Downturns and Landmines

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
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September 15th., 2015
Volume 19, Issue 4

Dear Friends and Partners,

I hope that your summer has been awesome. I’ve been busy with my boys, gardening, camping and enjoying as much of the Albertan summer as I can. Real Estate in Edmonton tends to take a break as well. You’ll see longer than average DOM for average properties just due to the lack of traffic. Sought after locations and incredibly well priced deals, still go fast. The multi-family market has been slower than usual with less than stellar listings on the MLS/CLS. That’s not to say that sales don’t happen - several, excellent pocket listings have been bought and sold  this past month.

With the federal election looming just 5 weeks away I’m finding some buyers hesitant to commit to a purchase and some (albeit not many here) sellers anxious to unload if over 60 DOM. What that means if you’re a buyer is that you may be able to wiggle a better purchase price between now and the election results. For seasoned investors the election timing doesn’t play such a big role in making a purchase, other than leveraging a sale. Seasoned investors have a plan in place to operate their property in a down or an up market. There are pros and cons to both and money making opportunities for each.

One maddening trend that I am starting to see is inexperienced ‘investors’ getting nervous about filling their vacancies. I’m starting to see ads for reduced rents, security deposits and even ‘1 month free’. This is a poor strategy and one that pulls all investors down. There are many strategies to employ (we list a lot here and in our media section of the website, look for “How To” articles.) that will help you get a better tenant and offer them value without dropping your rents below market value.

If you’re having trouble renting a property now, give me a call and I’ll fine tune your ad and give you some tips to help. Smart investors have  a good buying season ahead - give me a shout to see what investment properties we have that fit for you.

P.S. Want a cool mini-guide to investing in a downturn? We published a terrific booklet back in 2011 titled “3 The Critical Landmines You Need To Avoid When Investing in Real Estate”. I’d like to send it to you. Simply reply back with “3 Critical Landmines” in the subject line and your email and we’ll hit you back with a  free copy.


South East Edmonton: Holyrood 4-Unit Cashflow 

Turbo charge your portfolio. This terrific Side by Side duplex features separate (not legal - but potential to legalize) suites down. 1957 built, located on a quiet cul-de-sac, across from school and park. Walking distance to schools and transport. Close to downtown and Wayne Gretzky Drive.

This property has separate entrances to each suite; 2 X 2 bd and 2 X 1 bd, double garage, plus pad. This property was purpose built and is in fair condition. Investment capital includes $30K budget slated for further renovations to modernize, improve value, aesthetics and rentability. This is a turn-key deal. Good access to downtown and in a great, mature neighbourhood.

Comes complete with great tenants making this a totally turn-key property for you. Holyrood is a mature neighbourhood that is desirable for tenants working in the south end and downtown. HUGE upside potential due to the great purchase price, strong economic fundamentals and the proximity of this property in relation to Edmonton's desirable growing core.

Purchase price: $625,000
Total Investment: $146,090
Your Estimated 5 Year Profit: $90,498
Your pre-tax Total ROI is 62% or 12% 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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Edmonton has low risk of housing correction, new report says

By Alicja Siekierska, Edmonton Journal, August 4th, 2015

 The Canada Mortgage and Housing Corp. says Edmonton faces a low risk of having to deal with a housing market correction despite a slumping economy.
The organization released results from its House Price Analysis and Assessment, which is designed to detect problematic conditions in housing markets across the country.

Edmonton and Vancouver were the only two cities on the list of 15 that were cited as low risk in all four categories considered — overvaluation of home prices, overbuilding, price acceleration and overheating. GRAB THIS STORY

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Alberta housing market forecast to rebound 2016

By Mario Toneguzzi, Calgary Herald, August 20th., 2015

After a tough year in 2015, Alberta’s resale housing market is expected to rebound in 2016, according to a report by RBC Economics.
The bank’s senior economist, Robert Hogue, is forecasting sales in the province to dip by 17.8 per cent this year from 2014 to 59,000 transactions — the largest drop in the country.

But Alberta is then expected to see the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.

Despite the drop in sales this year due to a slumping economy and continued depressed oil prices, the average sale price in Alberta is forecast to climb by 0.7 per cent to $378,500 and grow by another 2.1 per cent next year to $386,600.   READ MORE HERE

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Update on housing - no boom - no bust.

