All Forum Posts by: Jason Ridout

Hi BP people. 

I'm sure you've heard the news about Kitimat getting a $40 Billion LNG plant. They are expecting upwards of 10,000 employees to build the plant over the next 5-7 years. Kitimat currently has 8,000 people. Do the math. 

I'm looking to park capital there. I'm thinking rents are going to almost double, as are property prices. It's going to be Fort Mac all over again. Just make sure you're out before the plant is completed, but even then, they are expecting 950 full time employees. I have some capital, and am willing to be hands on. Maybe someone wants to talk strategies with me? 

If anyone else is interested, let me know. 

I'm not sure I'd waste your money on your own appraisal. It might be fine, but banks often insist on having their own done anyhow. 

The banks don't care so much about what renos could cost, should cost, or will cost, it's what it's worth when you are done. You could spend $10,000 painting the house pink with blue polkadots, that doesn't mean the house is worth $10,k more, it might be worth $10k less after a paint job like that. It's not what you spend, it's what it's worth. 

I just put over $200,000 into a house in renovations, and asked the bank if they wanted receipts when I refinanced. They didn't care about receipts, it was all about the appraisal. Appraisers that are working for banks also do their appraisals a bit differently than someone wanting to know market value. The bank wants conservative appraisals.

Unfortunately, you are at the mercy of the appraiser. If you don't like the appraisal, tell the bank there is a conflict of interest, and you'd like another. You'll have to pay for it, but it MIGHT come back higher.

Everything you mentioned Matt, it true. Everything is effecting prices, 20% speculation tax, foreign buyers tax, increasing interest rates, the 2% "stress test". Sales are down on detached homes, and prices have started to follow. Condos and townhouses are still stable, as they represent the only "affordable" market for most people, but they too are cooling off quickly.

The housing cost in Vancouver has now hit 88% of the average persons income. That is not sustainable. The entire market has been propped up on foreign money constantly entering the market. Once that slows, or stops, the market stops. How big the adjustment in the market is will be hard to calculate, and is dependant on whether any foreign money gets taken out of the market, which could cause a much bigger collapse.

I remember hearing an investor, on one of the BP podcasts, talk about a conversation he had with a police officer in California, right before the crash in 2008. The officer explained how he had just bought a house for almost a million dollars, and only made about $60K a year. The investor knew, that's not sustainable. The only reason that was possible, was the banks were lending far too easily, and back heavy. The numbers didn't work. When I see that it takes someone 88% of their income to afford a home in Vancouver, with our very low interest rates, that to me says, not sustainable. Sometimes you can look at stats all day, but common sense still needs to play a factor. 

I would not be investing in the lower mainland, if I was basing the investment on speculation.

Hi Chris, I've viewed Campbell River, and came to the same conclusion, rents are fairly high there, but property prices are a bit too steep for the rent to cover the mortgage.

As for Port being a logging town, it is, but not as much as it once was. I tried my best to find stats on what percentage of the population in Port is employed by mills, or logging, but had a hard time finding solid numbers. I think it's a decreasing percentage though. I think every year, the population grows a bit, and yet the number of people employed by logging is staying the same, or even decreasing. It was a one trick pony town, once upon a time, but when a Walmart moves in, it's a huge indicator, they think the city is stable. You have the hospital, University, several car dealerships, etc. 

Tourism is good there. It is out of the way a bit, but still on the way to Tofino/Ucuelet. Lots of outdoor activities, and fishing. The fact that's it's only 30 minutes to Parksville/Qualicum, and half the price, makes it very appealing to young families. I don't know if it will ever be the "it" place, but it's not going to shrink.

It's kind of funny, part of me wants the big mill to close. Yes, it will hurt the economy there for a bit, but people view Port as a working, logging, mill town. It might be a really desirable place if it didn't have that reputation. I think realistically, there will be a need for logging, lumber, mills etc for many years to come. Oil might get phased out one day, but no one has even thought of an alternative for building supplies, to replace lumber.

If you want to look around Port, let me know, I'm a Realtor, we can look at some houses, I can even show you my property.

