Why is Edmonton the #1 top ten town?
- Thread starter nepoez
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QUOTE (nepoez @ Nov 21 2008, 06:35 PM) I went to the QS twice this year and was told Edmonton was the #1 top 10 town. I`m curious why it`s rated that since there`s no cash flow there in condos, single fam, up/down suited, even plexes.
Could anyone answer that?
Thanks
Just keep looking. There`s cashflow out there to be had! Be aggressive with your rents and consider allowing pets (a great way to increase your bottom line). The rental market is still very tight and while I don`t condone gouging, don`t be afraid to demand a premium rent for a premium unit.
Could anyone answer that?
Thanks
Just keep looking. There`s cashflow out there to be had! Be aggressive with your rents and consider allowing pets (a great way to increase your bottom line). The rental market is still very tight and while I don`t condone gouging, don`t be afraid to demand a premium rent for a premium unit.
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QUOTE (nepoez @ Nov 21 2008, 06:35 PM) I went to the QS twice this year and was told Edmonton was the #1 top 10 town. I`m curious why it`s rated that since there`s no cash flow there in condos, single fam, up/down suited, even plexes.
Could anyone answer that?
Thanks
keep looking .. write offers .. if you do not get at least 9 rejections on 10 offers you write you wrote either too few or at too high a price !
It is HARD WORK to find a decent asset .. but keep looking .. and you will find them !
How many offer did you write last month ? aim for 30 ... one / day ! did you ?
Could anyone answer that?
Thanks
keep looking .. write offers .. if you do not get at least 9 rejections on 10 offers you write you wrote either too few or at too high a price !
It is HARD WORK to find a decent asset .. but keep looking .. and you will find them !
How many offer did you write last month ? aim for 30 ... one / day ! did you ?
I would start writing offers left and right, but for those that I looked at to work I`ll be writing offers at 30% below asking price! Is that a good idea?
Thanks,
Nepoez
QUOTE (thomasbeyer2000 @ Nov 21 2008, 07:47 PM) keep looking .. write offers .. if you do not get at least 9 rejections on 10 offers you write you wrote either too few or at too high a price !
It is HARD WORK to find a decent asset .. but keep looking .. and you will find them !
How many offer did you write last month ? aim for 30 ... one / day ! did you ?
Thanks,
Nepoez
QUOTE (thomasbeyer2000 @ Nov 21 2008, 07:47 PM) keep looking .. write offers .. if you do not get at least 9 rejections on 10 offers you write you wrote either too few or at too high a price !
It is HARD WORK to find a decent asset .. but keep looking .. and you will find them !
How many offer did you write last month ? aim for 30 ... one / day ! did you ?
QUOTE (nepoez @ Nov 21 2008, 10:17 PM) I would start writing offers left and right, but for those that I looked at to work I`ll be writing offers at 30% below asking price! Is that a good idea?
Thanks,
Nepoez
Are you basing your cash flow calculations on 5% or 10% down payment and 25 year amortization? or are you basing it on 25% downpayment?
If 5% or 10% down payment, and 25 year amortization, there`s very little out there right now to make the cut.
If you`re using 20% down, and interest only payments, there are definitely possibilities.
Should Edmonton city council pass an amendment on January 19 2009 to a bylaw legalizing basement suites in older residential areas zoned RF!, you`ll have more choices since you`ll be able to purchase investment properties with 2 legal units for greater cash flow.
Thanks,
Nepoez
Are you basing your cash flow calculations on 5% or 10% down payment and 25 year amortization? or are you basing it on 25% downpayment?
If 5% or 10% down payment, and 25 year amortization, there`s very little out there right now to make the cut.
If you`re using 20% down, and interest only payments, there are definitely possibilities.
Should Edmonton city council pass an amendment on January 19 2009 to a bylaw legalizing basement suites in older residential areas zoned RF!, you`ll have more choices since you`ll be able to purchase investment properties with 2 legal units for greater cash flow.
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QUOTE If you`re using 20% down, and interest only payments, there are definitely possibilities.
Interest only? Not a good idea, if you ask me. You`re getting zero mortgage paydown - which, in essence, means speculation that the market`s going to go up, up, up.
What you could do, neopez, is explore other markets. Personally, I don`t see how it makes much sense, unless you`re getting a major discount, to buy in any of the areas which have had a huge run-up in price recently (Calgary, Edmonton, Regina), as most economists are pointing to a continued correction for at least the next 6 months and perhaps quite a bit longer. There are other places in Canada than Alberta which aren`t as subject to the boom and bust cycles, and where real estate is a lot more affordable relative to earnings.
