Ultimate Guide to Buying Property in Kelowna
For the last decade, thousands of people each and every year have been buying property in Kelowna for a whole variety of reasons. Considering this city has a warm climate with lake access from virtually any angle and is less expensive than Vancouver, it is no surprise that so many people want to buy real estate in Kelowna.
What are the benefits of buying property in Kelowna?
There are plenty of benefits to buying property in Kelowna. In fact, many people consider it as one of the most desirable places to live in the entire province!
Steady Population Growth – Kelowna has been experiencing steady population growth for the better part of a decade. Since 2011, the population has grown by approximately 22,000 to a total population of 142,146. When thinking about purchasing real estate it is important to understand the growing trend.
Major City – Kelowna is the economic powerhouse of the Okanagan and a truly metropolitan region. Nearby smaller communities rely on Kelowna as a major provider of big city amenities such as shopping, the hospital, the airport, and the University. The population of Kelowna is quite small compared to the economic output produced each year.
Amazing Weather – This city is known for having excellent weather conditions throughout the year. With warm summers with low humidity and relatively mild winters compared to other parts of Canada. Temperatures in Kelowna can range from 25 to 33 Celsius in the summers and as low as -1 to 5 C in the winter months.
Tourism Economy – Kelowna is home to one of the largest lakes in British Columbia and the tourism economy is flourishing thanks to all of the outdoor activities, shopping, restaurants, and wineries. The city of Kelowna is often recognized as one of the best destinations to visit in BC.
Big White – Kelowna is home to one of the most highly rated ski resorts in Canada. Big White Resort is an easy 45-minute drive from Downtown Kelowna and has thousands of acres of skiable terrain.
Wine, Wine, and more Wine – Produce farming is a huge economic driver for Kelowna and the broader Okanagan region. The Okanagan is recognized as one of the best regions in Canada to operate a vineyard and as a result, it has hundreds of amazing wineries. With plenty of amazing wineries to choose from it has become a well-known destination for wine tours.
How much does real estate in Kelowna cost?
Real estate prices in Kelowna are quite high compared to the rest of the province, but when compared to Greater Vancouver they seem much more affordable. Below are some average costs of real estate in Kelowna:
| Apartment | Townhouse | House | |
|---|---|---|---|
| One Bedroom | $325,000 – $475,000 | $420,000 – $525,000 | Not Applicable |
| Two Bedroom | $525,000 – $675,000 | $675,000 – $995,000 | $825,000 – $950,000 |
| Three Bedroom | $800,000 – $975,000 | $850,000 – $975,000 | $900,000 – $1,200,000 |
For the most up-to-date real estate prices in Kelowna, reach out to our recommended realtor by clicking here!
Who is buying a property in Kelowna?
Those Escaping Vancouver – That’s right, Vancouver housing prices are astronomically high meaning homeownership is completely out of the question for most families, especially first time homebuyers. So many Vancouverites are looking East at the central Okanagan area. While Kelowna real estate is not cheap, it is generally a lot less than the Lower Mainland.
Albertans – Albertans have been buying a property in Kelowna as a way to escape the cold temperatures that haunt the province every winter. The economic challenges in Alberta have hastened the migration trend.
Out of Country Buyers – Out-of-country buyers have been buying up real estate in the Okanagan for the last decade. In 2018, the BC provincial government implemented a speculation tax targeting foreign buyers to ease the demand for BC real estate.
Long Term Rental Investor – These conventional investors have been around since the dawn of time, but they too have had a sudden surge of interest in the Kelowna market. With all of the economic growth of the last few years, many long-term investors are seeing an opportunity for appreciation and cash flow.
Vacation Rental Investor – With the rise of platforms like Airbnb, VRBO, and Homeaway, there has been a surge in interest from investors looking to purchase second homes, cottages, and short-term rental-friendly accommodations. Many of these investors choose to self-manage or partner with a vacation rental management company to assist with the day-to-day operations.
Many homeowners/ investors love this type of real estate because it helps off-set the cost of ownership and still allows them to use the property whenever they want.
Come May 2024, a lot of major changes will be impacting the laws around operating a short term rental in Kelowna. You will only be able to operate a STR if it is your primary residence, have a business license, and register with the provincial government.
Which complexes can legally operate as vacation rentals?
The rules surrounding vacation rentals in Kelowna are tricky and, in many cases, downright confusing. That being said, it is super important to understand the municipal bylaws and zoning impacting the property you’re planning to purchase. The best option is to always contact the municipality directly and ask if the building you’re thinking of is eligible to operate as a short term rental.
A lot of these buildings are professionally managed buildings with established property management companies like Associated Property Management (APM) and commercial cleaning companies like Evergreen Building Maintenance (EBM).
Buildings that can operate as a legal short term rental:
- The Brooklyn
- Playa del Sol
- St. Paul (Managed by APM and cleaned by EBM)
- Sole Downtown
- Discovery Bay
- Sunset Waterfront
- Barona Beach
- Copper Sky
- The Cove
In general, if you’re looking at purchasing a residential home you will experience difficulty operating as a legal short-term rental. Most of the time you will need to live in the property full-time and rent out occasionally, or a separate suite.
How much revenue can vacation rentals generate?
Of course, this answer “depends”. There are a lot of reasons why one property might produce drastically more than the average and others that will fall just shy of the averages. That being said, in general, vacation rentals in Kelowna can generate between $25,000-$65,000 per year.
How much rent can a long-term rental generate?
Again, like any investment, the revenue estimates can vary greatly, but in general long-term rents are steadily increasing year after year in Kelowna. In fact, Kelowna has just been recognized as one of the most expensive rental markets in Canada.
In general, here is a guideline for rental rates by bedroom:
| Property Type | Monthly Rent |
|---|---|
| One Bedroom | $1,200 – $1,400 |
| Two Bedroom | $1,400 – $1,800 |
| Three Bedroom | $2,200 – $2,800 |
Common Cost of Homeownership in Kelowna
- Property Taxes – Yes, even in Kelowna you will be required to pay municipal taxes which are directly linked to the BC assessment appraisal of your property. These taxes will be used to fund public education and civic projects like building roads, bridges, and future development. You can expect to pay between $1,500 – $5,000+ per year on property taxes.
- Speculation Tax – If you’re planning on living in this property or renting it out in the long-term rental market for more than 6 months out of the year then you’re exempt from this tax. On the flip side, that means anyone buying a vacation rental or second home will be faced with the BC government’s speculation tax which impacts people looking to buy in Kelowna.
- Property Transfer Tax – If you’re buying property anywhere in BC you will be responsible for paying the property transfer tax. This tax is assessed on the sale price of the property that you purchase.
- Lawyer Fees – Every time you buy or sell a home you will be responsible for hiring a lawyer to facilitate the transaction. The cost to do so can vary depending on your situation and your lawyer’s fees, but in general, you can expect to pay between $1,200 – $1,800.
- Goods & Services Tax (GST) – If you’re buying a new home in Kelowna or buying a previous vacation rental property, you may be subject to GST. In Canada, GST is a 5% taxation on the total purchase price. In some cases, you may be able to defer this tax so consult with your attorney and/or tax accountant.
Planning on Buying Property in Kelowna?
At Lifty Life Hospitality we have local connections that can make your home buying experience easy and stress-free. Whether you need our vacation rental management services or not, feel free to reach out and we would be happy to connect you with our local contacts!
Take the next step to buying a property in Kelowna and speak with our realtor recommendation. Call our realtor recommendation today at (250) 999-3270!
