Opinions of future of Alberta

RodFlint

New Forum Member
Registered
Sep 24, 2013
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#1
Just looking for some opinions of the future of Alberta Real Estate and just the economy in general. I am a reasonably young successful oil field professional that has a small portfolio (4 Suited Homes) that I started buying in 2011. With the C-69 bill looming and predictions of another liberal majority government in 2019 @ 37 years old I have never felt so uncertain about my future. With wages in my industry on a steady decline and property values falling as fast as the rents I find myself after 7 years of Realestate investing with not much more than the equity I bought with my hard earned cash.

I know real estate goes it cycles but I can't help but feel like this time its different with everyone from the east & west working to completely shut down our energy sector. I don't think I have had a day go by in the last 6 months that I haven't thought about having a fire sale on my property and just sitting on cash to remove the stress of these difficult times.
 

Martin1968

Frequent Forum Member
Registered
Jan 22, 2017
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#2
Just looking for some opinions of the future of Alberta Real Estate and just the economy in general. I am a reasonably young successful oil field professional that has a small portfolio (4 Suited Homes) that I started buying in 2011. With the C-69 bill looming and predictions of another liberal majority government in 2019 @ 37 years old I have never felt so uncertain about my future. With wages in my industry on a steady decline and property values falling as fast as the rents I find myself after 7 years of Realestate investing with not much more than the equity I bought with my hard earned cash.

I know real estate goes it cycles but I can't help but feel like this time its different with everyone from the east & west working to completely shut down our energy sector. I don't think I have had a day go by in the last 6 months that I haven't thought about having a fire sale on my property and just sitting on cash to remove the stress of these difficult times.
I think we all feel the effects of a very slow economy here in Alberta. Everything is just a bit tougher, filling your places with good tenants, maintaining the rent levels, increasing interest rates etc.
And in a market with lots of rental inventory, your basement suites especially are a little harder to rent.

As far as your personal situation and selling off props, ultimately that’s your own decision however if you have the means and finances to hang in there I would advice to hold on to what you have. Indeed real estate, just as many other market you can invest in, is cyclical, so count on this lasting for another 3 to 4 years. Even a change in government will likely not have an immediate effect on markets.
Any type of investing you do you need to be in it for the long run to make it worth your while.

Goes to show though that in times like these, over-leverage, refi,s and so on of rental properties in order to grow fast can bite you in the butt. (not saying you did that, more a general and personal statement)
In your case, I would make sure that you can carry all your cost for running the properties at a 50% occupation rate. Something I strongly believe in is to plan for tough times.
If really needed then maybe sell of 1prop to start off with. Free up some cash. But do it calculated and not because of panic.
Things will turn around again, they always do. Hope it helps and wishing you all the best.
 
Likes: KhoaN

ThomasBeyer

Senior Forum Member
REIN Member
#3
Improve your liquidity. REITs with a 5-8% coupon paid monthly are good liquid options approximating RE returns without the work and mortgage qualification pain. You can buy them on margin if you want to to enhance return, but with increased risk and volatility.

Consider selling a house or 2. Consider buying elsewhere, say Kamloops, Vancouver Island, S-Okanagan or booming US cities of which there are many. Alberta values and rents likely flattish to 2021. No specific Alberta Advantage any more. Except higher wages, no property transfer taxes and no PST. BC growing as well as many US cities. Look there.

Budget flat rents and values and look at total return, mainly off mortgage paydown. Still a decent ROI in most cases. What is better: Cash-Flow or Maximum ROI ? http://myreinspace.com/threads/what-is-better-cash-flow-or-higher-roi.26596/ Cash-flow does NOT make you rich, but it allows a sustained ownership. Appreciation and mortgage paydown (by others) is where you get wealthy.

Eventually we will get another pipeline as even the federal Liberals are aware of the WCS-WTI differential and vast increase potential in oil and gas production capacity. Manitoba, Quebec and recently Ontario turned centre right as will Alberta in May 2019.
 

Matt Crowley

Senior Forum Member
Registered
Dec 14, 2013
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Calgary
#4
@RodFlint this time is different. My take is that things can actually turn around very quickly for Alberta if the right political changes were made:

1) NDP out of office (this seems likely based on recent polls)
2) Liberals take a democratic stance on pipelines. Bill C-69 is a bit duplicitous in my opinion to be federally backing / insuring Keystone while stalling progress. I think federally not much is going to change. The pain is not being felt in the east and BC is celebrating Kitimat and $40 billion recent investment. Trudeau wants to play both sides of the fence and bring everyone together but this isn't democratic when the majority says let's move forward.

The question to me is, is Alberta willing to flex its economic muscles to move something forward? It doesn't seem that Canada appreciates the extent to which it needs us. We need a provincial leader that basket 'Alberta First'. This may mean turning off the oil taps to much of Canada and let the prices spike.
 
Likes: Novice

Tim Blake

New Forum Member
REIN Member
Nov 17, 2010
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Grande Prairie Ab
#5
Hang in there !
If you NEED TO sell 1 or 2 to do so but if you don't need to just hang on . 10 years from now if you still have them you will be glad you did.
We have had no appreciation in many parts of Alberta in a decade
The world still needs our products and we will eventually get through this pipeline mess. There is areas that are very busy now (Grande Prairie ) and we are seeing rents back close to peak levels and our real estate prices are moving upward
Construction costs keep going up appreciation will come as long as you can hang on to your properties
 

eatarini

Betty Anne Tarini, Realtor, Baxter and Associates
REIN Member
Oct 18, 2007
17
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Calgary, AB
#7
We have an eagle eye on cutting costs to make up for lower rents and increasing interest rates and property taxes. However, it appears that increasing interest rates and the tightening up of mortgage lending rules is making it harder for first time home buyers to get into the market. Consequently, they stay in the rental pool longer. Of our 65 doors, we are 100% full, with no notices this month, and we have been cautiously increasing our rents for December, January, and February - so far, so good!