Hi Nina,
When I joined REIN 4 years ago I did a lot of research and followed REIN's strategies very strictly. After a lot of my own research including talking to experienced REIN members who had impressive portfolios in Grande Prairie, I decided Grande Prairie as the place to invest for me. I purchased both sides of a duplex in a newer community called Lakeland. As REIN recommends, I put a 20% down payment with my own cash (80% LTV) and with the rents at the time, it definitely met the 8-10% rule. Upon purchase in Spring of 2007, Grande Prairie was the #2 position in Alberta's Top 10 Towns Research Report put out by REIN, finding renter's was easy, cash flow was incredible, and this new world of owning rental property was fantastic. Then things changed.
Looking back if I were to turn back time, I would not have invested in Grande Prairie for the following reasons;
1. It is difficult to manage if you don't live in GP (I live in Calgary, AB). You must take an active role in your properties. Check previous REIN posts by GP investors for property management issues.
2. REIN's predictions and outlook was wrong on many accounts including Don's predictions of natural gas prices which plays an important role in the GP economy (see Spring 2007 REIN Meeting CD's). GP fell to the 8th position 1.5 years later on the Top 10 Towns Report and I would suspect it has fallen off the map since the time of the last report. This is not a slant towards REIN as I have learned a great deal from the REIN team, just simply a fact.
3. Property values have plummeted precipitously.
4. Vacancy rates have skyrocketed.
5. Rent has declined significantly and therefore cash flow has suffered.
Having mentioned some of those less than stellar aspects of Grande Prairie over the past few years, I will say that I have never found it difficult to find tenants, even when the vacancy rate was at it's highest. I still have positive cash flow, although it is not as significant as it once was. With the prices of similar duplexes that I purchased in Grande Prairie being $35,000 - 40,000 less, and knowing what the current rental rate is, I am positive you could make positive cash flow. The unknown question is, what does the future of Grande Prairie hold?
I think that investing in larger centres such as Edmonton or Calgary that are not relying predominantly on gas for example but are multifaceted, it makes for less drastic swings in the rental property business.
I would like to know what some of the experienced REIN members such as Thomas Beyer, Don Campbell, etc. thoughts are for someone in my position. Any thoughts would be appreciated.
Kind Regards,
Mario
