Smaller Housing Units Often Best for Investors

Published May 24, 2021 by Real Estate Leads

Real Estate agents in Canada will always be happy to work with clients who have different prerogatives when buying properties. The ones who buy them as investments are afforded the same level of service excellence as clients who are buying a home for themselves to live in. Smaller condominiums and similarly sized housing options are always going to be the most logical choice for first-time homeowners buying in major metro areas, but recent industry analysis and feedback from successful investors is indicating that studio units and the like are actually the better choice for clients buying homes as investment properties.

Investors often continue to work with a realtor in a specific city once they’ve had success working with them in the past. It’s for this reason among many others that brining new clients into your client base is always important, and here at Real Estate Leads our online real estate lead generation system is an excellent way for realtors to do this. And do it more effectively than other realtors who like you are looking to build their business and bring quality clients into the fold who will be inclined to be repeat clients.

Let’s look at why many experts are saying that buying smaller housing units is a better choice for investor buyers, with an eye to making you an even more knowledgeable real estate agent who can offer this expertise to all your new clients.

Cash Flow Advantage to Small

The opinion of economists who specialize in the Canadian real estate industry is that there’s a negative correlation between the size of an investment condo and cash flow. What they’ve found is that larger units erode cash flow, and that alternately while studio units only represent 6% of the market, they produce better cash flow.

A recent study found that studios produced $163 in cash flow. 1-bedroom units produced $86 and 2-bedrooms dropped down significantly to $21. NEGATIVE $122 is what three-bedroom units put investors into the red. It’s exactly as you see – the smaller unit, the better the cash flow return on the investment property purchase.

Many agree that the end price of a studio unity is likely the most affordable brand new housing product you can buy in terms of condos in any major metropolitan Canadian city. End prices will be anywhere between 500 and 600K for desirable downtown locations in places like Vancouver and Toronto, but the supply / demand end of things makes it so that these units can be rented out for rates that will support the investment and cash flow interests.

Price Appreciation

Another factor is how end users have also figured out that studio units are a good first step up and onto the property ladder. That’s because there’s very favourable price appreciation for these studio / micro units in big urban areas. Studios have room to appreciate more because you can get them for maybe slightly more than ½ a million, and that alone makes them incredibly inviting for first-time buyers and investors alike. Affordable studio units will be in demand for renters who are working at good career positions in city areas.

As entry-level price points in metro areas of cities like Vancouver and Toronto continue to climb, often times the most favourable price point is going to be with studio condo units. This is then paired wit the fact that when a price point is driving the value of a property this is when it usually has the most opportunity for appreciation.


Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads that are delivered only to you. You’ll be the only realtor to get these leads, and with them you’ll have an exclusive opportunity to be in touch with people who have shown a willingness to make a move in local real estate. It is a proven-effective and well recommended means of either getting a new realtor to hit the ground running or build up the client base of an established realtor who wants to get more out of their client prospecting efforts.