As for distance investing, I have some in Prince George, and that's far enough away. I probably make a trip up every 2 months to deal with stuff up there, i.e. contractors, etc. Unless you have a team of trustworthy people, its so hard. Once you have those people, it's fine, but it takes a lot of hands on to find them. I invested in Port because I found PG too far to manage.

I've heard a lot of people talk negatively about the quality of tenants in Port Alberni. Upon learning about Port for myself, I came to realize that the rental units available were as much as a problem as the tenants. The suites were horrible. No self respecting person would live in them. I bought a newer house, and the suites are beautiful. My rent will be much higher than the low end suites on the market, attracting the more desirable tenants. 

In the end, it's all about who you want for a tenant. Buy the cheapest, nastiest rentals on the market, slumlord style, guess who you're going to get for tenants. Focus on nice units, you might need a bit more money up front, but you don't have to deal with the nightmare tenants.

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!

It might be a bit tricky, but you can always raise the rent, the maximum amount each year, in hopes that the people move out. My friend has about a dozen units, and raised rent on 4 of them last year, two of the tenants moved out because of the rental increase. If you can try to float the deal, unit you can get the rent up, it might be worth it still. There's always the keys for cash solution too, offer them three months rent to leave. A lot of the time, they go for it. A bit of a cost up front, but you get it back fast.

Hi Melanie, Luc and Oren both offer some good advice. Getting out of the market now, might be a blessing in disguise, as I believe the market in the lower mainland is turning, as Luc said. Detached houses have already had a slight drop, and condos have decreased in sales, and prices will probably follow, or at least taper off.

However, wanting to stay in the market is always a good idea, even if it's not in your local market. I have two friends that live in the lower mainland, that are selling their homes, while the market is at the top, renting in the lower mainland, and investing their money where they will either see the market continue to appreciate, or where they can cash flow. It's almost impossible to cash flow anything in the lower mainland, unless you are putting 50% or more down.

I live in Parksville, and just bought an investment house in Port Alberni (about 30 minutes away) The market here on the island is still climbing hard, and I believe, has a ways to climb to catch up to where it was in relation to the lower mainland. I bought an 11 year old house, with tile bathrooms, 9 foot ceiling, open concept, and mountain views, with a 1 bedroom suite for $255,000. Fantastic value if you compare it to the lower mainland, or even Parksville. Comox/Courtney is doing very well right now too, and will continue to appreciate, but is harder to rent out to cover the mortgage, as prices are higher than places like Port Alberni.

For myself, I like Port because I'm close, cheap enough that I can't see it coming down in value, and vacancy rates are extremely low now. I know you might not want the hassle of having a long distance rental, but we could work out a way for me to help you manage the unit, as I am going to Port fairly often anyhow. It would be a great place to park your money for a few years.

If you want to come check out the island market, let me know. I'd be more than willing to show you around.

I understand that people don't like looking at stats, but I know the demographic I'm going to be pitching to, and it's mostly people heavily involved in the stock market, that like to hear numbers and stats to back everything up.

The best way to convert a stock investor to real estate is to prove that they won't lose their shirts in real estate they way they did ten years ago in stocks.

Hello everyone,

I'm trying to expand my investing to the next level by getting investors. I've got half a dozen rentals of my own, but need additional capital to grow. I'm in the middle of putting together a presentation to pitch to possible investors. I'd like to include as much number based factual information as possible.

The biggest point I'm trying to get across to investors is that even though the housing market fluctuates, the rental of housing stays fairly stable. I would love to find the actual numbers to back this up, or better yet, a graph or chart, showing a direct comparison between the stock market, and rental incomes over the last 10,20 or 30 years. Or stats showing a comparison between housing pricing and rent pricing, or all three, stocks, housing and rent prices. I know every city is going to vary in prices for rent and houses, but to see an overall image of how the USA or North America was effected during the 2007, 2008 recession would be interesting. I believe houses dropped in price, stocks dropped, but rent stayed fairly stable in most areas. This would be a great stat to pass on to potential investors to make them feel their money is stable during downturns, enabling them to weather any future storms.

Thanks for reading!