I am a new investor that has been doing a lot of research into REI over the last 3-4 months. Currently I own the condo I live in in Surrey, BC, and am hoping to acquire my first rental property this year. As I have done my research I have been having a difficult time making the numbers make sense for rental properties throughout the GVA, so I have been looking more into the Fraser Valley (Abby, Chilliwack, Mission etc). Nothing I have been finding comes close to the 1% rule. Also, any properties I have tried to analyze for practice, the Cash on Cash returns, cash flow, ROI etc are just a downright bummer.
Now I have only been looking on the MLS, and know that private deals may be out there, but my first little bit of searching has been a bit discouraging!
I have joined a few groups on MeetUp.com that meet within the Fraser Valley/Vancouver monthly to talk various aspects of REI, and hope to attend these over the next few months. I also went to a free REIN info session, but got a tad spooked by the hefty price tag attached to it.
I was wondering if any other investors out there have had success with Buy and Hold rental property in the Fraser Valley Area lately, not taking appreciation into account? Whether it be SFH with basement suites, or small multi-family units (<4), I would love to hear about your stories, and am always open for opportunities to meet and network!
Thanks so much for any advice, tips, or general feedback, it is all greatly appreciated!
Unfortunately, a lot of people come into REI with expectations that are higher than reality, this may not be true in your specific case but regardless it is something to note. Unless you get very creative which increases risk real estate takes time to make money. Not all markets will conform to the 1% rule which is why I hate that it is a "rule" some areas have higher appreciation or rent growth which is why the numbers aren't what you'd like them to be. I'm sure all investors would like higher returns but you have a few options.
1. Look elsewhere to try and get the returns you're seeking
2. Adjust your expectations to a more realistic level
3. Keep looking (you may not find anything)
4. Give up and invest in something else or not at all
Sometimes it is just helpful to see the options laid out, I wish you the best of luck in finding what you're looking for.
@Aaron K. Thanks for the candid tips, a lot of truth behind that.
Seem to be getting a little antsy in my search. I think for myself, and a lot of other newbies out there, I figure the best thing to do is keep researching, keep looking, and get involved in local real estate groups as much as you can.
Hi, you'll have to push your search way out of town. Try analyzing deals in like Prince George...
Thanks for the reply @Brad Fournier , yes as I look more it's more and more apparent that out of town investing is the route to go. Will be looking into the interior BC area next! Kamloops, Kelowna likely are going to be my two first cities to research more on
Greetings and salutations !
I am from Kelowna and currently looking into Vernon and Kamloops.
Prices is Kelowna are def lower than the GVA however is getting hard to cash flow.
Cory, you are late to the party. The Kelowa market has exploded in the last few years.
One condo I have in Kelowna, 2 bed, 2 bath, 1300 sq. ft. was worth $185,000 in mid 2016. Today that same unit is worth $325,000+. That is with no improvements to the unit to force appreciation (not even paint).
In early 2016 I purchased a condo in Vernon. Price was $192,300 for a 3 bed, 2 bath + 1 car garage. Just today the unit 1 floor above (exact same floor plan) just sold for $279,000 and is in much worse condition than my unit.
Prices in Kelowna have been on a rampage since late 2015 and Vernon is on the rise, but not as bad as Kelowna yet.
Finding a property that provides cash flow is probably a dream at this point. The bigger question with the market going up so much where are we in the market cycle in BC?
Thanks for the info! Always sucks to be the awkward one late to the party trying to play catch up, but the more information I can absorb right now the better.
I have seen some of that crazy appreciation happening as well down here in Surrey/Langley. The condo I live in has gone up ~120k since I bought in July of last year... And even then it would have been a bad cash flow investment!
The hunt shall continue. Thanks again for the input!
As Brad said, look out of town. I lived in the lower mainland, and moved to the island about a year and a half ago. Since I've bought 3 in Prince George, and 1 in Port Alberni. I think Port Alberni is going to appreciate more, but Prince George has better up front cash flow.
If you want to look at anything in Port, let me know!
Sorry for the delay but I am not getting the notifications but ..... better late than never.
