Heating Costs (OIL)

[Merriora]

I am currently looking at a Multi-family unit in the Atlantic region which uses Oil for its heating costs. With Oil prices fluctuating over the past year, I am un-sure if I need to multiply last years costs to provide a more accurate cost for the next year or if prices have remained approx. the same

My realtor gave a price of $3500/yr.
How much would you expect it to cost over the next year given the current oil prices?

Thank you.

 

[JeffSmith]

Hi Merriora,

Your kidding right? You want someone to predict the price of fuel oil in Atlantic Canada. Also, where in Atlantic Canada and why? Just curious. I invest in Alberta and I am from Moncton. That`s in New Brunswick.

Jeff

 

[Merriora]

QUOTE (JeffSmith @ Dec 7 2007, 07:50 PM) Hi Merriora,

Your kidding right? You want someone to predict the price of fuel oil in Atlantic Canada. Also, where in Atlantic Canada and why? Just curious. I invest in Alberta and I am from Moncton. That`s in New Brunswick.

Jeff

No I don`t expect anyone to predict the future. Sometimes you try to leave out obvious points to keep the question simple. The question is...How much is Oil currently above last year prices (average). If Oil cost $2000 over the last year, how much more approx. would it currently be at current prices.

ie: If prices remain at $100 US barrel, it will cost approx. 10% more than last year.

With Oil being such a big cost in some regions. Other investors must be using some sort of estimate to calculate costs to see if the property will be profitable.

 

[Merriora]

QUOTE (JeffSmith @ Dec 7 2007, 07:50 PM) ...Also, where in Atlantic Canada and why? Just curious. I invest in Alberta and I am from Moncton. That`s in New Brunswick.

I am actually looking in New Brunswick, specifically Saint John. I know from reading posts on this site that Alberta is the place to be, but unfortunately, it just isn`t feasible at this point. I live and own my house in Metro Vancouver and due to our extremely high housing costs, my TDS is rather high and I have minimal amount of $ for a down payment. Saint John`s appears to have some up and coming areas and I have heard of some good investment stories from others in the area. But Oil costs are a huge factor, especially since a lot of rental prices include heat.

Since you live in the area, what is your main reason for not investing in the area (assuming you only invest in Alberta)? I am always open to hearing both the good and bad as this would be my 1st rental property.

Thanks

 

[JeffSmith]

QUOTE (Merriora @ Dec 7 2007, 09:52 PM) I am actually looking in New Brunswick, specifically Saint John. I know from reading posts on this site that Alberta is the place to be, but unfortunately, it just isn`t feasible at this point. I live and own my house in Metro Vancouver and due to our extremely high housing costs, my TDS is rather high and I have minimal amount of $ for a down payment. Saint John`s appears to have some up and coming areas and I have heard of some good investment stories from others in the area. But Oil costs are a huge factor, especially since a lot of rental prices include heat.

Since you live in the area, what is your main reason for not investing in the area (assuming you only invest in Alberta)? I am always open to hearing both the good and bad as this would be my 1st rental property.

ThanksI am from Moncton and presently live in the Edmonton area(for a total of 10 years). The current stint has been since 2002. I was involved in the real estate industry in the maritimes, based in Moncton, for 5 years in the `90`s. I have been back many times since, most recently in Feb. 2007. Not much has changed. Alberta has been very, very good to me. No other area can compare from an investment view.

Please do a Gold Mine Scorecard for St. John. If you have $ to invest compare the fundamentals to Alberta. Do your due diligence and that will determine your avenue for investment. I don`t think it can compare to the long term prospects for Alberta.

On the positive side St. John has the largest oil refinery in Canada(sorry Edmonton) and I have info that it is scheduled for expansion.

If Alberta isn`t feasible, how can St. John be feasible?

 

[Merriora]

QUOTE (JeffSmith @ Dec 7 2007, 09:16 PM) I am from Moncton and presently live in the Edmonton area(for a total of 10 years). The current stint has been since 2002. I was involved in the real estate industry in the maritimes, based in Moncton, for 5 years in the `90`s. I have been back many times since, most recently in Feb. 2007. Not much has changed. Alberta has been very, very good to me. No other area can compare from an investment view.

Please do a Gold Mine Scorecard for St. John. If you have $ to invest compare the fundamentals to Alberta. Do your due diligence and that will determine your avenue for investment. I don`t think it can compare to the long term prospects for Alberta.

On the positive side St. John has the largest oil refinery in Canada(sorry Edmonton) and I have info that it is scheduled for expansion.

If Alberta isn`t feasible, how can St. John be feasible?

Not denying the fundamentals in Alberta or BC, but I have not been able to find any properties within my price range (currently $150,000 and under) that would allow for positive cashflow. I`ve looked (via MLS) at many areas in Alberta with very little success. In the Edmonton area, this price apears to only purchase condo`s and/or mobile homes. Eventhough I am a bit fearful of condo`s due to our BC Condo crisis (leaky condo`s continue to be found), I have attempted to run the numbers and have not found any even close to breaking even or having positive cashflow.

