New member in Vancouver, BC seeking Alberta
Member since 2023 · 14 posts · 1 vote
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Welcome to BP! I'm located in Calgary and our market has definitely gone up a decent amount with last run with everyone else. From a price standpoint we are still a lot cheaper than Vancouver and Toronto. But at the same time we also do not generate the same rents as those cities.
Alberta's economy is quite cyclical since our main industry is oil and gas. If you are betting on high appreciation then it might be a bit of a roller coaster. I think condo prices just got back to what the peak prices were in 2014. That's a lot of time without any appreciation (if you consider inflation, then you actually have depreciation).
I would be conscious of these things before making any investment decisions. Alberta is starting to diversify its economy, but it is still heavily dependent on oil and gas which is of course cyclical.
Don't know the future, but there are definitely some risks associated with Alberta. Personally I have a few properties here but I'm not actively seeking deals right now. However just like in any market, if you could find a good deal it can work.
DM me if you want to grab a coffee or something when you get into Calgary, always happy to chat real estate
Thank you Stevo! Truly appreciate your input as an investor in Calgary. Question; how have the rate hikes affected the local market/perspective in Calgary both for newcomers and those seeing their mortgage payments increase? Are sellers less willing to let go due to costs of a new mortgage? Is there a significant fear of defaults forcing sales?
Mortgage rate hikes impacts all debt holders the same way. It doesn't really matter if you are in Vancouver, Toronto, or Calgary. We don't have 30yr mortgages in Canada, so everyone will renew their mortgage some time. The rate increase will impact everyone if they stay higher and for longer. I don't think there is a significant fear of defaults, the mortgage amounts in the Calgary local market is not as high as Vancouver or Toronto due to the lower price points for the properties. The higher loan balance you have the more impact rate increases will have on your portfolio.
People in Calgary have been underwater from the 2007 peak and 2014 peak, but they were able to hold on to the properties. As long as people can afford the payments it is unlikely we'll see defaults. Personally I think price corrections can occur, but defaults are unlikely. I also think that markets where prices are much higher (aka. more debt) will crack first under the pressure of rate increases.
Hi Zorya, do you feel appreciation will rise in all classes (single family, condo, multi family) I’m in the process of getting pre approval to buy a rental, probably in west Edmonton as I know the area more than other parts of the city.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Without real cap gains, indeed it is not worth it. I guess if you are trying to leverage your bucks to stretch deep and build equity (lower rates backed by property) it is attractive, but if just plonk the cash into the SP500 looking at an easy 10-12% YOY. A little creativity and effort can pop that number up, especially as rates decrease.
I would argue that while you can receive 5.5% on a GIC today - that is very short-term thinking.
If the value is there in a property - this is a great opportunity to lock the property in before rates continue downward & drive prices higher
Once it makes "sense" to purchase the 6-plex or rental home when compared to a GIC - it will also will also make "sense" for all the other investors to purchase the same properties - driving up prices and fewer properties to choose from
Date the rate - marry the property
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
I would argue that while you can receive 5.5% on a GIC today - that is very short-term thinking.
If the value is there in a property - this is a great opportunity to lock the property in before rates continue downward & drive prices higher
Once it makes "sense" to purchase the 6-plex or rental home when compared to a GIC - it will also will also make "sense" for all the other investors to purchase the same properties - driving up prices and fewer properties to choose from
Date the rate - marry the property
The opposite argument could be made as well. Rates could continue to rise. In the short term rates may have peaked but there's nothing to say longer terms rates can't be higher. Since Canada does not have 30yr fixed rates, the borrower will take on some form of interest rate risk. Interest rate can go up and down based on economics and world events, having a mortgage will expose you to both the upside and downside of any movement.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Those win win situations will probably have cap rates higher than 6-7%. 🙂
Don't get me wrong, if you find a great deal then definitely take it. But based on my research of the general trends in my local market the cap rates have not risen enough for it to make sense.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.
We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now?
Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units) which neighbourhoods would be on your radar? TIA.
Looking to learn more with everyone here!
Hi Austin,
Thanks for your feedback and thoughts. Yes, I reached the same conclusion with regards to Edmonton. It just does not make sense if a goal is cap appreciation. The inner city overall is not that attractive, and the suburbs are close enough, cheap enough, and new enough that infills hardly make sense. If only rental income is the goal, then yes, I saw some great returns on some row homes with no strata fees. But in that case I'd rather keep it in the markets as it's still just 7% ish and comes with extra work and distance. If local to me, could be more attractive.
Calgary left a better impression on me as an investment center, but as you mentioned, seems construction costs are what are setting the prices at this stage.
Those win win situations will probably have cap rates higher than 6-7%. 🙂
Don't get me wrong, if you find a great deal then definitely take it. But based on my research of the general trends in my local market the cap rates have not risen enough for it to make sense.
Or take the short term risk and plug the money into the SP. Over there last month would have earned more than the years rent. In general it's not risky if you can hold. So cap rates or cap appreciation need to improve in those cities to become attractive.
I would argue that while you can receive 5.5% on a GIC today - that is very short-term thinking.
If the value is there in a property - this is a great opportunity to lock the property in before rates continue downward & drive prices higher
Once it makes "sense" to purchase the 6-plex or rental home when compared to a GIC - it will also will also make "sense" for all the other investors to purchase the same properties - driving up prices and fewer properties to choose from
Date the rate - marry the property
The opposite argument could be made as well. Rates could continue to rise. In the short term rates may have peaked but there's nothing to say longer terms rates can't be higher. Since Canada does not have 30yr fixed rates, the borrower will take on some form of interest rate risk. Interest rate can go up and down based on economics and world events, having a mortgage will expose you to both the upside and downside of any movement.
Yes, you are correct.
Having any kind of debt is exposure to the upside & downside movement.
Locking into a GIC also has its own risk - inflation typically runs higher than GIC returns & you would then be losing due to deflation.
Investing the the stock market also has its own risks as well with the ups & downs that brings also tied to world events.
Overall investors have to look at the long-term holding potential of an asset and choose what is best for them.
Historically both stocks & real estate have delivered great returns over time.