Merritt often comes up as a cheaper alternative to Kamloops. The short answer: both can work, but for different investors at different stages. Here's how the comparison breaks down.
Corrected 6 October 2026. The first version of this post put Merritt's population at "around 8,000"; the 2021 Census counted 7,051, down from 7,139 in 2016. It also called Kamloops a city of about 110,000 (the city was 97,902, the wider metro area 114,142), described current mortgage rates as "5% range" (the Bank of Canada's May 2026 average was 4.30%), and gave price ranges, cap rates, selling times and employment shares I can't source. Those are replaced with published figures or clearly marked as my own reading.
The Two Markets at a Glance
Kamloops had 97,902 people at the 2021 Census, up 8.4% from 2016, and its wider metro area 114,142. It has Thompson Rivers University (TRU) generating consistent rental demand from students and faculty, Royal Inland Hospital anchoring a healthcare employment base, and a diversified local economy that includes retail, logistics, and construction. The Association of Interior REALTORS® (AIR) put the Kamloops and District single-family benchmark at $671,600 in May 2026.
Merritt had 7,051 people at the 2021 Census, down 1.2% from 7,139 in 2016. It sits on the Coquihalla (Highway 5) where Highway 5A and other routes meet, and serves as a hub for the surrounding ranching and forestry communities. Prices are meaningfully lower than in Kamloops, but AIR's monthly releases don't break out a Merritt benchmark, so look at recent sales rather than a quoted range.
The Cap Rate Reality
Cap rate is net operating income divided by purchase price, before financing costs. It is the primary screening metric for investment properties (more on cap rate vs cash-on-cash here).
On paper, Merritt properties tend to show higher cap rates than comparable Kamloops ones, because purchase prices are lower relative to achievable rents. I don't have published cap-rate data for either town, so treat that as a direction, not a number.
On paper, Merritt looks better. In practice, the gap narrows when you account for several factors.
The Liquidity Question
This is the factor most small-town investment comparisons underweight: how easily can you exit?
Kamloops has a deep buyer pool. AIR recorded 250 residential sales in Kamloops and District in May 2026 alone, against 1,380 active listings. If you need to sell — because of a job change, a financial emergency, or simply because you found a better opportunity — a well-priced property finds a buyer. The market absorbs supply regularly.
Merritt's buyer pool is far thinner. In a rising market, that does not matter much. In a flat or declining market, you could sit on a property for months. If you need to sell quickly, you may need to discount significantly. That illiquidity risk is real and it is not priced into the cap rate difference.
Economic Concentration Risk
Kamloops's economy is diversified across healthcare, education, retail, and construction, with no single employer or industry dominating it.
Merritt's economy is more concentrated around forestry, the highway corridor, and a few large employers. Forestry in particular has had a turbulent decade in BC — mill closures and curtailments have direct downstream effects on Merritt's rental demand and resale market. If a major employer cuts staff or a mill goes offline, vacancy rates can spike quickly in a market that size.
Who Each Market Suits
Kamloops is the right first investment for most BC Interior investors. You are buying into a more liquid, more diversified market. The cap rates are lower, but the risk-adjusted return — accounting for liquidity, economic stability, and resale potential — is better.
Merritt makes sense as a second or third property for an investor who already has a Kamloops or Kelowna asset providing stable, liquid equity. At that point you can absorb the concentration risk, you understand the due diligence required, and the higher cash flow yield makes sense as a portfolio diversifier rather than your only holding.
The Cash Flow Picture
I want to be direct about something most BC Interior investment posts gloss over: almost all residential properties in both Kamloops and Merritt are negative cash flow on a month-to-month basis when financed at current rates (the Bank of Canada's average for a new uninsured 5-year fixed mortgage was 4.30% in May 2026). The investment thesis is appreciation plus mortgage paydown, not immediate cash flow. I wrote out the full line-item math in a separate post.
Merritt's lower purchase price does improve the cash flow position relative to Kamloops, but it does not typically produce positive cash flow either. A $400,000 purchase with 20% down at 4.30% still carries a mortgage of about $1,740 a month, before property tax, insurance, maintenance, vacancy and management. The rent has to clear all of that, in a town where rents are lower too.
The Verdict
For a first property, Kamloops: better liquidity, a stronger tenant pool from TRU and Royal Inland Hospital, and enough sales data to price with confidence. Merritt makes more sense as a second property, for an investor who finds a duplex at a price that gets the numbers closer to positive cash flow.
If you are starting your BC Interior investing research, I would suggest spending time in both markets before deciding. Drive the streets, talk to property managers, and look at actual lease comparables, not just asking prices.
Sources: Statistics Canada — 2021 Census Profile · AIR — Kamloops market, May 2026 (3 June 2026) · Bank of Canada — interest rates for new lending by chartered banks
Written by Jagatjeet, as part of a public BC Interior real estate learning journey. Published 12 June 2026. Corrected 6 October 2026. Updated 7 October 2026. Jagatjeet is working toward a BC real estate licence and is not a licensed realtor. Nothing here is financial, legal or tax advice.