What Is a Rental Building?

Is a Rental Building the Same as an Investment Property?

A rental building can be an investment property, but the terms are not interchangeable. An investment property is any real estate purchased mainly to earn rental income, resale profit or both. A rental building is a specific property type with multiple homes rented to tenants.

A rental building may generate income from several units, but it also has operating costs, tenant responsibilities, maintenance needs and vacancy risk. Read Kim Lee’s guide to real estate investing in Vancouver for an overview of rental income, financing, expenses and investment property planning.

Can a Rental Building Provide Rental Income?

Yes. A rental building produces rental income when tenants pay rent for individual homes within the property. Gross rental income is the total rent collected before expenses. Net rental income is the amount left after mortgage payments, property taxes, insurance, repairs, utilities, management and vacancy costs.

Review rental income with the building’s operating statements, current tenant rent records, lease information and maintenance history. Do not rely only on projected rents or a listing’s stated income. 

Are Rental Buildings More Affordable Than Condos?

Rental buildings can provide rental homes that are more affordable than ownership but affordability depends on the unit, location, rent level and housing program. A rental building may offer market rental homes, below market rental homes or secured rental housing.

In Vancouver, below market rental housing is rental housing priced below market levels for moderate income renters. It can include purpose built rental buildings, co-operative housing and non profit housing.

A rental building is not automatically affordable housing. Confirm the rent, eligibility requirements and tenure type for the specific unit.

Is a Rental Building the Same as a Multiplex?

No, a rental building is not the same as a multiplex. A multiplex is a physical building design containing three to eight residential units, whereas a rental building is defined by its legal ownership and tenure structure. While a multiplex can be individually strata titled and sold, a purpose built rental building remains under a single property title specifically to offer long term tenant housing. 

Can You Buy One Unit in a Rental Building?

Usually, no. In a purpose built rental building, the units are not separately strata titled and cannot normally be sold one by one. A buyer may purchase the whole building, subject to financing, due diligence and the existing tenancies.

You can buy an individual condo that is rented to a tenant, but that does not make the condo building a purpose built rental building. The individual condo is a separately owned strata unit, while the rental building is held under one ownership structure.

What is Secured Rental Housing?

Secured rental housing is rental housing protected for long-term rental use through legal agreements or policy requirements. It is intended to remain rental housing rather than being converted into individually owned strata condos.

In Vancouver, secured rental housing can include purpose built rental projects that are legally protected as rental tenure. The rules for a specific property depend on its zoning, development approvals and legal agreements.

What Should You Check Before Buying a Rental Building?

Before buying a rental building, confirm the legal unit count, title structure, zoning, tenant occupancy, current tenant rent records, operating costs and building condition. 

Review the following before removing conditions:

• Legal number of rental units
• Title, zoning, development approvals and permit history
• Current tenant rent records, leases, deposits and tenant occupancy
• Operating statements, property taxes, insurance and utilities
• Roof, plumbing, electrical, heating, exterior walls, siding and windows 
• Fire alarms and emergency safety equipment 
• Capital repairs, deferred maintenance and environmental concerns
• Tenant protection requirements and redevelopment restrictions
• Financing terms and lender requirements
• Rental income, vacancy assumptions and management costs

What is the Difference Between a Rental Building and Affordable Housing?

A rental building defines a property type, whereas affordable housing defines a rent pricing structure. A purpose built rental building is a multi-unit property leased to tenants, typically at standard market rate rents. In contrast, affordable housing refers to homes priced below market value through government subsidies, non-profit housing providers, or City of Vancouver municipal programs.