Redwater, Alberta...

[NJang]

Hi all,

I know NE Edmonton and Ft. Sask is the place to be; however, has anyone done much in Redwater? I had this `risky` land development proposition sent to me for a project in Redwater that is projecting 100% ROI in 2 years. I`m nervous when it comes to land development as there are no cash flows and one has to carry in order to get ROI on the back-end. I`m curious to know others` experiences in this area within the Industrial heartland.

Thx a bundle!

Norm...

 

[Thomas Beyer]

100% in 2 years is doable .. with the right partner !

land or construction projects are more risky .. negative cash-flow (taxes !!) and development costs .. and must have a sale in a few years .. but if well executed and in the right growth path of a city (which Redwater certainly is .. as it is in "upgrader alley") it could work ..

Some project in Edmonton area are now on hold .. some delayed .. some stalled due to high cost and low US dollar ... so for Canadian companies an investment in oil/gas in TX or CO makes more sense at the moment .. Encana just announced a billion $ investment in eastern Texas ... so expect the oil sands boom in AB to take a breather .. but take longer .. so long term AB is in great shape .. but there is short-term risk (high prices, slower in-migration, high land cost, high labour cost, many jobs elsewhere such as East-Coast of Canada, price correction downwards for a year or 2 ..)

if the developer is trustworthy you will likely not lose any money on a land deal (unless the going-in price is inflated .. a common "trick") .. but it may take many more years for it to be really profitable .. and some development projects will go bankrupt in AB due to underfunding and much much tighter lending criteria by banks !

 

[stepchuk]

Speaking simply from a personal perspective, we have found it slightly more difficult to rent out a single family home in Redwater vs. ones that we own in Fort Saskatchewan or NE Edmonton. This of course may change as the upgrader construction starts to go full swing. It sounds as if your project is something entirely different, but this has been our experience in the area.

 

[greghead]

QUOTE (thomasbeyer2000 @ Nov 23 2007, 08:50 PM) 100% in 2 years is doable .. with the right partner !

land or construction projects are more risky .. negative cash-flow (taxes !!) and development costs .. and must have a sale in a few years .. but if well executed and in the right growth path of a city (which Redwater certainly is .. as it is in "upgrader alley") it could work ..

Some project in Edmonton area are now on hold .. some delayed .. some stalled due to high cost and low US dollar ... so for Canadian companies an investment in oil/gas in TX or CO makes more sense at the moment .. Encana just announced a billion $ investment in eastern Texas ... so expect the oil sands boom in AB to take a breather .. but take longer .. so long term AB is in great shape .. but there is short-term risk (high prices, slower in-migration, high land cost, high labour cost, many jobs elsewhere such as East-Coast of Canada, price correction downwards for a year or 2 ..)

if the developer is trustworthy you will likely not lose any money on a land deal (unless the going-in price is inflated .. a common "trick") .. but it may take many more years for it to be really profitable .. and some development projects will go bankrupt in AB due to underfunding and much much tighter lending criteria by banks !

Thomas, you seem to be doing alot of buying in the US. I am interested in speaking to you about the best way to set-up the corporate structure to hold US properties in for Canadians. Any advice would be greatly appreciated.
Thanks,

Greg.

 

[peterwardell]

QUOTE (NJang @ Nov 23 2007, 02:58 PM) Hi all,

I know NE Edmonton and Ft. Sask is the place to be; however, has anyone done much in Redwater? I had this `risky` land development proposition sent to me for a project in Redwater that is projecting 100% ROI in 2 years. I`m nervous when it comes to land development as there are no cash flows and one has to carry in order to get ROI on the back-end. I`m curious to know others` experiences in this area within the Industrial heartland.

Thx a bundle!

Norm...

Hi Norm,

I work for a company that`s developing land in Redwater. We are half way through our two year time frame, and without any further appreciation we are still looking at 150% ROI.

Feel free to call if you have any further questions. 937 4888.

Cheers!