Interest only? Not a good idea, if you ask me. You`re getting zero mortgage paydown - which, in essence, means speculation that the market`s going to go up, up, up.
What you could do, neopez, is explore other markets. Personally, I don`t see how it makes much sense, unless you`re getting a major discount, to buy in any of the areas which have had a huge run-up in price recently (Calgary, Edmonton, Regina), as most economists are pointing to a continued correction for at least the next 6 months and perhaps quite a bit longer. There are other places in Canada than Alberta which aren`t as subject to the boom and bust cycles, and where real estate is a lot more affordable relative to earnings.
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QUOTE (nepoez @ Nov 21 2008, 09:17 PM) I would start writing offers left and right, but for those that I looked at to work I`ll be writing offers at 30% below asking price! Is that a good idea?
Yes.
Not necessarily, just start writing at 30% down, but it`s not a bad idea. What you`re looking for is motivated vendors. People have other concerns when selling besides price.
Don`t be a dick about it, but get involved. Find out what you can do to help them, and in exchange they`ll cut the price. My fiancee got $5-7k off her condo because she was willing to let the sellers stay there until they bought a new place. Seeing as she didn`t plan to move in for another 4-5 months, it was a win-win.
Yes.
Not necessarily, just start writing at 30% down, but it`s not a bad idea. What you`re looking for is motivated vendors. People have other concerns when selling besides price.
Don`t be a dick about it, but get involved. Find out what you can do to help them, and in exchange they`ll cut the price. My fiancee got $5-7k off her condo because she was willing to let the sellers stay there until they bought a new place. Seeing as she didn`t plan to move in for another 4-5 months, it was a win-win.
Hi,
I`m basing my cash flow on income minus any expenses caused by an acquisition. That includes the interest from my down payment paid with HELOC. My HELOC is 4%, Mortgage is 35y at 5%(prime+1) . I`m using 20% as down payment althought 25-30% down will give more cash flow, it hardly makes a difference and not worth wasting the extra HELOC. The % of down payment would make a big difference if my down payment cames from cash. That`s not the case for me.
Here`s an example of a property in Edmonton I looked at http://myasset.no-ip.org/realPort/asset/ed...11dbd6fe0c90001
The rent is pretty realistic for a 4-plex. For that property to JUST break even, the price needs to go down from $635k to $550k~. And for Up/Down duplex where Up rents for 1200, down for 900, you will need to find one that costs $300k or less to get break even cash flow.
Jack, let`s say I invest in other areas. Will I be able to find 4-plexes at MUCH below $550k and also produces the same amount of rent, AND have a good future? If so, where is that? What drives the rent high? What`s the future? What`s kept the prices low so far?
There are probably places that give higher cash flow but I want both cash flow and appreciation. I don`t mind if things go down more the next 6 months or 16 months as long as the next 10 years is going to be much higher than the present, provided that there`s enough cash flow so I don`t need to take money out of my own pocket. If Edmonton will do well the next 5+ years I won`t mind going through another year of correction, as long as I have possitive cash flow, but I`m not seeing any. With that said, further correction is a good thing for me as it`s obviously not been corrected enough yet!
I`m basing my cash flow on income minus any expenses caused by an acquisition. That includes the interest from my down payment paid with HELOC. My HELOC is 4%, Mortgage is 35y at 5%(prime+1) . I`m using 20% as down payment althought 25-30% down will give more cash flow, it hardly makes a difference and not worth wasting the extra HELOC. The % of down payment would make a big difference if my down payment cames from cash. That`s not the case for me.
Here`s an example of a property in Edmonton I looked at http://myasset.no-ip.org/realPort/asset/ed...11dbd6fe0c90001
The rent is pretty realistic for a 4-plex. For that property to JUST break even, the price needs to go down from $635k to $550k~. And for Up/Down duplex where Up rents for 1200, down for 900, you will need to find one that costs $300k or less to get break even cash flow.
Jack, let`s say I invest in other areas. Will I be able to find 4-plexes at MUCH below $550k and also produces the same amount of rent, AND have a good future? If so, where is that? What drives the rent high? What`s the future? What`s kept the prices low so far?
There are probably places that give higher cash flow but I want both cash flow and appreciation. I don`t mind if things go down more the next 6 months or 16 months as long as the next 10 years is going to be much higher than the present, provided that there`s enough cash flow so I don`t need to take money out of my own pocket. If Edmonton will do well the next 5+ years I won`t mind going through another year of correction, as long as I have possitive cash flow, but I`m not seeing any. With that said, further correction is a good thing for me as it`s obviously not been corrected enough yet!
