Single-family residence buy & hold investment in Edmonton.
Purchase price: $74,000
Cash invested: $75,215
2 Bdrm, 1 Bath, 700 Sqr-ft condo. Currently renting @ 850 per month (Current tenants lease ends 09/2019). Then rent will be raised to market value @ ~1050. New paint and refinishing before rent raise. Install a bathroom fan asap. Closing July 5th 2019.
What made you interested in investing in this type of deal?
Between living in Vancouver and having terrible credit I knew I needed to shop somewhere else to fit my price point. Why Edmonton? I have family and friends there (providing some connections to learn about the markets). Cap rates in Edmonton are relatively high compared to other major Canadian cities. But mainly it was the safest market I could get into ASAP.
How did you find this deal and how did you negotiate it?
I am working with a family friend who is a realtor. She has more than 25 years experience in the Edmonton area, tons of great reviews, very happy with the process so far. Property listed at 92,400 approx 250 days ago. After 3 price drops to 84,000 I entered the market and made an offer of 71500. After 3 counters from each side we settled at 75k. 75k was actually my target price. After addressing some issues we settled on 74k plus them fixing some misc issues.
How did you finance this deal?
I was given cash as a gift from my grandparents and I can not get financing for a mortgage.
How did you add value to the deal?
Motivated Seller - quick closing all cash offer. Refinish, Repaint and reassess property value, pulling out home equity loan for next property asap. Currently building credit and working on my getting that T4 bigger for the mortgage approval, but I would say this property acquisition was more of a value add to me. Where I can use it as a stepping stone to the next property and my first mortgage. Showing that I can profitably manage my own property should help with lenders. Plus I gain XP.
What was the outcome?
Closing on the property July 5th.
Lessons learned? Challenges?
I have learned many things this first purchase but mainly would be....... the process of purchasing a condo. I.e How to talk to your realtor and what to expect from them, reviewing inspection reports and condo docs, what to ask and when to ask it, how pictures can be deceiving, prices can be deceiving, listing info an be deceiving.... etc etc. Trusting the numbers. Learning how to analyze potential repair costs. Getting all the basics down and putting faces to names.
Good Job Daniel!
I have some family that lives in Hinton, AB. Prices out there are insane so it seems like you got a great deal!
I hope there are more deals to come your way.
Just to add some more info, the property was last assessed at 112k but I am not giving that too much weight. Currently in Edmonton there are way more sellers than buyers. Lots of properties sitting listed for months if not close to a year so I went through lots of condos to find the right one. This price range isn't the most glamorous so it took me a little while to find a building+condo that didn't wreak like cigarette smoke or look dilapidated and have sketchy individuals pacing in front of or around the building. Recent comps sold put my purchase price around average or below average for a 2 bdrm of that size in that area (based on price per sqrft). Buuuuuut it is not your average building/condo. Well kept, quite, actively promoting no smoking in front of the entrances, good minutes, what looks to be a very solid reserve fund and a good location. I could have moved a bit further downtown for an extra 100-200 rent and probably 5-10k in purchase price but the quality of condo and tenants would drop. I know Edmonton has a high crime rate and thus I am trying to avoid any negative encounters/interactions by renting to a different demographic. (currently a family with 2 young children that live in the condo). Worth noting the condo building is 60% owners and 40% renters. And there is a decent sized balcony. Condo sits facing a main road but is extremely quite. Can't hear traffic one bit - Windows were redone in 2016 :D.
Anyways thanks to anyone who reads this! I appreciate any advice or just to talk shop. Please feel free to send me a message.
PS. Hinton is actually where I stayed for the night when I went to Edmonton to view some properties. Nice little town but unfortunately it was blanketed in forest fire smoke while I was there.....
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