Will you buy a property only cash flow but no appreciation potential?

Cathy2681

New Forum Member
Registered
I am currently looking at a duplex that the seller suited and renovated. Here is the pros and cons about this property

Pros:
- good condition
- illegal suite but really good work
- with conservative estimate on rental price I will have $150 net cash flow after debt servicing
- seller is willing to lease back the property right away with one year lease
- estimate repair cost is very low maybe just $3000 towards the window in 2-5years
- close to ring road

Cons:
- it is in older and less desirable neighborhood in calgary so I am not expecting much price appreciation within near future
- rental market may continue worsen in calgary

What do you think about this Propery?
 

Matt Crowley

Senior Forum Member
REIN Member
Great time to buy in Calgary.

Illegal suite = unfunded liability. Eventually the city may catch you, shut you down, and require you to upgrade.

Now is the time to buy in a great area! 20% vacancy downtown Calgary right now. There are deals out there on rentals. The quality of your home is the quality of your customer. Do you want to deal with the customer that will live in that home in that area?

Vacancy is a temporary investment in Calgary or any downturn market. Invest in your tenant profile.

It is impossible for any market-priced property in Calgary right now not to have appreciation potential. In a downturn, buy closer to the CBD (central business district) and further away from the suburbs. If we hit a rougher patch ahead (I'm not sure we will), you do not want to be owning out in the suburbs. Calgary isn't about to pick up its heels and leave. Own closer to where people will always demand to live. In a total crises, the suburbs hollow.
 

Rickson9

Senior Forum Member
Registered
Can we please get an example, numbers-wise of a 'great' deal that can be had in a good area of Calgary? Thanks!
 

Rickson9

Senior Forum Member
Registered
What price point were you referring to in your post?

Great time to buy in Calgary.

Now is the time to buy in a great area! 20% vacancy downtown Calgary right now. There are deals out there on rentals.

I can't tell if your post was satire or serious?
 

Thomas Beyer

Senior Forum Member
REIN Member
.. What do you think about this Propery?

What is the price vs. comparables ?

If you say duplex you mean 2 units or 1/2 a side-by-side house ?

What rent can you realistically get ?

What else do you own in Calgary ?

What is your landlording experience ?
 

Kir Luong

Inspired Forum Member
Registered
Illegal basement suite in duplex might not be possible even if you try to legalize it due to zoning and density issues. Check with the city.
It would be bad if you got shut down only to find you can't even have a suite there even if you pay for the permits.
 

RedlineBrett

Senior Forum Member
REIN Member
Great time to buy in Calgary.

Illegal suite = unfunded liability. Eventually the city may catch you, shut you down, and require you to upgrade.

Now is the time to buy in a great area! 20% vacancy downtown Calgary right now. There are deals out there on rentals. The quality of your home is the quality of your customer. Do you want to deal with the customer that will live in that home in that area?

Vacancy is a temporary investment in Calgary or any downturn market. Invest in your tenant profile.

It is impossible for any market-priced property in Calgary right now not to have appreciation potential. In a downturn, buy closer to the CBD (central business district) and further away from the suburbs. If we hit a rougher patch ahead (I'm not sure we will), you do not want to be owning out in the suburbs. Calgary isn't about to pick up its heels and leave. Own closer to where people will always demand to live. In a total crises, the suburbs hollow.

I agree with a lot of what you have here save the knock on the suburbs - Calgary was developed as a white collar home owner town. It means we have a very limited supply of purpose built rental stock. Almost all of it is either downtown or in the very old communities close to downtown. Yet the vast majority of our population lives in the suburbs because that's where the single family homes are, and that's where the schools are. I agree that the very new communities will suffer, but so much of Calgary is suburban that I think it's unlikely we'll see a large move inner-city.
 

RE123RE

Inspired Forum Member
Registered
Great time to buy in Calgary.
Now is the time to buy in a great area! 20% vacancy downtown Calgary right now. There are deals out there on rentals.
Hi,
Can you give an example or two of a "Great deal" currently for sale there.
Please include asking price, property type and your expected rent.
Thanks
 

Developer

New Forum Member
Registered
Will you buy a property only cash flow but no appreciation potential? - Yes, if it gives you a good yield and you think it is a desirable place that you will be able to keep full. In general I wouldn't bank on property values to appreciate more then inflation in a lot of Canadian markets unless you can add value to the property in terms of renovation, redevelopment etc or if you buy after a market correction
 

Sherilynn

Real Estate Maven
REIN Member
I am currently looking at a duplex that the seller suited and renovated. Here is the pros and cons about this property

Pros:
- illegal suite but really good work
- with conservative estimate on rental price I will have $150 net cash flow after debt servicing

I wouldn't buy any suited property where it was impossible to legalize the suite. If the suite was inspected and you were forced to shut it down, would the property still cashflow? If not, you'd have no upside.

$150 net cashflow on a suited property is very low. Not worth the risk, IMO.
 

RE123RE

Inspired Forum Member
Registered
"Will you buy a property only cash flow but no appreciation potential?"
Hi,
Spoiler: all properties have appreciation potential and all appreciation potentials are just estimates.
Thanks
 

nubiwan

Inspired Forum Member
Registered
I see the term suite used a lot on here. What's the deference between a suite and an apartment. If I have a residential property, with 2 meters, registered with the town, then I call it a 2 apartment home, where I come from. If I called it a suite, then people might expect a couch and a bed, or a bellboy by the front door. If I called my 2 apartment home suites, then people would, quite literally, laugh at me. Exactly what are people referring to as 'suites' on here? They sound awful ritzy.

Stories of custodians and janitors, sanitary engineers and bin men abound..... :)
 
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RE123RE

Inspired Forum Member
Registered
I see the term suite used a lot on here. What's the deference between a suite and an apartment. If I have a residential property, with 2 meters, registered with the town, then I call it a 2 apartment home, where I come from. If I called it a suite, then people might expect a couch and a bed, or a bellboy by the front door. If I called my 2 apartment home suites, then people would, quite literally, laugh at me. Exactly what are people referring to as 'suites' on here? They sound awful ritzy.

Stories of custodians and janitors, sanitary engineers and bin men abound..... :)
Hi,
HA Ha :)
Thanks
 
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