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Edmonton condo/apartments

N

nepoez

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Mar 29, 2008
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Hi all, it`s me newbie again.

Since my first REIN QS in April, I`ve been looking for cash flow properties, specifically 3br condos/apartments or town houses in Edmonton. I`ve got a realtor whose also a REIN member helping out. It is now July and we still can`t find any that cash flow.

I`m financing the 20% down payment with a HELOC. For a prop around 200k this brings expense up just 150 a month compared to using real cash from my pocket.

I believe Edmonton is still the place I want to invest in. However, should I give up on true cash flow? Am I just not looking hard enough? Will the prices go down more due to the huge supply, allowing me to wait a little longer to purchase properties that cash flow?

Any advice would be greatly appreciated! As I am started to feel discouraged.
 
Hold out for cash flow or start looking elsewhere. They are there but you need to find a motivated seller. You have not been looking for that long considering the market.
If you do not have positive cash flow you will not be in this business for very long.
How many offers have you made to this date.
 
Many investors are still buying positive cashflow properties in Edmonton. At 200k you don`t need huge rent to make it work as long as you are designing your investment correctly.

Are your assumptions accurate? Where are you getting them from?
-Rent
-Vacancy
-Maintenance

Are you using 35 or 40 year mortgage amortization figures?
 
Be patient!

Remember the first 3 properties are the hardest and after that is becomes eaier (not easy)

You have some great advice from established members so LISTEN to that. I know of one guy who spent a year looking for the right property and now he has many properties.

Want to change the results then change the actions.

  • Work harder
  • Look somewhere else
  • Get a different realtorAsk more questionsDont accept NoThink outside the box
and dont give up!!!!!!
 
QUOTE (nepoez @ Jul 11 2008, 09:29 AM) Hi all, it`s me newbie again.

Since my first REIN QS in April, I`ve been looking for cash flow properties, specifically 3br condos/apartments or town houses in Edmonton. I`ve got a realtor whose also a REIN member helping out. It is now July and we still can`t find any that cash flow.

I`m financing the 20% down payment with a HELOC. For a prop around 200k this brings expense up just 150 a month compared to using real cash from my pocket.

I believe Edmonton is still the place I want to invest in. However, should I give up on true cash flow? Am I just not looking hard enough? Will the prices go down more due to the huge supply, allowing me to wait a little longer to purchase properties that cash flow?

Any advice would be greatly appreciated! As I am started to feel discouraged.


You can get a 3 br townhouse which will cash flow if:
* You get it for about $210,000 max.
* Your tenants pay the utilities i.e. condo has its own furnace and hot water tank, or utilities are built into a low condo fee.
* You use a Heloc on your purchase and pay interest only payments.
* Your rent has to be in the $1200 to $1300 price range.
* Your condo fees need to be lower than $200 per month.
* At $210,000 purchase price, 80% financing would be $168,000. Using a Heloc at 4.75% rate, monthly payment interest only would be $665.00. Assume condo fees of $175, taxes at $140, tenant pays utilities, maintenance at 2% ($25), vacancy rate of 5% ($62), Management expenses at 10% ($125)would give you about $1192 in expenses. Add $158 for your down payment Heloc interest, and you would need $1350 per month in rent to cover.

However, I believe that your definition of cash flow is that the rent has to cover everything PLUS the $158 or so per month that you would be paying on your down payment amount from your Heloc. My understanding from the Cash Flow Analysis sheet is that the Analysis does not include this amount.
 
Hi All!

Thanks for all the feed back. Samwei, I finally found one last week and made an offer on it. Today I looked this post up and saw your description below and everything matches my analysis sheet. It is also a 3br town house. It doesn`t cover my heloc payment fully but it`s almost break even at -$50/m so I still find it to be a good deal. The property is in really good shape, shows really nice, located in zone 35, curb appeal is average not ghetto nor super. Built in mid 70s.

This is my first Alberta investment. What do you guys think of my move. Bad? Good? Any comments and feed back would be interesting to hear.

Thanks!



QUOTE (samwei @ Jul 14 2008, 03:17 AM) You can get a 3 br townhouse which will cash flow if:
* You get it for about $210,000 max.
* Your tenants pay the utilities i.e. condo has its own furnace and hot water tank, or utilities are built into a low condo fee.
* You use a Heloc on your purchase and pay interest only payments.
* Your rent has to be in the $1200 to $1300 price range.
* Your condo fees need to be lower than $200 per month.
* At $210,000 purchase price, 80% financing would be $168,000. Using a Heloc at 4.75% rate, monthly payment interest only would be $665.00. Assume condo fees of $175, taxes at $140, tenant pays utilities, maintenance at 2% ($25), vacancy rate of 5% ($62), Management expenses at 10% ($125)would give you about $1192 in expenses. Add $158 for your down payment Heloc interest, and you would need $1350 per month in rent to cover.

However, I believe that your definition of cash flow is that the rent has to cover everything PLUS the $158 or so per month that you would be paying on your down payment amount from your Heloc. My understanding from the Cash Flow Analysis sheet is that the Analysis does not include this amount.
 
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