Rental investing in Halifax NS

[Iain Calhoun]

Hey everyone,

I’m fairly new here and looking to begin searching for my first deal. I’m located in Alberta, but the cost of entry here is far too high.

In my searches I’ve come across opportunities in halifax with a decent price to rent ratio, and from what I’ve read, there’s an incredible level of demand and not nearly enough supply. Rental prices are through the roof, real estate prices are not.

My question is - anyone here have extensive experience in the Halifax area, and am I extremely off base on my analysis? Are there issues that I need to be aware of, unique to the East coast?

Thanks everyone for your input.

[Trevor Gaal]

Hi Iain,

I'm originally from Calgary and have lived in Halifax for 11 years. There's certainly opportunities here in the Atlantic provinces that aren't broadly available in Alberta, BC, Ontario etc... 

You really need to do your research or partner with someone that knows the local markets. For example, there's places in the Maritimes where you can buy an entire 4-plex for under 80k, and the listing agent will tell you that it generates  3000/month in gross rents, but, trust me when I say, that in most cases that's not going to be a good investment!

The age of some of the properties are... OLD. So when you're seeing some of these bargain-basement prices it's because they're literally falling apart, they have stone foundations, knob-and-tube electrical, asbestos plaster walls/floor tiles, old cast iron plumbing throughout...  or they're in a war-zone.  

That being said, Halifax specifically doesn't have complete war zones where you'll see half the buildings on the street boarded up. There's lower-income areas with a bit of a bad reputation, but overall Halifax, Dartmouth, Bedford and surrounding areas don't have anything lower than C+ neighbourhoods. 

When you consider that you can buy a 4BR house on a lake for under 500k, yes, real estate is cheap here. When you can buy a 6-unit on Gaston Rd for 450k, yes, it's like we have a big red CLEARANCE sign on our real estate!

I've been able to pick up two great triplexes recently. One was 225k pulling 2925/mo with tenants paying all utilities and the other purchased for 240k pulling 2250/month (we're inheriting the tenants and it's currently underperforming, but we'll fix it this year). We're closing on a 6-unit at the end of March for 150k, and it needs over 100k of work, but it's in a great area and will bring in 5500-5800/month in gross rents. These last two deals we're doing with joint venture partners.

Our Joint Venture business model is a little different than the typical 50/50 split on everything... We find great deals for our money partners and they receive between 80-90% of the cashflow until their investment is fully paid back. A property management fee is built into the expenses, so that it's tax deductible and also won't effect our partner's cash flow if I get hit by a bus (it's simply taken over by another professional property manager).

@Kris Bucci is correct that there's huge opportunity in student rentals in Halifax. But the price points are a lot higher, especially on the Halifax peninsula. If an investor tells me they want to be in the student rental business I have no doubt I could find something above 12% COCR. It might take a few months of hustling... most of these deals are made, not found.

Halifax has a lot going for it... it's only a matter of time before the rest of Canada catches on. Historically our passive appreciation has been relatively low, but outside investment cash has started to flow in and have already starting driving up prices. There's a short window here, and many locals are going to find themselves priced out of their own market in the coming years.

Sorry this was so long, but it seems like you're the kind of guy that does his research and likes to dig in on many of the details. 

Feel free to connect with me and I'll help you out any way I can. 

Cheers,

Trevor :)