investing in North East Edmonton.

[blissedheart]

Hi there,
I would really lik to understand exit stragies.
I have picked a prime invetor area and prime investor real estate type : town homes.

If we are buying at todays prices of approximately $250,000 and renting it out at 1300 per month.

the questions are with an * 8 increase per annum in five years we are looking at a price of $ 367, 332.
How do we estimate the rental increase during that period.

After 5 years , who would we be selling this town home to with the majority of owners being investors in this area?

what will be the economic indcators do we look for in an exit strategy.
with thanks
laila

 

[ChrisDavies]

QUOTE (blissedheart @ Feb 25 2008, 01:31 PM) Hi there,
I would really lik to understand exit stragies.
I have picked a prime invetor area and prime investor real estate type : town homes.

If we are buying at todays prices of approximately $250,000 and renting it out at 1300 per month.

the questions are with an * 8 increase per annum in five years we are looking at a price of $ 367, 332.
How do we estimate the rental increase during that period.

After 5 years , who would we be selling this town home to with the majority of owners being investors in this area?

what will be the economic indcators do we look for in an exit strategy.
with thanks
laila


Hi Laila,

The rental increases are dictated by two things in the Edmonton area.

First, when you last increased the rent. We`ve been used to doing this twice a year until just a year and a bit ago, and now you`re limited to one increase every 12 months. This means you`ve got to try and predict where the rental market will be in a year`s time, and balance the increase with the probability of your suite going vacant (your existing tenant leaving or being unable to quickly attract a new quality tenant). Second, the market. This includes the availability of rentals in your socio-economic slot, the area, the price of homes, net migration, the weather, the price of oil, the price of tea, and whether or not the Oilers are winning.

For the purposes of planning, use a number like $100 per year (or 5-10%), which is a reasonable projection. Edmonton`s seen a very rapid increase in rents over the couple years, but always use a simple number in your model. Two things to remember: Edmonton`s rents tend to follow Calgary`s, but on a 18 month delay; always consult with your property manager (and listen to their advice) when setting new rents. Do your own research (which includes physically checking out the buildings).


As for exit strategy, listen to the research that is coming out of REIN. It is worth it to have a peek at the Alberta 2020 video that someone posted here a couple days ago. I also posted it on www.chrisdavies.ca.

Cheers,

Chris

 

[Thomas Beyer]

markets do not always go up .. and they don`t always go up in a straight line ..

values frequently rise faster than rents .. and Edmonton rents have gone up 50% in 3 years and are now flat.

Also to consider is that Edmonton currently has NEGATIVE migration: more people leave than come in !

Do NOT assume an 8% annual increase. This may happen .. or it may not ..

If you cash-flow .. hold onto it .. and you will likely come out OK / higher 5 years from now. How high ? Anyone`s guess ... I`d say: 5% annually is a decent assumption - ON AVERAGE !

Keep in mind: People have drowned in rivers 1 foot deep on average !

 

[RebeccaBryan]

Thanks for the utube Chris, I sent it to all my friends on facebook.

 

[blissedheart]

QUOTE (blissedheart @ Feb 25 2008, 02:31 PM) Hi there,
I would really lik to understand exit stragies.
I have picked a prime invetor area and prime investor real estate type : town homes.

If we are buying at todays prices of approximately $250,000 and renting it out at 1300 per month.

the questions are with an * 8 increase per annum in five years we are looking at a price of $ 367, 332.
How do we estimate the rental increase during that period.

After 5 years , who would we be selling this town home to with the majority of owners being investors in this area?

what will be the economic indcators do we look for in an exit strategy.
with thanks
laila

 

[blissedheart]

thankyou for all your imput and the video.

please can anyone advise who will be a potential buyer for my town house in 5 years with the following projections
todays price
$250,000 with a rent of 1300
five years price *5 % appreciation $ 335,000 with a rent of maybe 1800 per month ( is that feasible you think?, what sort of fundamentals will support this rent in terms of affordability, intrest etc)

Who then will i be selling to when the market is predominatly investor based.
the property now has aged five years , built around 1979.
Thanks for all the input
laila