Newbie here......... Brrrr in Edmonton? what are your experiences

9 Replies

Hello BP, 

My name is Joe, married and I live and work in Edmonton, AB, Canada. I stumbled unto BP a few months ago because I was interested in real estate and wanted to educate myself more on it. I now think it is time to act and my wife and I are hoping to get our first deal in the next few months.

My interest is in rentals at the moment. Specifically, SFH with a legal basement suite. I'm sure I'm not the first one to say the following...I am interested in Brrrr but find it "difficult" to make the numbers work in Edmonton. Is it a matter of how I am looking at it or is Edmonton just not the market for this? I have some good contacts in trades, some money saved, and I am ready to act but I have yet to find a property I could work with to do this.

I am keeping my eyes and ears open to see if something may come up but in the meantime, I am looking into possibly purchasing somewhat of a turnkey property (hopefully at a good price).

What do you guys think? Any suggestions? 

Hey Joe, glad to see more Canadians on Biggerpockets! It feels lonely sometimes and is refreshing to talk with a fellow Albertian. 

I'm currently investing with my Father, and we are from Calgary Alberta. We started our real estate journey in 2018 exactly in the same boat as you, using BP information and applying it to Calgary/Edmonton. 

What I can say is that the BRRRR strategy is one that requires the perfect deal, it is very hard to find that perfect deal even in the best markets throughout the US. As well, to refinance out at a heavy LTV ratio, you get your cash out to continue investing, but you also kill your cash flow which is very important for long term buy and hold security and asset protection. Personally, for our rentals we like to keep a 50-65% LTV ratio - so we can get most of our cash out, but still have great cash flow as to not worry about future problems.

The problem with Edmonton and Calgary - is the same problem many California investors are running into... As their rental investments are based off principal pay-down and appreciation. Because of this, we are opted out of Canada, and are now investing in Dayton Ohio, Memphis Tennessee, Montgomery Alabama, NJ, and Indianapolis, where we can find rental properties all based off returns on investments and cash flow - No consideration on appreciation, or speculation when running our numbers. (Ex. the total money invested, compared to our monthly rents minus expenses). Not to mention we are able to find deals for under $60k, renting for $800-$1,000/month - being able to diversify into more deals, in multiple markets, compared to one Calgary Rental. 

I understand taking the leap to invest in American Real Estate can be challenging, but it is very possible to do so - and is very straightforward with the right team. I would love to share with you my contacts i use to for cross-border accountants and lawyers if you're ever interested. 

I also understand the difficulties of investing out of country, which is why my father and I do not do it alone. We work with a large network of investors across North America, and connect these investors to our teams we have established in the US. By doing so, we gain the benefit of power in numbers, giving more work for the companies that produce quality work, and straightening our relationships for personal security and our investors. 

Please feel free to reach out and talk with me, as i would be happy to continue the conversation with you! My phone number is in my Bio if you're interested, i'm free to talk anytime during the week. 

Hoped this helped, best of luck!

Joe

I have been getting listings under 200k from my Fort Saskatchewan based agent for the past few weeks, a few have been listed that have potential to brrrr (I haven’t toured any myself). This agent is an investor himself and has a few clients who are active flippers. We have also done three past deals with him for our principal residence, I trust him as the past experience was always great.

He sent a listing today that was about 20% under market (no photos of interior), and it has 6 offers in the first two days on market! He mentioned they bid on 1-3 of these per month, and figures probably 60-70% are sold before he can even tour them because other folks are jumping at them. I believe there to be potential for a brrrr in the Edmonton region, but with a legal suite could be difficult to find.

Over the past 3 years him and I have also spoke several times of a new build with a basement suite, as his office also works very closely with a small builder. This is also an option, but obviously not a brrrr.

Hope this bit of insight helps

Dale

HI Joe, how is everything going? I am also curious about BRRR in AB, I suspect we may have to even leave the bigger cities and try Red Deer, lethbridge, or maybe surrounding areas at the city outskirts to BRRR where the prices are slightly lower.

@Nathan Hillier

We invested in the states too but found no one that would refinance our <$60,000 properties. We were told it was very difficult for Americans, let alone Canadians to find lenders willing to refi such a low value property. So we ended up selling do we would have access to all that money again. That was about three years ago. Have things changed since then? Are you able to refi as Canadians on low value properties?

Originally posted by @Amy Colin :

@Nathan Hillier

We invested in the states too but found no one that would refinance our <$60,000 properties. We were told it was very difficult for Americans, let alone Canadians to find lenders willing to refi such a low value property. So we ended up selling do we would have access to all that money again. That was about three years ago. Have things changed since then? Are you able to refi as Canadians on low value properties?

It is still very much the same process we are currently going through, although whether or not they will lend to Canadians is determined by your corporate structure. We have a Canadian S-Corp that owns our american C-Corp, and the C-Corp owns our LLCS. With this structure we have not been turned away from lender because we are Canadian, but have found an increased difficulty with refinancing our rentals with ARV of $60,000.

We have a couple more lenders we are talking with, and have determined that by packaging our two SF rentals together to create a combined value higher than $100,000, we have achieve refinancing. 

The next few weeks we should know for sure whether we can stick with this plan, or forced to re-balance our portfolio and acquire larger properties! 

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