With this market I have been able to shave 5-10k off my last 2 purchases. However, with prime+1 interest, those discounts are no longer enough to cash flow anything I`ve seen lately.
However, since I have nothing to lose now, I could start making offers 50k below asking and see where it goes hahaa...
Correction: For the example I posted earlier, I`ll need 85k below asking price. Is that still recommended?
QUOTE (ChrisDavies @ Nov 22 2008, 11:21 AM) Yes.
Not necessarily, just start writing at 30% down, but it`s not a bad idea. What you`re looking for is motivated vendors. People have other concerns when selling besides price.
Don`t be a dick about it, but get involved. Find out what you can do to help them, and in exchange they`ll cut the price. My fiancee got $5-7k off her condo because she was willing to let the sellers stay there until they bought a new place. Seeing as she didn`t plan to move in for another 4-5 months, it was a win-win.
Correction: For the example I posted earlier, I`ll need 85k below asking price. Is that still recommended?
QUOTE (ChrisDavies @ Nov 22 2008, 11:21 AM) Yes.
Not necessarily, just start writing at 30% down, but it`s not a bad idea. What you`re looking for is motivated vendors. People have other concerns when selling besides price.
Don`t be a dick about it, but get involved. Find out what you can do to help them, and in exchange they`ll cut the price. My fiancee got $5-7k off her condo because she was willing to let the sellers stay there until they bought a new place. Seeing as she didn`t plan to move in for another 4-5 months, it was a win-win.
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QUOTE (Jack @ Nov 22 2008, 09:15 AM) ...There are other places in Canada than Alberta which aren`t as subject to the boom and bust cycles, and where real estate is a lot more affordable relative to earnings.
Such as ?
Usually prices are a lot lower because wages or economic potential is a lot lower .. such as PEI, Quebec, Ontario, .. so WHERE does it make more sense than in W-Canada ???
Such as ?
Usually prices are a lot lower because wages or economic potential is a lot lower .. such as PEI, Quebec, Ontario, .. so WHERE does it make more sense than in W-Canada ???
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QUOTE (nepoez @ Nov 22 2008, 11:43 AM) With this market I have been able to shave 5-10k off my last 2 purchases. However, with prime+1 interest, those discounts are no longer enough to cash flow anything I`ve seen lately.
However, since I have nothing to lose now, I could start making offers 50k below asking and see where it goes hahaa...
Correction: For the example I posted earlier, I`ll need 85k below asking price. Is that still recommended?
One thing I noticed on the analysis I missed earlier was that you`re budgeting 10% of cash flow for your reserve fund. That should be cash up front, not something out of your cash flow. That puts you right at the break-even point, unless I missed something.
However, since I have nothing to lose now, I could start making offers 50k below asking and see where it goes hahaa...
Correction: For the example I posted earlier, I`ll need 85k below asking price. Is that still recommended?
One thing I noticed on the analysis I missed earlier was that you`re budgeting 10% of cash flow for your reserve fund. That should be cash up front, not something out of your cash flow. That puts you right at the break-even point, unless I missed something.
10% of my rent each month goes into a reserve fund for unexpected(or expected unexpected) expenses.
QUOTE (ChrisDavies @ Nov 22 2008, 12:50 PM) One thing I noticed on the analysis I missed earlier was that you`re budgeting 10% of cash flow for your reserve fund. That should be cash up front, not something out of your cash flow. That puts you right at the break-even point, unless I missed something.
QUOTE (ChrisDavies @ Nov 22 2008, 12:50 PM) One thing I noticed on the analysis I missed earlier was that you`re budgeting 10% of cash flow for your reserve fund. That should be cash up front, not something out of your cash flow. That puts you right at the break-even point, unless I missed something.
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QUOTE (nepoez @ Nov 22 2008, 05:08 PM) 10% of my rent each month goes into a reserve fund for unexpected(or expected unexpected) expenses.
And I think what Chris means is that in general, it shouldn`t be coming out of your cashflow, but should be included in your costs when you purchase the building. If you need $3000 in your reserve fund, that should be included with the downpayment, lawyer`s fees, etc, right from the getgo, as opposed to saving $100 a month for 30 months. What if you need the money in the 2nd month? You won`t have had any time to build up your reserves to a point where they are useful.
Now, once you use your reserve fund, of course you should top it up with the cashflow, but you shouldn`t have to do it for the entire time you own the building.
