Location Investing

[Hutchym]

Hello All!,

I thought I`d throw this discussion out there for some more experienced investors to weigh in on this subject. I live in Southwestern Ontario and have thought of some investment in the Sarnia to London Areas. The specific topic I thought would be interesting is on why Sarnia having some of the cheapest real estate in the country is not considered as much as other places. There must be something I`m not looking into. Here are some reasons why is may be a good market to invest in:

- Low intitial investment (compared with other cities)
- Major employers (petro chemical, refining, power production, small auto)
- Ontario College
- US border exists within 2 minutes Sarnia-Point Edward.
- According to StatsCanada high percentage (up to 60%) rent.
- major freeway 402 goes through center of Sarnia
- Located on Lake Huron and St. Clair River

There are a few other reasons that do not come to mind at this time.

A few negative reasons to not invest in property here may be:

- Stagnant population
- Air Pollution worse than many urban centres (petrochemical and refinery flare stacks, Coal Generating station etc)
- Access amount of cheap land to develop vs low development pace
- High Construction contracting population ( Lay offs when no work)
The above are some reasons I`ve already been told by would have been investors.

If anyone can think of any other reasons Why or Why Not to invest in Sarnia LAmbton, It would be nice to throw some ideas around!

Also I have been looking at Chatam-Kent as a possible location. If anyone knows Chatam to a good extent I wouldn`t mind learning a little about that area as well.

Mike

 

[bizaro86]

I would expect the refining industry to continue with its current employment levels. It`s essentially impossible to build a new refinery in N. America, so the ones that are around will probably stay. Refining margins have been quite low (by historical standards) the last few years, so I wouldn`t expect much in the way of expansions/new hiring. If that changes and margins go up it could be a positive catalyst for expansion in the area.

One potential negative catalyst is the decline of conventional natural gas in Alberta, and the move to export Alberta raw materials directly to the US, not via Ontario. For examples of this consider the Alliance gas pipeline, which has caused the TCPL mainline (which ends at Sarnia) to be under-capacity. This may starve the petrochemical industry of feedstock.

The same might be true of liquids (oil) pipelines, after the Keystone and clipper projects get built. That could pull oil off of the pipeline to Ontario, which would also hurt the chemical industry in the area.

I`m far from an expert on Sarnia (or anywhere in ON) but those are my thoughts nonetheless.

Regards,

Michael

 

[markl]

Hi Mike,

One of my clients who is currently investing in Hamilton grew up in the Sarnia area and has a number of rental properties there. They make him ok cash flow but appreciation has been nil. This is part of his over all portfolio and he is happy with them. If you would like send me an email and I can get you guys in contact. I am not sure he makes it on this board all that often.

Regards,