With many Canadians opting for long-term home rental rather than buying, there is an opportunity for real estate investors … if they get creative.

Toronto-based Starlight Investments says that rental supply is lagging demand with renting seen as a more affordable option for some, and essential for those unable to obtain a mortgage.

It says that investors can reap rewards from the demand even though purpose-built rental units may be in short supply.

In a new whitepaper, Starlight highlights a rise in millennial renters from 46% in 2011 to 52% in 2016. It also notes that according to CMHC, only 1.2% of the total national rental supply was added in 2017 and this is not expected to increase significantly in the years ahead.

Shadow condos not the long-term answer
Starlight says that the rise in secondary condo rental units comprise around 15% of Canada’s rental inventory but is not a long-term solution for the market.

With a spread of around 35% between rental apartment and condo rates, around $375 per month, the issue of rental apartment affordability remains.

The firm believes a better solution is innovative thinking including repositioning and infill development, student-centric housing, and allowing greater density in some neighbourhoods.

It also points to repurposing of existing real estate, such as a dated hotel that it redeveloped into loft units and others, creating a total of 100 new rental units.

The whitepaper is available from starlightinvest.com

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