All Forum Posts by: Sean Kollee

Exactly the high cost is why I'm right now starting a build to rent project with good numbers. I don't want a collection of mid 70's garbage properties spread out across the huge city. It isn't a scaleable model. It isn't how I want to spend my time to manage tiny cash flow properties. Prices are so high how does a person accumulate a portfolio? If you have the funds here to buy a portfolio you could get 10x the number of units elsewhere. My second comment about buying here. If it doesn't cash flow now, why would it further appreciate? The next buyer would cash flow even worse than the 2017 buyer. I always look at my property market value and think 'would I buy this today at this number'. Generally the answer is no. Today is the time to be selling a portfolio not building it.

Typical big city Canada is highly over priced for landlords to buy in now. I often see listed property at over 200x monthly rent. For example a townhouse you may want to buy to rent in calgary would cost 5-600k yet rent for 2500/month (if you're lucky enough to get a tenant of that calibre they can easily buy so why would they rent). Take out 250$ condo fee and 4000$ tax bill and these properties can't cash flow. Investors have better luck buying older homes and suiting them. Even this is tight. Older multi family buildings again are laughably over valued vs cash flow. Often times the buildings are valued at 200k per door for a 50 year old building. I have a development property where it is valued at more than 500x monthly rent. These are big time money losers to hold because the value is all on the land. There are other strategies where building to rent may be better than buying existing stock. To many investors I've suggested that buying a reit would provide a lot more passive income than a rental property in calgary. If you factor in cap ex and management the listing agent pro forma would show a cap rate in the 2-3% range. Ugly returns on that type of product.

Just reading some of your posts frightens me in regard to your experience in these matters. Here is rule #1 city inspectors cannot be relied upon for anything, not oversight of your project, quality control, or assurance it is done properly. City inspectors make issues more often than they don't resolve issues. Here is a bonus rule. Don't make your first project a multi family build. Especially in an area with lots of rules, fire compartments, engineers, rigid city guidelines, Etc. I'm not saying you can't do it but with an 8 plex you can quickly end up with 8x the trouble. Whatever the gc fee is, you may save a multiple of that in pitfalls avoided.

I use smartsheet. Mostly for Construction not for finances. I'm sure you can get a trial period for free.

I would tour the local area and find some active projects similar to what you have in mind. Find who the builder is and interview them. Once you locate a builder show them your specs and plans and see what they offer. I don't think your investment requirements have anything to do with them. They aren't going to offer you a lower cost to build than they would any other type of client. The cost will be the same for any new build, driven by land, location, design, specs, fees, labour, etc.

Assign contract to an investor there isn't much time to do anything else. It is hard to buy property with no financing available to close and as you have seen people flake out on you.

Incorporating a holding company offers certain benefits. Allows you to have the corporate structure for tax purposes and you can still access residential financing

Can you share that somehow to me I can only seem to open a read only version.

Not sure if my numbers are correct but based on what my city charges for water at 1.8$ per cubic m which is 264 gallons your house is supposedly using 326 gallons per hour 24/7 30 days per month. I don't think I'd be overstepping to suggest a little fraud is going on here. Does a 3/4 inch supply line even have the capacity to push 5.5 gallons of water per minute through it? Can city water fill a milk jug every 10 seconds? I guess it is possible given the pressure of a city main. I would hire someone to immediately shut off the water supply. Second would be to fire whoever is doing this to you. Third would be to fly to the site and stabilize the properties until you can get a new pm. If I lived in your city I'd shut the water off for you gratis. Maybe find a bp member and ask them to do so or just hire a plumber. If the water can be shut off outside it is a 30 second task.

Here is my review of 2016 for Calgary inner city investors:

1. Bottom Seekers Missed Out Big Time. Investors were making deals while you were on the sidelines waiting for big price drops that never really materialized. What was different about 2016 compared to other years' is that you could actually find quality product on the MLS and there was choice in the market (for a while), this has since really dried up in some segments. Looking back the bottom in terms of price seemed to be that ugly period of market sentiment where oil was less than $30 per barrel. Good deals were made at that time and into the spring and even summer. Some buyers are sitting on $100k of new equity since July! (see point 3).

2.  Landlords Still Suffering - Values of 244 times monthly rent means that buying new to rent in the inner city is terrible for investors - I saw a sale today that I would estimate would rent for $2k, selling price was $488k.  There is no way you can fool yourself into believing this is a investor friendly market for landlords.  Landlords need to get really creative to add to their holdings and to keep tenants who are moving to lower priced lease deals.  Vacancy remain high and uptake of worn out old rental bungalows is low in the inner city.

3.  Land Value Recovery - values have largely recovered (almost to the 2014 high point of the cycle) for land.  From low to high this year it seems that land has gained back $100k over the past 8 months.  Unbelievably a 50 ft lot on a non-prime inner city SW location sold for $40k over asking price, at $640k after being bid up by the builders.  The builders are already undermining their own businesses in their desperate hunt for land to build into the next cycle.  Major optimism and fear of missing out hit the builder/investor following the election and land inventory is non-existent in some neighbourhoods.

4. The condo market is pretty awful, the townhouse market is very soft.  I am shedding a tear here because I have a couple townhouse projects in the design phase...still a good buyers market for retail buyers who want to live in the inner city and can take their time, make low offers and snap up choice units in almost any area. Despite the soft pricing on condo property, it does not cash flow once you factor in the high tax rate and the very high condo fees these units are often saddled with ($400/mo for a one bedroom?)

5.  Semi-detached and detached market is looking way better than I would have thought it would be.  This is feeding the builder buying frenzy for land.  Look for a lot of basements getting dug in spring plus many were dug before winter hit in December.  The typical SW areas I target are looking like construction zones again.

Predictions for 2017 - I was too wrong too often about 2016 to be making specific predictions.  Some of the sales we have seen in late 2016 defy logic.  It does appear that 2017 will be a good year for inner city investors because were are starting the year with positive momentum rather than the dismal start we had last January.

Hopes for 2017 - The unexpectedly strong semi-detached market starts to pull up the townhouse market so my projects look more appealing!  

Goals for 2017 - Sell my current semi I am building into a stronger spring market and get a multi family project in the dirt!

Best of luck for Calgary investors for the new year.