I started researching fundamentals for Saint John, NB in December 2007. Heres what I gathered back then...
Why Saint John, NB.
lots of jobs, HUGE oil refinery, proposed 2nd refinery, US is hungry for more energy and prefers Canada over most other nations, and lastly very cheap housing.
Property Analysis. (this was done in 2007 dec... the property has sold now)
I just went to MLS.ca and found a random listing for a duplex in Saint John:
http://www.mls.ca/PropertyDetails.a...pertyID=5921967
Interest rates are between 3.5-6.25% (in my opinion are pretty low and makes the properties there pretty affordable.)
Ref:
http://www.canequity.com/mortgage_services.stm
-(I’m not sure how accurate the site is nor how up to date it is)
Anyways, according to the mls listing... lets just round the price of the home to 100k. Assuming you don`t want to deal with CMHC, you put 25% down... which is a 25K investment.
You get a mortgage for 75k at let`s say 6.25% (highest rate found on the referenced site) your monthly payments turns out to be: $494.75 on a 25yr amoritization.
The upper floor rents for 500 and the lower floor for 800... that means you net $1350/month
Minus property taxes and maintenance fee`s (I`m just guessing a number around $300/month) you walk away with over $550 per month... that`s a $6600/yr if it`s rented out year round. (26.4% ROI!)
Being less optimistic and let`s say you only get 8/12 months occupied you still end up with 4400/year +/- (cashflow) that alone is a 17.6% ROI… (and that`s not even including possible appreaciation of the property or the principle you pay off your mortgage) which is huge- compared to
mutual funds.
Unemployment rate as of Oct 07 is 5.1% which is still less than the national average at 6.1%... which means that there are jobs that are pulling more people into the area...
Ref:
http://www.rbc.com/economics/market/pdf/citytrend.pdf
(calgary is at 3.2 or 3.1)
I’m not familiar with the economics there, so I wouldn’t know how much you would expect to gain/lose with respect to appreciation.
But by just looking at the possible cashflow alone your making 18% ROI… in that sense I think it’s definitely a good investment… unless you’re expecting Real estate in the area to drop by 7% anytime soon. But like you said you are expecting more oil refineries… so appreciation should be above inflation rate.
The owners of NB.
http://www.irvingoil.com/company/erock.asp
Irving is brutal...
They own New Brunswick...
Some bad things.
The whole city is dirty...You have a MASSIVE oil refinery polluting the entire city! Not to mention the pulp mill and the other industrial area polluting the water/air.
Recent News.
2009 summer Irving will start building its 2nd refinery.
Some Advice.
I`ve been out to Saint John, NB and its something i`d advise before buying any properties. The houses and apartments are all very old (100years+). Property inspections are a MUST and do careful due diligence when renting your units (lots of bad tenants). Almost every house I was going through had people with pet cats. Expect a lot of cats. Some of the houses have asbestos so be careful to ask because insurance wont cover your house! Oil heating is used in many of the homes. Its very warm but is dependant on oil prices. Lots of buildings are heritage buildings which makes it very difficult to do any type of renovations (you need approval from a heritage council). Germain st is probably one of the best streets to buy on. Next is probably king st and areas around mcallister mall. Red head rd area is good if you are banking on renting to construction workers for the refinery. Also, rothesay area is for the upper middle class who are probably more financially secure and better tenants.
Hope this helps a bit!
