Edmonton Real Estate Investor: real estate cycles

Alberta Oil Sands Investment Real Estate News®
Glenn Simon Inc., Suite 1217, 5328 Calgary Trail NW, Edmonton, Alberta, Canada. Tel 1-888-780-5940 Fax 1-888-276-4517
www.glennsimoninc.com email: info@glennsimoninc.com

October 31st., 2014
Volume 17, Issue 7

Dear Friends and Partners,

The value of the cycle; I endeavor to talk about the good news stories as much as I do about the (bad news) potential risks in the market. The underlying economic fundamentals drive a market and give it depth, but don’t always do it fairly. Recently I have spoken to investors that started buying property in the 80’s and (to various degrees) continue to buy. Granted, a few folks that bought in the 80’s have changed their buying profile to larger, more manageable building and others have sold their commercial property choosing to only keep a few key residential ones to pass down to their children.

When we talk about purchases made in late 2007/2008 we fall against the backdrop of the global recession. This ‘dip’ in the cycle was, and still is for some areas, much deeper than first anticipated. It’s actually quite incredible that Edmonton weathered this storm as well as it did; thank those underlying economic fundamentals. But, nonetheless some properties bought in the peak of 2007/2008 still haven’t climbed back up to where they were.

Thus, this is the cycle.

We look at real estate cycles typically being 5-7 years, and here in Edmonton you can see house prices coming back to earlier highs. Now, does that mean we are approaching a peak and shouldn’t buy? Be conscientious of what you buy - not based on where the cycle is so much as what the leverage/rates are that you are getting. A solid piece of real estate WILL hold its value throughout a cycle. Put another way, if you held your rental property for the full 25 year mortgage term (or whatever it is you set up) you would own an asset free and clear that would produce net CF for you (minus taxes/operating expenses) provided you had bought a solid property to begin with. The trouble you can get into with low rates is thinking that they’ll go on forever.

Regardless of the timing in the market, it will still have a cycle of high-low-high-low and stabilization in between. Real estate is a long-term game. The winners have enough skin in the game to hold when they have to and will reap the rewards for carefully selected real estate that will weather the cycle.

And what about the 2007/2008 property? With proper management, mortgage administration and diligent repairs that asset will hold its value. And if you want to sell it…the cycle will come round (like it always does) and give you an opportunity to do so; with years of banked equity.

See our articles on HOW to buy here:
Focus on the fundamentals
Keep investment real estate profitable in any economy

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Central Edmonton: Terrace Heights 4-Unit Cashflow (PPI Deal)

Turbo charge your portfolio.
This 1963 built Side X Side Bungalow with in-law suites is located of Wayne Gretzky Drive in Terrace Heights. Easy access to Downtown, UOA and the Yellowhead as well as many parks and schools to enjoy in this neighbourhood.

This property has front entrances to the 2 X 2BD main floor units and lower entrances for the 2X 1BD suites. This property was built as a duplex and will need renovations to operate the (non-conforming) in-law suites.

This is a purchase plus improvement deal, meaning that we wrap the ($25K) renovations into a new mortgage. Ensuite laundry to be added. Property has parking pad . Excellent access to downtown, transit and Sherwood Park.

Comes complete with great tenants making this a totally turn-key property for you. Terrace Heights is a great mature area that is a desirable for tenants working in the city or attending U.O.A..

HUGE upside potential due to the quality of the building, great purchase price, strong economic fundamentals and the proximity of this property in relation to Edmonton's desirable growing core. Purchase price factors in renovations. P.P. of $575K + $25K renovations = $595K.

Purchase price: $595,000K
Total Investment: $139,000K.
Your Estimated 5 Year Profit $94,475K.
Your pre-tax Total ROI is 68% or 13.6% per year

These 4 suites rent for top dollar and have everything arranged, including financing structure and incredible tenants. Your investment includes: impeccable tenant selection, financial analysis, professional inspection, insurance, financing set-up, legal fees, basic accounting, reserve fund, CMA, bi-annual statements, strategic market planning to ensure successful entry and exit, plus much more!

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Competitive tax rates give Edmonton an entrepreneurial edge over other big Canadian cities

By Geoffrey Morgan, Financial Post, October 20th., 2014

Louise Dirks admits it would be easier on her travel schedule to run her high-end shoe business out of a city like Toronto or New York, where trans-Atlantic flights are scheduled multiple times a day.
At the beginning of October, the founder and owner of Gravity Pope had just returned to her Edmonton headquarters after a business trip to Paris.

