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Calgary real estate market

Surrealplaces

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I remember looking at the Castello units back when the building was first built. aside from the special assessment due the building overall is nice, and the units are nice and spacious with spacious balconies. It's true that those SA's can lend to there being a stigma, but over time it dies down or goes away. Personally, given the layout and size of the units, and the location of Castello, it's still one of the better choices.
 

Thrillhou

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I remember looking at the Castello units back when the building was first built. aside from the special assessment due the building overall is nice, and the units are nice and spacious with spacious balconies. It's true that those SA's can lend to there being a stigma, but over time it dies down or goes away. Personally, given the layout and size of the units, and the location of Castello, it's still one of the better choices.
From what I know about the building is the SAs were to pay for the balcony repairs (3? Years ago) but since that time it has been problem free. Just looking at other similar age builds and $/sq ft the fees are on par. Wish I had the money as it would be a great rental property you could charge $2/ sqft.
 

JustDandy

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From what I know about the building is the SAs were to pay for the balcony repairs (3? Years ago) but since that time it has been problem free. Just looking at other similar age builds and $/sq ft the fees are on par. Wish I had the money as it would be a great rental property you could charge $2/ sqft.
Do you think you would be able to get $2800+ a month for a two bedroom there? I doubt it so thats why it doesn't fit my investment criteria.

Here is my quick math based on a 2 bed 2 bath @ $450K
Mortgage: $1170 with 35% downpayment
Interest Rate @ 2.65%
Strata Fees: $765 at .65 a sq ft
Property Taxes @ $300
Target CoC return @ 5-6% $656-785

Even with just this, its not looking good for what I would need. Its only going to get worse as you add R&M and VL and Mgmt Costs. Sure I could take a lower cash on cash return, but then i would move away from my strategy and could buy some dividend producing stock for less hassle. there is no expected capital appreciation, as this is Calgary so it has to stand on the income approach for me. Your investment strategy is different, therefore id love to hear your assumptions. Since this is the internet, I like to be open and transparent in what I use to underwrite a deal, its not a slight at you or anyone else.
 

Sky of Blue

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Given the price difference of buying a one bed over a two bed. The return on a one bed would be higher, would it not? The purchase price spread is significantly greater than the rental price spread. In many buildings, the two beds only rent for a couple hundred more than one beds but cost significantly more to buy, plus higher property taxes and condo fees. There would also likely be more people living in the unit to put on wear and tear.
 

JustDandy

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Given the price difference of buying a one bed over a two bed. The return on a one bed would be higher, would it not? The purchase price spread is significantly greater than the rental price spread. In many buildings, the two beds only rent for a couple hundred more than one beds but cost significantly more to buy, plus higher property taxes and condo fees. There would also likely be more people living in the unit to put on wear and tear.
One beds do typically make the numbers better, I was basing of what is currently on the market in Costello. Sometimes turn over is greater in smaller units however and that can be a killer on the CoC.

personally I just digested a 4 bedroom townhouse unit in Metro Vancouver and the numbers appear like this.
$1650 mortgage with a purchase price of $650K and downpayment of 35%
Condo Fees @ 280
Taxes at @185
Expected CoC of 4% $750 (there is an expectation of 2% rent increases and 1% capital appreciation in my models for Vancouver but this is removed to keep it simple).

Rent is currentl anywhere from $2750-$3200 a month, so just looking at that i'm closer to my target (more capital in it until it is refinanced at a later date). This one worked as frankly i'm the first tenant post acqusition to live in it, therefore once rent increases that it flows better I will purchase another unit and move into it. So repairs and maintenance are minimal and so is vacancy loss as I know i'm not going anywhere for a bit.

I was looking into Nude for a one bedroom and the math was stacking up better, the GST was the sticking point but I figured I can probably pick one up on completion down the road.
 

CBBarnett

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Using your same CoC approach I thought it would be interesting to look at my one bedroom apartment in Beltline. I live here as a home not necessarily an investment, so it's just a thought exercise and rounded all the numbers.

$950 /month mortgage (230K principle, 2.92%, 23K down)
$420 /month fees ($0.59/sf)
$180 /month taxes
$96 / month (CoC @ 5%)

~$1,650 / month rent required. It's a older but nice place, rent for my kind of building is typically in the that 1,400 - 1,700 range. I was thinking of keeping this place for the foreseeable future - the game plan was always to buy a easy to rent, well below my means monthly cost - perhaps as a rental once I move somewhere else in a few years. So seems feasible in the right conditions (note, I excluded a few smaller costs like insurance etc.)
 

darwink

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That is a good simple model - hadn't laid out something similar. By that metric the unit I rent out should have a bit higher rent, but I doubt I'd get it in Sunalta without at least a few capital upgrades, like new carpet and newer looking appliances (not the biggest cost, but still a cost).

Here is my quick math based on a 800 square foot 2 bed 1 bath @ $200K
Mortgage: $592.11 with 35% down-payment
Interest Rate @ 2.65%
Strata Fees: $528.99 at .66 a sq ft
Property Taxes @ $117.29
Target CoC return @ 5-6% $292-350

Target rent 1530.39

Crazy thing is in 2014 could have probably rented it for around $1750! If only had know what was to come.
 
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JonnyCanuck

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There is a growing supply of rental units in the city core:

1. Purpose built rental buildings coming on stream with hundreds of units, and more on the way.
2. Newish (last 5 years) condo buildings that still have units the developer can't sell without taking a big loss. Therefore some of them are being rented out short to medium term
3. Past condo owners who purchased units as an investment property, and have been renting them out for years. The Airbnb business has dropped substantially and will probably not recover for another year. Owners are forced to look for longer term tenants.

and ... will hotels realize that the only way to increase occupancy rates in the foreseeable future is to offer monthly rates??? If so, they will be in competition as well. 🤔

All of this supply and cost pressure will only lead to lowering of rents which is a good thing if you are a renter but very bad if you are a real estate investor.
 

darwink

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and ... will hotels realize that the only way to increase occupancy rates in the foreseeable future is to offer monthly rates??? If so, they will be in competition as well. 🤔
The Best Western on 8th Street across from the Dairy Queen has had signs for monthly rentals up for a while now.

All the competition and new builds, I have to wonder if for institutional investors it is more of an inflation and currency hedge (more as a store of value) than anything. Lock in super low rate financing and hope for the best.
 

JustDandy

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There is a growing supply of rental units in the city core:

1. Purpose built rental buildings coming on stream with hundreds of units, and more on the way.
2. Newish (last 5 years) condo buildings that still have units the developer can't sell without taking a big loss. Therefore some of them are being rented out short to medium term
3. Past condo owners who purchased units as an investment property, and have been renting them out for years. The Airbnb business has dropped substantially and will probably not recover for another year. Owners are forced to look for longer term tenants.

and ... will hotels realize that the only way to increase occupancy rates in the foreseeable future is to offer monthly rates??? If so, they will be in competition as well. 🤔

All of this supply and cost pressure will only lead to lowering of rents which is a good thing if you are a renter but very bad if you are a real estate investor.
We really don't know the impact that COVID-19 will have on the market place yet, but prior to that rents were rising albeit fairly slowly( CMHC rental market report). Rents per foot were also rising in lots of the larger new scale product, once again with a caveat that incentives are being offered.

My personal bet is that COVID-19 will pass and the market will be more resilient than many people expect. People will always need a roof over their head and if they can't buy they rent.
 

JTron

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The market's not bad for smaller molre inexpensive properties, or for rental, but not good for high end luxury homes.

This mansion in Springbank had a listing price of $20 Million , then $15 Million, and now $10 Million.

 

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