We are focused in Kelowna but it has been harder to buy another one as it became hard to cash flow
Most recently we bought a condo in Victoria (Langford) which may turn out to be a good investment
Keep on trucking
I think if you don't worry about the rules so much and keep putting aside money to put as your down payment, you will eventually get to the point where it would make more sense to just buy a unit than to sit on your money. The problem with following a rule is that it holds you back from just finding a good deal and getting into the market. As with most of the deals mentioned by the others, the earlier they got into the market, the more they could benefit from the appreciation (and experience).
With my first unit, I didn't follow any 1% rules. I just made sure I found a solid rental unit in a good location that could cash flow after all expenses were paid. Two years later, I have no regrets. The unit has gone from $262K to almost $400K now, it cashflows more than it did before, I have a great stable tenant, and that unit has given me leverage to buy more units. It was a great experience and it launched me into more purchases, new contacts, etc.
I can't remember where I heard it, but someone that was successful in REI said that finding and buying great deals is really good, but that if you simply buy and hold for a long time, all deals will eventually be great deals. If that's the case, you should simply keep running numbers and buy your first unit based on numbers that make sense for you even if it doesn't quite fit the 1% rule.
Cory- Have you found any deals yet? I just got possession on a property in Campbell River. The numbers made sense to me and rents in that area are good. We had 8 families show up looking to rent our house as there is such a shortage of rentals there. 2 families offered to pay more rent than we were asking. If I had more funds, and risk tolerance, I would definitely buy more rentals there. At 5 rentals, I am really trying to hold off until its time to renew my mortgages in a few years to see what interest rates are at.
@Shaidah K. Congrats on getting a new rental in Campbell River. Renters offering to pay more rent is unheard of in Vancouver, in the end how much did you rent it for? Thanks for sharing.
If you need more funds, a HELOC is always handy to have. We leverage our HELOC to acquire new rentals.
We rented the house for $1875 which was what we were asking. We were planning for $1850 and thought we would try $1875 to see the response... We probably could have gotten $1900 but we didn't want to come across as greedy as the house is small with 3 bed/1.5bath, 1200sqft. We prefer to chose tenants that we think will be right for the house and for us as opposed to getting more money in rent. It also helps that most people who rent are having such a hard time finding a home that allows pets.
I have a coworker who was telling me that his brother has a house in Chilliwack and there was also a "bidding war" on renting the house. Right now, there are few and far between homes available for rent, and tenants are willing to pay more to end their housing search.
As for the HELOC, we do have one, but at prime+0.7 (currently 4.45%), it is a bit high for what I want to be paying in interest charges.
Sorry for the late response, I ended up buying a 4 plex unit in Edmonton. I decided if I was going to leave metro vancouver, I might as well go where the tenancy laws are super lax, prices are cheap, and there is no PST! Haha, once the dust settles on this first purchase I will continue the hunt in BC.
That is interesting about Campbell River, glad to hear you had some success!
@Cory Graham congrats on the purchase! I looked at several multi family buildings (6-9 plexes) about 12-18 months ago and always thought it would be a great investment area, especially around the new ice rink area. Might have to go back and have another look as prices seem to keep favouring the buyers at the moment in Alberta.
@Xuan-Thy (XT) Bui yeah price points are just a tad more attractive there! Have a look at the Mogul Realty Group, they are a group of realtors that specialize in out of province investors. They were a great resource for me and really know their stuff.
@Cory Graham Thanks for the thread! I am also from Vancouver and recently developed an interest in investing in RE. After you mentioned Edmonton I got really interested, and did some really quick search, and found out average household income is 90k in Edmonton vs 70k in Vancouver, unemployment rate similar while population is half of Vancouver. However the price is not even close to 50% of Vancouver's. I'm mostly just looking at condos though. What's your experience of finding tenants (how's the rental market there based on your experience). And in terms of investing in another province, does it add lots of complexity to taxes?
@Angie Tao condo prices in Edmonton are very attractive as compared to Vancouver. I have a condo around 673 sq st in south east Edmonton around 34 street and 16 ave and I have it rented out for around $1000/month. A friend of mine also has a condo in the same building around 884 sq ft and that was rented out for few years for $1700/month but in 2016 old tenant left and economy was not doing so great and he rented it out for $1200 right away. Both of these unit are under $200k and were built in 2013. Rental market has been improving and right now rental vacancy rates are around 5.3% which is way higher than Vancouver which is around 1%.
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