Have a good one!
JohnS
And I think what Chris means is that in general, it shouldn`t be coming out of your cashflow, but should be included in your costs when you purchase the building. If you need $3000 in your reserve fund, that should be included with the downpayment, lawyer`s fees, etc, right from the getgo, as opposed to saving $100 a month for 30 months. What if you need the money in the 2nd month? You won`t have had any time to build up your reserves to a point where they are useful.
Now, once you use your reserve fund, of course you should top it up with the cashflow, but you shouldn`t have to do it for the entire time you own the building.
Have a good one!
JohnS
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QUOTE (JohnS @ Nov 22 2008, 04:38 PM) And I think what Chris means is that in general, it shouldn`t be coming out of your cashflow, but should be included in your costs when you purchase the building. If you need $3000 in your reserve fund, that should be included with the downpayment, lawyer`s fees, etc, right from the getgo, as opposed to saving $100 a month for 30 months. What if you need the money in the 2nd month? You won`t have had any time to build up your reserves to a point where they are useful.
Now, once you use your reserve fund, of course you should top it up with the cashflow, but you shouldn`t have to do it for the entire time you own the building.
Have a good one!
JohnS
Exactly right. I use 3 month of gross rent up front, and when it`s depleted then all the net positive cash flow goes back into it until it`s replenished. What happens if something breaks right off the bat?
Now, once you use your reserve fund, of course you should top it up with the cashflow, but you shouldn`t have to do it for the entire time you own the building.
Have a good one!
JohnS
Exactly right. I use 3 month of gross rent up front, and when it`s depleted then all the net positive cash flow goes back into it until it`s replenished. What happens if something breaks right off the bat?
OK ic. I do have a staying power fund of 3 months rent worth, for emergencies that could happen at the beginning. However I never thought of having a the reserve fund as a fund with a top, where you only start filling it when it`s not at the top. I`ve been just planning to keep the fund up right from the get go. Either way though, the reserve fund deduction should be calculated as a monthly expense as it will eventually happen even in your case and needs to be taken into the analysis.
With that said. It still doesn`t solve my cash flow problem
even if I don`t put that -$200/m of reserve fund in my analysis.
QUOTE (ChrisDavies @ Nov 22 2008, 05:05 PM) Exactly right. I use 3 month of gross rent up front, and when it`s depleted then all the net positive cash flow goes back into it until it`s replenished. What happens if something breaks right off the bat?
With that said. It still doesn`t solve my cash flow problem
QUOTE (ChrisDavies @ Nov 22 2008, 05:05 PM) Exactly right. I use 3 month of gross rent up front, and when it`s depleted then all the net positive cash flow goes back into it until it`s replenished. What happens if something breaks right off the bat?
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Hi Lucius,
Rents are still good here. Good units are still going extremely fast. I posted a vacancy for a very nice one-bedroom basement suite a block from NAIT and I got it rented for $800 plus 1/2 the utilities in six days. (To a non-student by the way)
And just as a point of non-scientific interest since there`s no way to really measure this - I still see tons of out of province license plates. People are moving because it`s better here than anywhere else.
We signed a six-month extension on a three-bedroom half-duplex in Fort Saskatchewan Friday. $1795 plus utilities.
Now, I am having difficulty with a two-bedroom basement suite that is probably a five or six out of ten. But if the suite was better I`m pretty confident I`d have more luck. It`s got a lousy layout and some cosmetic issues that are expensive to overcome.
Don`t give up!
Jason
Rents are still good here. Good units are still going extremely fast. I posted a vacancy for a very nice one-bedroom basement suite a block from NAIT and I got it rented for $800 plus 1/2 the utilities in six days. (To a non-student by the way)
And just as a point of non-scientific interest since there`s no way to really measure this - I still see tons of out of province license plates. People are moving because it`s better here than anywhere else.
We signed a six-month extension on a three-bedroom half-duplex in Fort Saskatchewan Friday. $1795 plus utilities.
Now, I am having difficulty with a two-bedroom basement suite that is probably a five or six out of ten. But if the suite was better I`m pretty confident I`d have more luck. It`s got a lousy layout and some cosmetic issues that are expensive to overcome.
Don`t give up!
Jason
QUOTE (nepoez @ Nov 22 2008, 12:39 PM) Hi,
I`m basing my cash flow on income minus any expenses caused by an acquisition. That includes the interest from my down payment paid with HELOC.