Ms. Dirks said that being based in Edmonton means there’s always one more flight to catch, or at least a few additional hours spent in a cramped airline seat, as she travels to France, Italy and Germany to source shoes and designer clothes for her stores in Edmonton, Calgary, Vancouver and Toronto. FOLLOW THIS ARTICLE

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IMF sees ‘solid’ Canadian growth, despite ‘uneven’ global recovery

By Gordon Isfeld, Financial Post, October 7th, 2014

OTTAWA — The “uneven” global recovery will be with us for at least another year or two, although the pace of growth will be “more country specific” than before, according to the world’s biggest lending agency.

Overall growth should reach 3.3% this year and 3.8% next year, the International Monetary Fund said in its October outlook released Tuesday. That’s down 0.1% and 0.2%, respectively, from the agency’s forecast in July.
For Canada, the IMF said “growth is expected to be solid,” thanks mainly to a strong pickup that is likely to continue in the United States during 2014 and into 2015. But it continued to caution policymakers about Canada’s “still-overvalued” housing market. GRAB THIS STORY

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Canada one of the world’s most popular destinations for job seekers: study

By Tavia Grant, The Globe and Mail, October 6th, 2014

Canada is one of the top spots in the world for job seekers who are setting their sights abroad.

The U.S., the U.K. and Canada are the world’s most popular country destinations for job seekers, a Boston Consulting Group global survey of more than 200,000 people released Sunday showed. Among cities, London is the most popular spot, while three Canadian cities crack the top 25 list for most-sought after places: Toronto (#8), Montreal (#21) and Vancouver (#23).

Bigger economies are one reason why job seekers opted for the top three, along with a largely English-speaking population at a time when English is the most frequently taught second language, the paper noted. READ MORE HERE

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I appreciate all your calls and emails. I'm looking forward to helping you with your next step towards building real wealth.
Your success continues EVERYDAY, let me help you build for tomorrow.

“Do your own thing on your own terms and get what you came here for." - Oliver James

Warm Regards,

Todd and Danielle Millar

===SPECIAL NOTICE: NO CASH, BUT GOOD CREDIT? CALL US TODAY TO LEARN HOW YOU CAN OWN INVESTMENT PROPERTY===

P.S. Stay ahead by checking out Danielle's blog at Edmonton Real Estate Investor for all your cutting edge market news and information.

Alberta Oil Sands Investment Real Estate News®
Glenn Simon Inc., Suite 1217, 5328 Calgary Trail NW, Edmonton, Alberta, Canada. Tel 1-888-780-5940 Fax 1-888-276-4517
www.glennsimoninc.com email: info@glennsimoninc.com

April 1st., 2013
Volume 14, Issue 4

Dear Friends and Partners,

When were you last on all fours, head in the toilet, gut heaving and eyes popping; when was your last hangover? I have quaffed less than half a bottle of fine vino over the past decade. The last time I drank too much was probably sometime back in my 20's. Its hard to remember how great the night was, or how much fun I was having, but I sure do remember how bad I felt the next day.

I bring up this disgusting image because I realize that it is very much a kin to a marketplace hangover. See, we have a lot of good news stories in Alberta and then we have the scary global ones. We take two, three, four steps forward with our Alberta economy and then a giant one backwards with politics and pipelines. When we scrutinize a proper real estate investment here, we get excited because it IS a good deal and it will do well. But, just like you might never drink Malibu again, that hangover can burn an image in your mind that really turns your stomach.

For those of us that bought in the late 90's or pre mid-2007 we look back without hangover... For those of us that bought at the party's height, we may still feel a tinge of pain in the temple when we see all the 'good news' stories in Alberta and wonder 'When the heck will my property be at that value again?!"

Real Estate investing is a long-term game. The cycles can last for years and sometimes even decades, just as you can flip a house in a day and make money. Unfortunately real estate isn't a very liquid asset and the time we want to, or need to, cash out may be at the worst time in the cycle.

Moving forward, investing in Edmonton and other parts of Alberta is going to seem like a warm house-party. There will be good news stories, lots of laughs and long friendships made. Some will enjoy the festivities too much and leave with a hangover while others will have made friends (investments) for life.

The best thing you can do is stress-test your potential property by calculating higher interest rates, factor in lower rents, use down payments of 20% or more, manage effectively and know what your exit strategy is before you buy. There are more ways to mitigate risk and different strategies to employ that will allow you to leverage better and protect yourself more, but for now we will focus on avoiding a hangover.

South Central Edmonton: 4 Suite Cash Flow Property in Bonnie Doon

Turbo charge your portfolio. Upgraded 1965 built 4 unit property with separate entrance to lower suites. Upper units have been renovated and using our PPI strategy the lower units are upgraded at purchase, and costs wrapped into mortgage. You'll find 2 X spacious 2 bd units upstairs and 2 X bright 1 bd units downstairs. There is common laundry for the lower units and upper suites have en-suite laundry. Each unit has its own exterior storage locker as well. There is also a double detached garage adding cashflow. Excellent location directly across from Bonnie Doon mall on a small side road, 1 block north of Whyte Avenue. 5 minutes to Rowland Drive and ravine, with routes to the Yellowhead and Whitemud minutes away, 10 minutes to downtown and UOA. Fast access to Wayne Gretzky Drive and on all bus routes.

