What would it take to make this property work ?

Question

Hi All,

So I had this property passed to me by a friend who is handling a couple of the units. I personally don't see anyway to make the numbers work but would love for anyone to take a crack at it.  The posting is below.

https://www.realtor.ca/real-estate/20480471/2-0-bedroom-condo-615-13104-elbow-dr-sw-canyon-meadows-calgary-canyon-meadows

Thanks!

Cody Weiss · Answer

Thanks @Rick Laszlo, had a conversation with someone from BP and the numbers are feasible with the right capital brought to the table and length of time for a hold. Were you units acquired pre special assessment or after ? Feel free to PM me. The location of these properties is an a real asset.

Rick Laszlo · Answer

Cody ...that complex has a 70k special assessment for repairs per unit.

If you want more info get back to me.

Have 2 units in there.

Cody Weiss · Answer

@Jon Martin

Great question Jon, this is an estimate based off historical vacancy rates in the community which have hovered around 2.2% and CMHC vacancy rates reported for the City which have fallen from 6%-4% in the last year or so. I expected the complex to have higher then 2% given the current state of management and renovations.

Curiously are your tenants breaking their contracts to leave or are you operating on monthly tenancies? Id also been interested to know what area your rental is located.

Jon Martin · Answer

@Cody Weiss - on that vacancy rate; is this an estimate, or something you are quite certain about?

We have a similar unit in YYC and the way the market/economy has been over the past 2-3 years its almost impossible for us to get someone in for anything more than a 6month lease.

The end result is often tenants leaving for cheaper options after 6 months. This usually leads to a 1-month vacancy to find new tenants. So 1/12 = 8% vacancy.

Cody Weiss · Answer

@Patrick Snyder

Apologies, I was sloppy on the details but have done some more leg work. I am trying to figure out if you could purchase this property and then refinance and wether or not the bank would refi to the $176 K assessed value or the $ 100K  sale price.

Rent Income: $1135

Condo Fees: $433 per month

Loan lien: $271 per month for 20 years ! This property underwent a special assessment and was found to have structural deficiencies due to poor construction processes in the 1970s. A good reason why  stucco and wood frame construction in a winter climate can be a disaster.

Rentals are permitted

Property Tax: $1223

Assessment Value: $176 000.00

Vacancy Rate: 3%

Square Footage: 1119

2 bedroom 1 bath

Closing costs: $3000

Capex: ??? , not too sure given the extensive work due to the structural issues

Cody Weiss · Answer

Thanks @Jonathan Watt. Funny enough, my friend will value these responses more then my own ha.

Patrick Snyder · Answer

Im not sure most people will have an answer without knowing the numbers, most specifically the costs and potential rental income, assuming that's what you're after.  How much will it bring in each month?  What are the association fees, insurance, and rental prep numbers?  Will the association allow rentals?  And what is the added lien for, if you know?

Jonathan W. · Answer

@Cody Weiss taking away the 433$ monthly fee...condos don’t appreciate as well either so I can’t say anything would work!

The illusion of knowledge is strong with your friend

And me too

I’m commenting on a Canadian property when I know zilch about Canada and the rental market