My Small Success in Calgary, Alberta
Hello BiggerPockets,
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 investors…so here it goes!
The Story
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%
NW Bungalow
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.
Concluding Comments
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!