But in the end, I am a new real estate investor. I`ve had success flipping condo`s in the BC market, but this doesn`t compare to finding good quality rentals that will provide monthly cashflow.

If you have any suggestions and/or examples of good deals (even ones that you have purchased in the past), please let me know. Might give me some hope for the area.

As far as Saint John, I have looked at the fundamentals and they do look decent, especially in key areas, but I don`t expect the types of annual returns I would in BC or Alberta.

Thanks once again for your input.

Robert

 

[DanSampson]

Hi Merriora, Sorry to say but I am with Jeff on this one. The Atlantic oil Cartel (IRVING) doesn`t much care it crude is 80, 90 or 97. If they want an extra couple hundred million $$ this winter, you are going to pay more for heating oil.

I would ask the question; if the Realtor pegs the cost at $3,500 and actual cost comes in 10% more are you going to lose sleep over it? If the anser is yes, then you are looking at the wrong deal.

I Live and Vancouver and grew up in HFX. I toured NS, NB and PEI this summer and had a great time, stayed at the finest resorts (for $250.00 per night not $600.00) and hope to do it again soon. Having said that, I am certainly not going to buy there. When I get on a plane to buy property I always get off in Edmonton.

Cheers,

Dan

 

[JeffSmith]

Hi Robert,

Dan`s comments are to be seriously considered. I know his plane stops in Edmonton quite often.

My final comment is this: If I could find you a positive or break even cash flow property in the Edmonton area, would you be interested.

Regards,
Jeff

 

[Merriora]

QUOTE (JeffSmith @ Dec 7 2007, 10:20 PM) Hi Robert,

Dan`s comments are to be seriously considered. I know his plane stops in Edmonton quite often.

My final comment is this: If I could find you a positive or break even cash flow property in the Edmonton area, would you be interested.

Regards,
Jeff

This is why I have been coming to this forum everyday since I finished reading both of the REIN books and am trying to learn as much as possible. Feedback and people willing to help with advice and knowledge from experience. Of course I would be interested and appreciate any advice given.

 

[Merriora]

QUOTE (DanSampson @ Dec 7 2007, 10:05 PM) Hi Merriora, Sorry to say but I am with Jeff on this one. The Atlantic oil Cartel (IRVING) doesn`t much care it crude is 80, 90 or 97. If they want an extra couple hundred million $$ this winter, you are going to pay more for heating oil.

I would ask the question; if the Realtor pegs the cost at $3,500 and actual cost comes in 10% more are you going to lose sleep over it? If the anser is yes, then you are looking at the wrong deal.

I Live and Vancouver and grew up in HFX. I toured NS, NB and PEI this summer and had a great time, stayed at the finest resorts (for $250.00 per night not $600.00) and hope to do it again soon. Having said that, I am certainly not going to buy there. When I get on a plane to buy property I always get off in Edmonton.

Cheers,

Dan

No reason to say sorry. I appreciate honest feedback.

10% increase wouldn`t worry me if I`ve considered that as part of my calculations. However, a 20-50% would definitely cause some worries and one of the reasons that I have been attempting to find places were the renter pays their own bills reducing my risks.

The main reason for the original post on Oil was to determine if I was using the most accurate values for my analysis of the property. However this thread has turned into a much more valuable thread and will continue to make me think if I am looking in the right area.

 

[JeffSmith]

Hi Robert,

Send me an email

 

[Grant]

QUOTE (JeffSmith @ Dec 7 2007, 11:20 PM) Hi Robert,

Dan`s comments are to be seriously considered. I know his plane stops in Edmonton quite often.

My final comment is this: If I could find you a positive or break even cash flow property in the Edmonton area, would you be interested.

Regards,
Jeff


QUOTE (Merriora @ Dec 8 2007, 12:14 AM) No reason to say sorry. I appreciate honest feedback.

10% increase wouldn`t worry me if I`ve considered that as part of my calculations. However, a 20-50% would definitely cause some worries and one of the reasons that I have been attempting to find places were the renter pays their own bills reducing my risks.

The main reason for the original post on Oil was to determine if I was using the most accurate values for my analysis of the property. However this thread has turned into a much more valuable thread and will continue to make me think if I am looking in the right area.

I`m glad to see that this thread is becoming even more useful than you had imagined.

I just wanted to let you know that instead of posting multiple replies in a row, you can simply press the "+ Quote" button under each post that you want to quote and then click "Post Reply" near the bottom of the page (next to "New Topic") and it will come up with quotes to all the posts that you pressed "+ Quote" next to. It`s a handy feature, though most people haven`t figured it out yet.

I did it in this post just to prove that it`s possible.