Hi nepoez,
If you are looking for property which will cover your interest from your down payment paid with heloc , plus a 10% reserve fund, there is NOTHING in Edmonton which will be positive cash flow for you, at today`s current prices.
Better to recognize and acknowledge that now, and look in different areas. That way, you can channel your efforts in areas which may yield better results. It`s either that, or leave out the interest from your Heloc as an expense to be covered from cash flow. I don`t believe that the Rein analysis of cash flow, as outlined in the Quickstart program, includes this figure as part of the analysis. ( I stand to be corrected by other Rein members).
I`m basing my cash flow on income minus any expenses caused by an acquisition. That includes the interest from my down payment paid with HELOC.
Hi nepoez,
If you are looking for property which will cover your interest from your down payment paid with heloc , plus a 10% reserve fund, there is NOTHING in Edmonton which will be positive cash flow for you, at today`s current prices.
Better to recognize and acknowledge that now, and look in different areas. That way, you can channel your efforts in areas which may yield better results. It`s either that, or leave out the interest from your Heloc as an expense to be covered from cash flow. I don`t believe that the Rein analysis of cash flow, as outlined in the Quickstart program, includes this figure as part of the analysis. ( I stand to be corrected by other Rein members).
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QUOTE Usually prices are a lot lower because wages or economic potential is a lot lower .. such as PEI, Quebec, Ontario, .. so WHERE does it make more sense than in W-Canada ???Well, why not Manitoba? I made a housing affordability post a few weeks ago, and Manitoba`s real estate was consistently trading at about 4 times average annual earnings, whereas Alberta`s was consistently something like 9, and B.C.`s was about 12. To me, this is a very revealing statistic, and it tells which markets are inflated and which has potential to grow. Example: if the average house in B.C. is trading at 12 times average annual earnings, how long do you think that can sustain? People just can`t afford it, and the banks are no longer willing (thank goodness) to allow people to vastly over-lever themselves.
As for the earnings argument - OK, that`s true, average earnings are highest in Alberta - but, so is their provincial Consumer Price Index. It costs $124.10 for a basket of goods in Alberta, compared to $114 in B.C., $115 in Manitoba, etc. This means that the cost of living is higher, in terms of routine, everyday purchases (food, energy, etc.). Also, in the affordability index, it was revealed that you earn 20% more annually on average in Albera relative to Manitoba, which is great - but, the real estate, on average, is about 80% more expensive! How is that variance explained? The underlying economics? Fine, but Albertans should just hope that this beatdown that the O&G industry is taking lately doesn`t persist, as the province is very much tied to its success.
What`s Manitoba tied to? Off the top of my head, I can`t really think of anything. Yet, they somehow quietly, consistently continue to perform respectably from an economic standpoint. Low cost of living, responsible wages, responsible house prices, low unemployment, etc. I haven`t done too much of a drilldown analysis on the province as an investment platform, but the affordability index spoke volumes, to me, anyway. That`s what it`s all about these days - affordability. No longer will people be able to get these huge, many-times-earnings mortgages, now will they want to! They`ve seen what`s gone on in the U.S., and I think people are going to become more risk-averse when it comes to real estate purchases and over-leveraging themselves with mortgages - and what province provides a safe haven for that, with many other strong economics? That`d be Manitoba.
As for the earnings argument - OK, that`s true, average earnings are highest in Alberta - but, so is their provincial Consumer Price Index. It costs $124.10 for a basket of goods in Alberta, compared to $114 in B.C., $115 in Manitoba, etc. This means that the cost of living is higher, in terms of routine, everyday purchases (food, energy, etc.). Also, in the affordability index, it was revealed that you earn 20% more annually on average in Albera relative to Manitoba, which is great - but, the real estate, on average, is about 80% more expensive! How is that variance explained? The underlying economics? Fine, but Albertans should just hope that this beatdown that the O&G industry is taking lately doesn`t persist, as the province is very much tied to its success.
What`s Manitoba tied to? Off the top of my head, I can`t really think of anything. Yet, they somehow quietly, consistently continue to perform respectably from an economic standpoint. Low cost of living, responsible wages, responsible house prices, low unemployment, etc. I haven`t done too much of a drilldown analysis on the province as an investment platform, but the affordability index spoke volumes, to me, anyway. That`s what it`s all about these days - affordability. No longer will people be able to get these huge, many-times-earnings mortgages, now will they want to! They`ve seen what`s gone on in the U.S., and I think people are going to become more risk-averse when it comes to real estate purchases and over-leveraging themselves with mortgages - and what province provides a safe haven for that, with many other strong economics? That`d be Manitoba.