New member in Vancouver, BC seeking Alberta

[Taimur Khan]

Hi All, have spent a few days browsing these forums. Longtime entrepreneur (education & e-learning space) that is finally putting in more energy and effort into RE investment in Canada outside of REITs and personal homes.

We have a trip to Edmonton & Calgary next week for an initial scouting. Looking for a blend of income + cap gains. Given that other Canadian markets have appreciated immensely, we feel these two markets will be next despite cyclical dependence on oil in the past. Opinions? Are we completely off and it is just an energy cycle now? 

Also, if you were to invest in homes with legal suites or smaller multi-family (4-6 units)  which neighbourhoods would be on your radar? TIA.

Looking to learn more with everyone here!

[Stevo Sun]

Quote from @Taimur Khan:

Quote from @Stevo Sun:

Welcome to BP! I'm located in Calgary and our market has definitely gone up a decent amount with last run with everyone else. From a price standpoint we are still a lot cheaper than Vancouver and Toronto. But at the same time we also do not generate the same rents as those cities. 

Alberta's economy is quite cyclical since our main industry is oil and gas. If you are betting on high appreciation then it might be a bit of a roller coaster. I think condo prices just got back to what the peak prices were in 2014. That's a lot of time without any appreciation (if you consider inflation, then you actually have depreciation).

I would be conscious of these things before making any investment decisions. Alberta is starting to diversify its economy, but it is still heavily dependent on oil and gas which is of course cyclical. 

Don't know the future, but there are definitely some risks associated with Alberta. Personally I have a few properties here but I'm not actively seeking deals right now. However just like in any market, if you could find a good deal it can work.

DM me if you want to grab a coffee or something when you get into Calgary, always happy to chat real estate

 Thank you Stevo! Truly appreciate your input as an investor in Calgary. Question; how have the rate hikes affected the local market/perspective in Calgary both for newcomers and those seeing their mortgage payments increase? Are sellers less willing to let go due to costs of a new mortgage? Is there a significant fear of defaults forcing sales? 

Mortgage rate hikes impacts all debt holders the same way. It doesn't really matter if you are in Vancouver, Toronto, or Calgary. We don't have 30yr mortgages in Canada, so everyone will renew their mortgage some time. The rate increase will impact everyone if they stay higher and for longer. I don't think there is a significant fear of defaults, the mortgage amounts in the Calgary local market is not as high as Vancouver or Toronto due to the lower price points for the properties. The higher loan balance you have the more impact rate increases will have on your portfolio.

People in Calgary have been underwater from the 2007 peak and 2014 peak, but they were able to hold on to the properties. As long as people can afford the payments it is unlikely we'll see defaults. Personally I think price corrections can occur, but defaults are unlikely. I also think that markets where prices are much higher (aka. more debt) will crack first under the pressure of rate increases.