By John Clinkard, Journal of Commerce, September 8th, 2015 

While the term "recession" may have applied to some sectors of the Canadian economy in the first half of the year, it certainly does not apply to Canada's housing market. This view is strongly supported by the fact that, after exhibiting back-to-back declines in December of 2014 and January of this year, due in part to the negative impact of low oil prices on Alberta and colder than normal weather on the rest of the country, home sales have trended steadily higher since February. 

Moreover, despite the very weak start, the volume of sales in the first seven months of this year are 5.4% higher than during the comparable period in 2014. In addition, year to date, home sales are up in seven of the ten provinces led by British Columbia (+21.4%), PEI (+11.6%), and Ontario (10.1%).  FOLLOW THIS ARTICLE


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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.

“The way to get started is to quit talking and begin doing.“  -Walt Disney

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 daily blog at Edmonton Real Estate Investor for all your cutting edge market news and information.

Watch out for rental scams!

I read this article about the dozen families that have nowhere to live because of a rental scam.

I've had about half a dozen people call me saying our ads were posted on Craigslist or some other site for half the true rental price, payable to a landlord who clearly wasn't me. 

Sadly, twice I've gotten teary angry calls saying they had rented my place and given someone the security deposit. It's a lot of money to lose and often saved up funds, hard to replace.

My tips to avoid rental scam:

Landlords:
Most effective is to put a 'For Rent' sign in the window with your phone number. Potential renters will drive by to check out the house and area. They will realize the discrepancy and hopefully call your number.

Tenants:
This is rough but a little common sense goes a long way. Is it plausible that a 4 bedroom house would be $1200? (whatever low price is being used to lure you in) In a 1% vacancy market you aren't going to be the one to get that crazy deal.

Always ask to see the inside of the house, don't send money without doing so.  I know in this case the owner may have been involved - that makes it really difficult. If you are moving to a town have a proxy look.

Ninety nine percent of landlords charge one month's rent as the security deposit UNLESS it's a huge apartment complex ie Boardwalk or Midwest. Low security deposits are a huge red flag!

If a "landlord" says I'm leaving tomorrow and you just have to send the money now - RUN. Typically if they were leaving they'd have a property management company manage the rental. The odd owner may go away and rent out his house but I would use extreme caution.

Delegation the key to Peace of Mind

I used an judgement enforcement company for the first time this month. I had a tenant who was so pernicious and ridiculous that I couldn't deal with this person any more. It dawned on me that receiving 10 - 15 absurd emails a day was something I didn't have to deal with. The only trouble was I've often prided myself on doing everything related to management so it was a big leap for me to hire someone to do something I'm perfectly capable of doing.

Then I realized -as landlords and business owners there is a lot that we delegate, taxes, cleaning, repairs and the list grows as your business grows. There comes a time when you are managing that you have to remove yourself from a tenant situation and let someone totally impartial do the job. Credit Info Canada did everything and the only time they contacted me was to tell me the job was done and there was an order to vacate against the tenant. 

I love that.

The Frugal Landlord - 3 Ways to find tenants cheaply.

I went to my local book exchange library today. After living in Japan for 10 years I've pretty much read all the English books at all three of my city's libraries.

The book exchange often has some reading gold that you can borrow and keep for free. I've gotten tons of business books, travel books, biographies and novels there.

Today I was pleased to find The Frugal Gourmet cook book. When I was a kid I remember watching the show and him always taking a sip of wine and well that's about all I remember. I guess it didn't make THAT much of an impression on me but I thought the book might help me overcome my sometimes unambitious cooking.

Then I got to thinking about land-lording and how you could use the Frugal Gourmet premise when finding tenants. So here it is 3 ways to get champagne tenants on beer advertising budget.

1. Place your ads wisely - Newspaper and online advertising have become cheaper over the past few years but how about spending no money at all? It's old school but placing ads with the little phone number tags attached to the bottom is a fantastic way to get tenants that are looking in a specific neighbourhood. Places like laundromats, supermarkets, schools and community centers may have bulletin boards where you can post for free. Effective? Yes. Cheap? Very!

2. For rent signs- They are cheap, highly visible to foot and drive by traffic and they let people know instantly that this property is up for grabs. Not to mention you can put them up the minute the tenant gives notice. In fact you can keep it in the property and ask the tenant nicely to do it themselves! Save gas too....

3. Referrals - You've probably got some good tenants who respect your property like it's their home. They are a goldmine of untapped potential tenant networks.
Offer all your great tenants the chance to introduce their friends to your family of rentals and offer say, dinner for two or a movie, they would be more than happy to help you fill your vacancies. You maybe saying well dinner isn't cheap but it's a lot cheaper than a vacant property with mortgage payments.