Real Estate Investing Near Public Transit is a Savvy Strategy

Properties in close proximity to public transit are like candy for savvy real estate investors. The value of both residential and commercial properties that are located near public transit routes are significantly higher than comparable properties situated far away from public transit.

In the Greater Toronto Area, studies have shown that real estate will appreciate in value by 30% when situated near a public transit route. Getting in on the ground floor of a pre-construction project located near public transit will allow you to make a reasonable return on your investment. As construction comes to an end, the property value will gradually rise in value.

Multifamily urban properties attract high-income renters

Urban centres are at the forefront of investments and revitalization all across Canada. Millennials, in particular, flock to urban cities.

Opportunities to earn high incomes while living in mixed multifamily dwellings resonate with young workers today. They appreciate the convenience of living within walking distance to grocery stores, shopping centres, and nightlife destinations that are all accessible through functional public transit.

Renter demand is exceptionally high in these mixed urban communities, causing rental prices to skyrocket across these urban areas. Multifamily property investments typically yield higher passive incomes and financial stability for investors, and there are many strategic reasons why investors are encouraged to pool their capital into multifamily properties.

Multifamily property investments near public transit have the potential to generate even greater value for you as an investor. Public transit gives urban renters flexibility and the opportunity to live without a car, which can save residents thousands of dollars a month. This is one of many reasons why these rental properties are in such high demand amongst renters.

UBC research shows impact of public transit on real estate

A study commissioned by the University of British Columbia examined the effects of public transit expansion on surrounding neighbourhood real estate prices. The focus of this study was the impact of expansions to the Vancouver SkyTrain transit system by comparing data on home prices in surrounding communities over a 10-year period.

According to the findings of the study, public transit improvements eventually increased monthly dwelling prices in select Vancouver communities. The price increases were reported in both the original SkyTrain-connected neighbourhoods, as well as communities that were more recently added to the public transit system’s expansive reach. The research also indicated that neighbourhoods within a one-kilometre walking radius of the transit line also rose in value.

Similar to the trends in Toronto, the biggest reason for the price increases in Vancouver is the convenience afforded to urban residents. Connectivity through the SkyTrain expansions enable urban residents to move freely throughout Vancouver, while still maintaining a downtown residence with access to all the urban amenities.

As a real estate investor, these insights can help you pinpoint the best properties to invest your money. Multifamily properties are particularly attractive due to the sheer volume of residents to whom you can rent out space, and generate steady streams of passive rental income.

Where are the biggest public transit expansions in Canada?

Most Canadian communities have some form of public transit. City buses run routes across most Canadian towns and cities to help people get around without requiring ownership of a car. You can research existing bus routes and identify new property construction projects that will be developed along those existing routes to decide where to invest in those communities.

However, in larger cities, more rapid forms of transit exist that increase demand for inner city residences. Currently, there are seven metropolitan areas across Canada with existing rapid transit systems — Calgary, Edmonton, the Greater Montreal Area, Ottawa, the Greater Toronto Area, Metro Vancouver, and Waterloo Region.

With the exception of Waterloo, construction is underway to expand each rapid transit system into new neighbourhoods to better service more residents. Additionally, there are projects currently in development that will bring rapid transit to the communities of Gatineau, Quebec, Hamilton, Ontario, and Quebec City.

Tips to make your next investment near public transit

So how can you capitalize on placement near public transit to reap the greatest returns on your real estate investments? Keep these suggestions in mind as you begin researching various communities to help make the most bang for your buck.

- Research city development plans along proposed public transit routes

Wherever governments are building public transit, real estate properties are also part of the urban redevelopment plan. Use that knowledge as you begin to research where to invest your time and money.

In Toronto, the development of the Eglinton Crosstown transit line is part of a broader effort to redevelop parts of the city that have long remained neglected. Specifically, the so-called Golden Mile in Scarborough is one of the prime neighbourhoods that will undergo redevelopment.

New mixed use real estate will be developed to attract new residents to the area. As an investor, acquiring the property for one of these proposed mixed use properties is an excellent way to generate significant return on an investment near rapid public transit. Once the Crosstown is completed, the value of those properties will significantly appreciate in value.

- Look into the neighbourhoods where future rapid transit is planned

There are currently three mid-sized cities that will soon be added to the list of Canada’s rapid transit metropolitan areas. Before shovels get into the ground, you can be savvy with your investment acumen by diving into the communities that will become more valuable once the transit lines are completed.

Take Hamilton as a prime example. The proposed B-Line rapid transit system will run through the downtown corridors along Main and King Streets. Remember from the UBC research that properties and rental dwellings within a one-kilometre radius of a transit line appreciate in value.

Use this information to your advantage and research areas near Hamilton’s transit development that you can make your investment. Are there existing buildings that are up for sale? If there are new buildings slated for development, take the initiative to invest in one of those available properties. Acquiring those properties now before construction begins in 2024 will make your investment more valuable once the transit line is operational. 

- Identify high growth companies located near public transit lines

Public transit creates employment opportunities. Companies open offices and expand their growth plans when they’re located near public transit lines. It makes things more convenient for their employees, which is a great selling feature for talent acquisition strategies.

As an investor, high growth companies that are raising capital and expanding their growth plans are creating more job openings for future employees. Jobber, an operations management software firm located in Edmonton, recently announced it had raised $134 million in Series D financing. This is reportedly the largest venture capital investment in Edmonton’s history.

Geographically, Jobber’s head office is located within walking distance of Edmonton’s Capital and Metro public transit lines. As Jobber determines how to use their newly acquired financing, they will undoubtedly increase their employee roster by welcoming new talent to the firm.

As an investor, keeping up to date with these expansions in the private sector creates endless opportunities for real estate investments. Booming businesses attract new people to the cities where they reside, and geographic proximity to public transit lines means people want to live within convenient access to those offices.

Use that knowledge to fuel your real estate investment expansion strategy. Acquire properties that are within close proximity to those offices, and the transit lines near those office spaces to make savvy real estate investments that will only accelerate in value.

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