British Columbia is one of the ideal places in Canada for investments. The government doesn’t show unnecessary involvement in the matters as long as your investment is legal.
Furthermore, there aren’t any hindrances or restriction on new investors.
The regulatory cost has also decreased in the past years, inviting more foreign investments.
Investors both from within Canada and abroad can invest in British Columbia.
The foreign investors, however, have to file a notice BC Registrar of Companies before completing a month into the business.
An important question that comes to every investor’s mind when deciding upon investing in real estate is to choose between residential and commercial investment options.
Before diving into details, we should understand the clear definitions of both first.
Defining Residential and Commercial Properties:
While buying a house, a single unit, a duplex or even a triplex is solely considered a residential property by mortgage providers.
Almost all banks these days also consider a four-plex as a residential property as well. However, investing in a four-plex isn’t the recommended option by many.
Anything beyond a four-plex including office spaces, restaurants, shops, retail stores and industrial properties are considered commercial properties by all mortgage providers.
Differences between the two:
The main difference between these two property types is the cost of doing business. While staying in the residential range, interest rates are quite predictable and there’s almost no lender fee.
Appraisal costs are also minimal along with constant legal fees.
All these costs start to rise once you invest in a commercial property, including a multi-family home.
Appraisal costs for commercial investments start at $1200 while for residential investments it lies between $350 and $500 (exclusive of taxes).
Also, the bank fees and money you pay to your broker are way higher. Both the accounting and legal costs are also higher.
The home inspectors are also categorized differently for residential and commercial property inspections.
State in British Columbia:
The overall value of commercial property sales in British Columbia rose up to 47% last year. This was mostly due to a shortage in available land and not to mention the constantly growing economy.
The number of sales for commercial property sales also showed a 21% increase over the past year.
Residential properties, on the other hand, were stable to down in most parts of Canada.
So you should only invest in a commercial property if you’re capable of investing a huge lump sum into it. Similarly, the returns on a commercial property are also higher in most cases but with a higher percentage of risk.