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How is Alberta rental housing holding up?

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Posted by Thomas Beyer

on Monday, 31 August 2015 14:52

At one point last week stocks were down 10% since May. Like many, I own some stocks and/or REITs, so scary days! Oil is down to $40 and likely to stay there for some time. So what are the implications for our main investment market - rental housing?

I phoned a few of our on-site building managers this week and asked them:

  • Is the rent down 10% ?  Answer: "No, it is flat and renovated suites are up"
  • Did 10% of tenants leave?  Answer: "No, why?"
  • Are you sure the building vacancy hasn't moved to 10% over the last 2-3 months?  Answer: "No, of course not"
  • Do competing landlords in the area offer incentives or are their rents down 10% or have they seen 10% vacancies?  Answer: "No, they are like ours, all full and same rent, more or less"

I then phoned a few multi-family realtors in Texas, BC and Alberta (three of the markets we'd typically buy in today) and asked:

What is for sale with all this doom-and-gloom, $40 oil and the new orange NDP government in town now in Alberta ?

  • Are building values coming down?
  • Are there any deals ?
  • We have money to invest and want to buy buildings 10% cheaper than a few months ago...

Answer, as you can imagine: "No! prices are still very strong and in MANY case actually have gone up as fearful investors leave the far more volatile industrial or office real estate space and look for safer heavens, let alone the spooked stock investors that lost 100's of billions the last few weeks in various stock markets around the world.

Sorry, no deals. Many folks even de-listed as they don't know where to put their cash after they sell their buildings".

Some doom-and-gloom in the apartment building space!

You see, residential rental real estate behaves fairly predictably in good times AND very predictably in bad times!

That is THE key reason we have made so much money in that space over the last decade and a half, and continue to like them it.

  • Even in a $40/barrel oil environment.
  • Even in an anti-business, tax-hiking, spend, spend, spend, debt-creation NDP environment (that may soon spread to the whole of Canada).
  • Even in a recession or a Dow Jones 1000 point in 2 day retraction environment. 

The chart below shows that even in a completely flat market you can make 6-12% by just holding and paying down your mortgage. As in PLUS 6-12%. Not minus.

debt reduction

The numbers listed above are even better now as mortgage rates are ridiculously. For example consider this scenario:

$1M asset, $250,000 (or 25% down) invested, with a yield or CAP rate of 5% and a mortgage rate at 2.5% you make $25,000 every year or 10% on the actual cash invested, without any equity upside. Usually we re-invest the cash-flow and force rents up in upgraded units for higher value down the road.

Thomas Beyer is the President and Founder of Prestigious Properties - www.prestprop.com

 



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Real Estate

Canada 6-City Housing & the Plunge-O-Meter

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Posted by Brian Ripley

on Monday, 10 August 2015 09:48

2746114

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One chart shows the average detached housing prices for Vancouver, Calgary, Edmonton, Toronto*, Ottawa* and Montréal* (the six Canadian cities with over a million people) as well as the average of the sum of VancouverCalgary and Toronto condo (apartment) prices on the left axis. On the right axis is the seasonally adjusted annualized rate (SAAR) of MLS® Residential Sales across Canada.

The other chart tracks the dollar and percentage losses from the peak and projects when prices might find support. 

....go HERE for Larger Charts more commentary and more articles



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Real Estate

If You Own This Expensive Asset, It’s Time to Sell

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Posted by Bill Bonner - Diary of a Rogue Economist

on Monday, 27 July 2015 06:14

2015-02-01-Average-Price-WebVANCOUVER, Canada – When we woke up in the morning, the TransCanada had already heaved itself over the highest point in the Rockies. 

Gone were the dense forests of the East. Gone were the wide-open spaces of Saskatchewan and Alberta. We were in British Columbia – rolling downhill, following the gray-green river downstream, through boiling canyons and lazy flats… 

Does any country have more bountiful natural resources than Canada? 

Timber, food, cattle, minerals, water – Canadians have it all. 

Too bad: When it comes to prosperity, there are few things as dangerous as inheriting money or having abundant natural resources. 

Gagging on Oil

Rather than making or inventing things… or providing useful services… a resource-rich economy tends to sell itself – by the ton. 

When commodities boom, the miners, farmers, and lumberjacks live high on the hog. But when they fall – the economy falls with them. 

Canada’s economic growth was negative in the first quarter. The country is the world’s tenth largest exporter of crude oil. And oil is in its worst downturn in 30 years, according to Morgan Stanley. 

The U.S. oil price has dipped below $50 a barrel. Along with it, the entire commodity complex – upon which much of the economy of Canada depends – could be dragged further down too. 

Why? 



Read more...

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Real Estate

What's Happening in Real Estate Markets Outside of Toronto & Vancouver?

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Posted by Real Estate Reporter for the GlobeandMail

on Thursday, 23 July 2015 06:54

imageTHE OTHER MARKETS

While most of the attention paid to house prices focuses on the big markets of Toronto, Vancouver and Calgary, there are other cities in Canada. Real estate reporter Tamsin McMahon looks at six smaller markets across the country that are being affected by changing economic conditions ....continue reading HERE


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Real Estate

Canada Poised For Biggest Housing Crash in History

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Posted by Canadian Real Estate Wealth

on Wednesday, 15 July 2015 12:08

Housing crashCanadian home prices are about to fall by nearly 50 per cent, leading to the biggest housing crash the country has ever seen – but this could present an opportunity for well-financed investors.

"Investors who own properties with substantial equity can hang on without any trouble and they will see a new supply of renters who will be looking to rent after being burned as owners," MacBeth, a portfolio manager at Richardson GMP in Edmonton told CREW.

.....read more HERE



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