I have been on the fence about sharing my "First REI Success Story" as I'm not one for the limelight, but I felt it was important to celebrate small victories and perhaps my small success will motivate other would-be investorsâ¦so here it goes!
I moved to Calgary four years ago for a job in the Energy sector after finishing my university degree. After renting for the first 3 years, I decided I needed to stop renting and start building equity. I saved up and bought my first property; an Inner City condo. I suppose it would be important to mention that this first purchase was not made with real estate investing in mind (ie I did not base this purchase on whether this property was a strong investment)
- Purchase Date: May 2015
- Purchase Price: $266,000
- 2 bed, 2 bath, 1000 sq.ft
While living in the Inner City condo, I spent the next ~12 months sharpening my pencil, cracking open a few books, listening to countless BP pod casts and perhaps most importantly, joined a couple local MeetUp groups focused on REI investing in my local market. I met local investors and professional that motivated me to develop a plan to purchase my first "REI Focused" property. With that said, I am happy to report that I recently closed on my second property; a NW Bungalow.
- Purchase Date: August 2016
- Purchase Price: $526,000
- Upper Unit: 2 bedroom, 1 bath, ~1100 sq.ft (my girlfriend and I currently live in this unit)
- Lower Unit: 1 bedroom + den, 1 bath, ~850 sq.ft
- Bonus: 3 Car Garage; I am currently using the garage (who doesn’t want a workshop/man cave?) but it could be leveraged as an additional source of income if rented separately.
After moving into the Upper Unit, I secured tenants for both the Inner City condo and the Lower Unit of the NW Bungalow for Oct 1 (this proved to be challenging due to the current economic climate in Calgary). However, I am now officially a Landlord, but more importantly, a Real Estate Investor!
“Back of the Envelope” Simplified Numbers
Inner City Condo
- Capital Invested: $60,000
- Rent: $1500
- Monthly Cash Flow: -$50 (the Inner City rental market in Calgary has taken a significant hit due to the current economic climate. We are confident in the next 1-2 years we will see strong positive cash flow)
- Equity Generation per year: ~$5000
- Annual Return on Capital: ((-50x12)+5000)/60000= 7.3%
I’m not going to breakdown the entire financial story of this property since I am using the Upper Unit as a primary residency as well as selfishly keeping the garage for myself. As of right now, the basement suite is rented for $900 and is acting as a “mortgage helper”. Rental rates for the Upper Unit and the Garage would roughly land around $1500 and $350, respectfully. This would likely yield a Monthly Cash Flow of ~$200.
I suppose that’s the story so far. I know it’s “nothing to write home about” but I am proud that I stayed true to my plan and met my initial goal of adding an investment property to my portfolio and testing the waters as a Landlord.
My next goal is simple; grow my REI portfolio with reliable and consistent cash flowing and appreciating assets. Although I am still torn on the best REI strategy and asset class to target in Calgary's market, the concept of a BRRR-type strategy does seem enticing. If there is anyone out there with experience implementing a BRRR type strategy here in the Great White North and would be open to sharing your experience with a REI Noobie, I'd really appreciate the opportunity to chat!
Thank you for stopping by, I hope you enjoyed my small success story!
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@Niko Heir - Awesome - I love reading about Canadian success stories! While it might be a small success for you, you're miles ahead of other people. My focus has been on BRRR in the Toronto area, let me know if you have any questions and I'd be more than happy to help!
congrats on your win @Niko Heir . I'm in Edmonton and I am still working on getting a tenant to an old condo that I purchased in August.
Love hearing success stories, we all have to start small while thinking BIG.
@Chris Chang Thank you for the comment! Its great to hear from investors in the local area. How have you found the Alberta real estate market in your experience? Alberta Strong my friend!
@Ming Lim Ha well I think my little success was a big personal milestone, but I still have a lot of learning and growth before I catch up to many of the other active investors around the BiggerPockets community! If you don't mind, I will send you a private message regarding your BRRR experience; I'd love to have a casual conversation and hearing about your experiences!
@Adeola Ade Thank you for the kind words! The inner city condo market in Calgary is still quite slow; there are still a good number of units going on 2-3 month vacancies. I originally posted the rental rate around $1650 but ended up dropping in $50 increments until I reached $1500. I wish you luck with securing a great tenant in the short term for your unit! Do you have other rental units in Edmonton?
@Niko Heir , Alberta market is a tricky market. Just this past week, in speaking with property management company, they said renters had looked upward to 20 properties before they decide.
That's crazy consider we don't even do that to buy our house. I do believe in our economy, will it goes back to 2009- 2014 when a renter literally has to decide on the spot to rent? Who knows. I think this recession served a balancing act for both tenants and landlords.
@Niko Heir nicely done! Actually just did the exact same as you and bought a second property with a basement suite. Easy way to save some extra money with next to no mortgage payment and start as a landlord. Great to see a fellow Albertan getting ahead and thanks for sharing!
@Niko Heir - Sounds good! I love chatting about Real Estate!
Your story is exactly how I see my story starting. Would you be willing to network, and have a further conversation about how you did it?
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