REI in Canada = Not profitable? (BP #214)

[Jan B.]

Hi there -

Just listened to podcast episode #214 of the podcast and was surprised by Joel Sherlocks statement that REI in Canada didn't made much sense for him/his company so they went to the US/Arizona instead..

We're currently located in Munich, Germany but have been all over the place in the past, spent a couple of years in NZ, and are now seriously thinking about moving to Canada (BC) and starting to invest in real estate (small rentals) there.

Any insights from local investors much appreciated -
Does it make sense to invest in real estate in the BC/AL area these days, i.e. are there good deals to be found..?

Cheers,
Jan

[Robert Gunther]

Thought I would share a very recent transaction.

On May 1st I closed on a 4-plex in Vernon BC.  It has all two bed, one bath units - all the same size.  Has a shared coin operated washer / dryer in the building common area.

It is in a C class neighborhood, built about 1970.

Purchase price was 470k,  plus about 10k in closing costs and I will put about 10k into repair/improvements.

At possession on May 1st only 1 unit was rented @ 800 - the tenant has been there 1.5 years.

I believe the market rent should be more in the range of $950.

I put an advert on Kijiji saying there would be an open house on May 4th and got about 35+ people replied.  I screened some of them out right away from their initial contact.

About 15 people completed applications for units during the open house and rented the three available units at the $950.

With the purchase price, closing and repairs it comes to about $122,500 per door.

The building is structurally sound, tenants all have separate power meters - I supply the water  in the rent (hot & cold), everything else is paid by the tenants.

Property taxes are about $3,300 and insurance is about $2,200.

So far I am very pleased with the deal, as long as I have picked some good tenants things should work out well.