Comes complete with great tenants making this a totally turn-key property for you. Convenient south central area of Bonnie Doon with easy access to transit and downtown. Bonnie Doon is a mature, sought after area near the university and Whyte ave. Highly rentable; solid value and increasing rents. HUGE upside potential due to the great purchase price, strong economic fundamentals and the proximity of this property in relation to Edmonton's desirable south side.

Purchase price: $625K Total Investment: $145,601K. Your Estimated 5 Year Profit $77,327K. Your pre-tax Total ROI is 53% or 11% per year + $400 Cash Flow

These 4 suites rent for top dollar and have everything arranged, including financing structure and incredible tenants. Your investment includes: impeccable tenant selection, financial analysis, professional inspection, insurance, financing set-up, legal fees, basic accounting, reserve fund, CMA, bi-annual statements, strategic market planning to ensure successful entry and exit, plus much more!

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Alberta Economy Continuing its Impressive Boom

By Mario Toneguzzi, Calgary Herald, March 19th 2013

CALGARY — Any dark clouds that are currently hanging over Alberta will clear by 2014, paving the way for strong business and consumer activity, says a report by RBC Economics.

The bank’s latest Provincial Outlook, released Tuesday, said the province’s economy will continue its “impressive boom” through 2013, after leading the country’s economic growth in 2012, despite facing challenges.

RBC forecasts a provincial real GDP growth rate of three per cent due to strong crude oil production as well as high levels of capital investment, employment and population growth. This will be second in the country behind the 5.1 per cent growth expected in Newfoundland & Labrador. GRAB THIS STORY

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Lamphier: Alberta's population Boom isn't Shaking Foundation of housing Market

By Gary Lamphier, Edmonton Journal, March 22nd 2013

EDMONTON - If you’re looking for a job in Newfoundland and Labrador, good luck. You’ll need plenty of it.

For every job opening, there were 16 job seekers in December, according to recent StatsCan data. In New Brunswick, the ratio was a still-stratospheric 10.5-to-one.

The odds of landing a job were only marginally better in Ontario, where eight applicants fought over every vacancy.

Here in Alberta? It’s a completely different story. For each unfilled job there were fewer than two people unemployed in December. No wonder newcomers continue to beat a path to Wild Rose country. Despite worries that discounted crude prices may prompt a slowdown in the oilpatch, the stampede shows no signs of abating. FOLLOW THIS ARTICLE

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Alex McBrien: Why Alberta Needs a Diversified Economy and, Three Ways We Can Get There

By Alex McBrein, Huffington post, March 23rd 2013
The Alberta government is facing a deficit in the area of $4 billion. By now we have all heard the discussions regarding the recommended courses of action that the government should take to make sure that Alberta's finances get back into the black; reform Alberta's taxation system (although the budget saw no such reforms), cut government spending, and diversify Alberta's energy export markets.

All of these will certainly be needed in the short term, to some degree or another, to get Alberta's finances back on stable footing. However, all of the above are just that, short-term solutions to a more systematic issue facing Alberta's economy. University of Calgary economist Ron Kneebone was right to suggest that the real issue at hand is "the [provincial] government's historic reliance on resource revenues to bankroll its operations". Instead, what is needed to mitigate the economic risks associated with being a resource- based economy is a sustained focus on diversifying Alberta's economic base.

This will be a complex and challenging task (as it is for most resource-based economies), however placing focus on areas that build off of Alberta's current economic strengths, that make it easier to set up a small business, and that increase investment in arts and culture are sure to go a long way in achieving this goal. READ MORE HERE

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I appreciate all your calls and emails. I'm looking forward to helping you with your next step towards building real wealth.
Your success continues EVERYDAY, let me help you build for tomorrow.

"Always hold your head up, but be careful to keep your nose at a friendly level." -Max L. Foreman

Warm Regards,

Todd and Danielle Millar

===SPECIAL NOTICE: NO CASH, BUT GOOD CREDIT? CALL US TODAY TO LEARN HOW YOU CAN OWN INVESTMENT PROPERTY===

P.S. Stay ahead by checking out Danielle's blog at Edmonton Real Estate Investor for all your cutting edge market news and information.

P.P.S. Don’t forget to visit our website and take advantage of the Resource Tools and product section including REIN's #1 real estate books and Quick Start homestudy sets at a discount. Get your copy of the Canadian Success Stories book and the 2010-2014 Top Ten Investment Towns of Alberta and Ontario.