Sharma. Or many others, each with a slightly different pathway in. Take Vancouver city council- lor Lisa Dominato, who ended up with an "investment" prop- erty in Victoria after she and her husband moved to Vancou- ver in 2012 and had a hard time selling their old house. They decided to rent it to families to help provide housing in their old Fairfield neighbourhood. Or someone like Haig Armen, assistant dean of inter- action design at Emily Carr University of Art and Design. He's found himself with a one- bedroom condo in Vancouver's Kitsilano neighbourhood as one of the legacies of the small apart- ment empire that his father, an architect originally from Armenia, built up during his working years in Ottawa. "He bought a bunch of apartment buildings and fixed them up," remembers Armen. "I saw it as a really viable passive income, something you can do and con- tinue on with your main career." He hasn't been as aggressive as his father at invest- ing, but he is very content with his plus-one holding. He manages the tenant selection and apartment maintenance himself, rather than paying one of the many prop- erty management firms that have sprung up around Vancouver. Even the City of Vancouver seems to be in on the stampede. It bought a just-com- pleted apartment building at 41st and Main recently for somewhat above market rate, with a plan to rent it out. People might not believe it of us risk- averse Canadians compared to those wild and crazy Americans (who love real estate investing so much that they toppled their own housing market in 2008 by betting too much in a shaky system), but people in this country appear to be more seduced by real estate investing than even the Yanks. That's likely partly because the Canadian real estate and banking system has been so stable, say experts. In the U.S., individual investors owned just under 38 percent of the 49.5 million rental units, according to 2020 HUD sta- tistics, with corporate entities dominating the rest except for small amounts under the control of nonprofits or housing co-ops. By contrast, Canada Mortgage and Housing Corporation surveys have found over the years that a steady 49 percent of all rental homes in the country—4,953,840 of them in the most recent census—are owned by individual investors. The rest are owned by a mix of small companies, limited-liability partnerships, pension companies, real estate corporations and real estate invest- ment trusts. And small-time investors are the bedrock of trusts. In B.C., where the housing market has been at 50,000 or more on the Sco- ville heat unit hot-pepper scale for three decades, small investors have been a notable factor in the market for quite a while. B.C. has the highest proportion of investor-occupiers—owners who live on a property where they rent out one or more units—of any province in Canada. That seems to have primed some of them to move on from just renting a base- ment suite or laneway on their property into new investment frontiers. They're what UBC sociology professor Nathanael Lauster calls the province's "artisanal landlords," who together rent out a third of all the condos in the province, along The stories that appear with stunning regularity about bad actors at various rungs in the investor ladder don't help to create a flattering picture. Mom-and- pop landlords who seem to have barely a nodding acquaintance with tenancy law getting into squabbles with their renters over extra children or pets or appliance repairs.

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