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Invest in Edmonton

Martin1968

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Jan 22, 2017
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This is a momentary blip of a worst case scenario timing wise. I can look at the same 4 years (2003 to 2007) and say wow, I'm a genius! Go short and you'll either lose, win, or break even. Stretch this to any 20 year investment time-frame and it's a win, and chances are Calgary or Edmonton will have outperformed most smaller centers.



Exactly my point, your unfortunately at the worst part of a 10 year cycle, things will improve and be much better in 2-5 years from now. Every decade looking back since the 80's has had a major downturn every 10 years, some uglier than others but they have always came back. It has been said many times on here, but leveraged real estate in general has no real cash flow at the end of the day. Your Alberta properties look like duds now, but they won't a few years from now.



Your seriously stating you would sell these properties at the bottom of the market?


Didn’t you buy in Red Deer? Why? What’s in it for you? Nothing for sale in Edmonton or Calgary?
If that market is good enough for you why not for others?

Seems like Cash flow is a dirty word for some. Believe me......cash flow is a lifeline for ANY business, incl Real Estate. Like in any business, try investing your hard earned money without seeing a return (or a very lousy one) after the initial years, and I can tell you right now you will get very bored with that pretty quick. (Quote is based on experience) Real estate is no different.

Remember, Revenue is vanity, Profit is sanity, but Cash is King.

(Seems like some on the forum are pushing their REITs, now that they have moved on to their next stage in their Real Estate investment business........)
 

Cory Sperle

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What makes you relatively bullish on Alberta?

Long term I am bullish, but I simply meant that selling now at a break even point or a loss doesn't make sense. If one has owned an asset for a long time, and has a good equity position then by all means taking profits could makes sense, but I'm willing to bet the market will be much stronger in 5 years than it is today.
 

Cory Sperle

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Didn’t you buy in Red Deer? Why? What’s in it for you? Nothing for sale in Edmonton or Calgary?
If that market is good enough for you why not for others?

Let me clarify. 'In my opinion' Calgary and Edmonton will outperform smaller centers long term. By smaller centers I mean communities of 10,000 people or less, which is really the only place you will find high cash flow, and low liquidity projects. Secondary markets like Red Deer, Leduc, Beaumont, Spruce Grove are good markets and I have bought in them, at a discount to what you would pay in Edmonton or Calgary. The discount must be applied to make up for the stronger markets of the larger cities over time.

Going back to the original purpose of this post. again in my humble opinion, slightly overpaying in Edmonton or Calgary is better than trying to go to a really small market to seek better 'implied' cash flow and take on the extra risks. Small centers work for those who live there, or in some cases folks who live close by looking for a project, however very few sophisticated investors would attempt this. I know as I was extremely lucky to exit a small town on a 12 suiter, and would never go that route again.
 

Martin1968

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Ok, thank you for your clarification. Seems we are not that far apart then, as the markets named are roughly between 15.000 and 100.000 population.
Very close to my 8000 to 100.000 population strategy as per one of my previous posts.
If it’s good for you, it’s likely good for many.

If small markets can be good, as you said, in certain markets, then that would apply for small scale investors as well. I can tell you from experience that some of those smaller markets in the population range named are VERY active markets, the product (that I’m interested in personally) seems to sell there easily, maybe a tad slower then the 2 big cities, but there always seems to be a farmer or a local business guy wanting to park their money somewhere. Or someone from the city, that values cash flow.

Secondly, when you do a good job on your rentals with an outstanding product, you won’t have the same level of competition as in the bigger (satellite) centres.
Your old and tired looking lipstick and rouge ‘updated’ apartment building in the big city is competing with developers brand new apartment buildings, who are being build in large numbers, to which the tenants (profile) I would be interested in, is flocking. They gladly pay the $200 extra a month plus a few extra utilities, as opposed to tenants profile (low to no income, Aish) that you will attract to above mentioned older apartment building. They will be price driven, not so much quality. I don’t want to be in that business. Personal choice.

I can totally accept everyone’s different strategy and opinion. I wouldn’t call myself a genius nor would I call myself sophisticated, I usually get a bit nauseous when those words are used, cause it indicates that one might feel high and mighty compared to others. But yes I’m also very happy with the results accomplished and wouldn’t want it any other way. And I know of others that feel that way.
Wishing that to Jesse, or anyone else that is slightly discouraged by their investment choices. My advice, stick with it, try to improve your bottom line, and if everything else fails, cut your loss and move on. Many different ways of investing and making your money work for you.
 

Michel Lafleur

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Apr 30, 2015
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$2000/month cashflow in Edmonton is unlikely unless you paid cash (minimal mortgage) and manage a rockstar of a short term rental. Lots of work to manage, but it might be possible.
Otherwise a good investment could be to buy something like a 4plex (or suited duplex) with 20% down cashflow closer to $500/month.
 

Martin1968

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Jan 22, 2017
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$500 cashflow on a 4 plex is not good. It’s terrible. It’s $125.00 per apartment.
Aim for $350/$375 cash flow per apartment with the potential of upgrading and improving and boost to over $500 per apartment or wel over $2000.00 cash flow per 4 plex. Now we are talking.
 

Matt Crowley

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Question is answered by cap rates...

Edmonton cap rates 4.25% - 6.50%

For $200k, unlevered this means $8,500 - $13,000 per year, $708 - $1,080 per month of NOI. Cap ex is 20-25% of NOI historically (NCREIF, check out some annual reports), so $560 - $860 per month on the high side....less than half of your target.
 
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