Success with Buy & Hold rental property in the Fraser Valley?

Question

Hello all,

I am a new investor that has been doing a lot of research into REI over the last 3-4 months.  Currently I own the condo I live in in Surrey, BC, and am hoping to acquire my first rental property this year.  As I have done my research I have been having a difficult time making the numbers make sense for rental properties throughout the GVA, so I have been looking more into the Fraser Valley (Abby, Chilliwack, Mission etc).  Nothing I have been finding comes close to the 1% rule.  Also, any properties I have tried to analyze for practice, the Cash on Cash returns, cash flow, ROI etc are just a downright bummer.

Now I have only been looking on the MLS, and know that private deals may be out there, but my first little bit of searching has been a bit discouraging!

I have joined a few groups on MeetUp.com that meet within the Fraser Valley/Vancouver monthly to talk various aspects of REI, and hope to attend these over the next few months.  I also went to a free REIN info session, but got a tad spooked by the hefty price tag attached to it.

I was wondering if any other investors out there have had success with Buy and Hold rental property in the Fraser Valley Area lately, not taking appreciation into account?  Whether it be SFH with basement suites, or small multi-family units (<4),  I would love to hear about your stories, and am always open for opportunities to meet and network!

Thanks so much for any advice, tips, or general feedback, it is all greatly appreciated!

Cory Graham · Answer

@Shaidah K.

Hello!

Sorry for the late response, I ended up buying a 4 plex unit in Edmonton.  I decided if I was going to leave metro vancouver, I might as well go where the tenancy laws are super lax, prices are cheap, and there is no PST!  Haha, once the dust settles on this first purchase I will continue the hunt in BC.

That is interesting about Campbell River, glad to hear you had some success!

Marie Tai · Answer

Hi Cory,

I think if you don't worry about the rules so much and keep putting aside money to put as your down payment, you will eventually get to the point where it would make more sense to just buy a unit than to sit on your money.  The problem with following a rule is that it holds you back from just finding a good deal and getting into the market.  As with most of the deals mentioned by the others, the earlier they got into the market, the more they could benefit from the appreciation (and experience).

With my first unit, I didn't follow any 1% rules.  I just made sure I found a solid rental unit in a good location that could cash flow after all expenses were paid.  Two years later, I have no regrets.  The unit has gone from $262K to almost $400K now, it cashflows more than it did before, I have a great stable tenant, and that unit has given me leverage to buy more units.  It was a great experience and it launched me into more purchases, new contacts, etc.

I can't remember where I heard it, but someone that was successful in REI said that finding and buying great deals is really good, but that if you simply buy and hold for a long time, all deals will eventually be great deals.  If that's the case, you should simply keep running numbers and buy your first unit based on numbers that make sense for you even if it doesn't quite fit the 1% rule.

Good luck!

Marie

Jason Ridout · Answer

As Brad said, look out of town. I lived in the lower mainland, and moved to the island about a year and a half ago. Since I've bought 3 in Prince George, and 1 in Port Alberni. I think Port Alberni is going to appreciate more, but Prince George has better up front cash flow.

If you want to look at anything in Port, let me know!

Brad Fournier · Answer

Hi, you'll have to push your search way out of town. Try analyzing deals in like Prince George...

Huninder Mann · Answer

@Angie Tao condo prices in Edmonton are very attractive as compared to Vancouver. I have a condo around 673 sq st in south east Edmonton around 34 street and 16 ave and I have it rented out for around $1000/month. A friend of mine also has a condo in the same building around 884 sq ft and that was rented out for few years for $1700/month but in 2016 old tenant left and economy was not doing so great and he rented it out for $1200 right away. Both of these unit are under $200k and were built in 2013. Rental market has been improving and right now rental vacancy rates are around 5.3% which is way higher than Vancouver which is around 1%.

Angie Tao · Answer

@Cory Graham Thanks for the thread! I am also from Vancouver and recently developed an interest in investing in RE. After you mentioned Edmonton I got really interested, and did some really quick search, and found out average household income is 90k in Edmonton vs 70k in Vancouver, unemployment rate similar while population is half of Vancouver. However the price is not even close to 50% of Vancouver's. I'm mostly just looking at condos though. What's your experience of finding tenants (how's the rental market there based on your experience). And in terms of investing in another province, does it add lots of complexity to taxes?

Cory Graham · Answer

@Xuan-Thy (XT) Bui yeah price points are just a tad more attractive there!  Have a look at the Mogul Realty Group, they are a group of realtors that specialize in out of province investors.  They were a great resource for me and really know their stuff.

Xuan-Thy (XT) Bui · Answer

@Cory Graham congrats on the purchase! I looked at several multi family buildings (6-9 plexes) about 12-18 months ago and always thought it would be a great investment area, especially around the new ice rink area.  Might have to go back and have another look as prices seem to keep favouring the buyers at the moment in Alberta.

Shaidah K. · Answer

@Julie Toh

As for the HELOC, we do have one, but at prime+0.7 (currently 4.45%), it is a bit high for what I want to be paying in interest charges.

Shaidah K. · Answer

@Julie Toh

We rented the house for $1875 which was what we were asking.  We were planning for $1850 and thought we would try $1875 to see the response...  We probably could have gotten $1900 but we didn't want to come across as greedy as the house is small with 3 bed/1.5bath, 1200sqft.  We prefer to chose tenants that we think will be right for the house and for us as opposed to getting more money in rent. It also helps that most people who rent are having such a hard time finding a home that allows pets.

I have a coworker who was telling me that his brother has a house in Chilliwack and there was also a "bidding war" on renting the house.  Right now, there are few and far between homes available for rent, and tenants are willing to pay more to end their housing search.

Success with Buy & Hold rental property in the Fraser Valley?

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