All Forum Posts by: Ken Didychuk

@Arzu Irem Aydogdu *If* these centers are approved, and right now, that is a huge *if*, all of Alberta will benefit. By rate of comparison, the $1.6B expansion to the Red Deer hospital will be employing 300 electricians. How many other tradespeople are needed for such a project? Now extrapolate that to O'Leary's $70B project? Now add in another half dozen smaller data centers along the foothills. The size of that workforce would be ridiculous. Real Estate all across Alberta would be in demand with maybe the smaller towns/communities seeing the greatest increase. You wouldn't necessarily have to invest up near GP. Find a community that would be a good investment under *any* circumstances and you will never go wrong.

@Stevo Sun The workforce needed to operate these data centers (I believe there are well over a dozen sites that are proposed) may not be as large as the oilpatch, but the workforce needed to build them would be immense. Not to mention all the subsidiary jobs that will be created to support such an influx of trades. Also, these sites are chosen because of their direct access to natural gas for essentially unlimited electricity potential. This means that there will be immediate demand (customers) for natural gas right in our own backyard. The oilpatch will benefit for ongoing production and continual maintenance. Another reason for these sites up here is the incredible amount of heat these data centers generate. The ongoing costs in a cold weather climate are greatly diminished, not to mention the relatively easy access to water for those same purposes. As you mentioned, who knows if this will come to fruition, but the economic potential is absolutely incredible.

Sounds like you're doing just fine Ryan!

Be careful about the advice of others when it comes to your RE investing future. There are so many variables and some of the biggest misunderstandings come from regional variances on how these variables are handled (mortgages & financing especially).

I had thought progressing towards multifamily and then commercial was the obvious path to follow, but one conversation changed it all. I was made to think "if you've put this much time, money, and effort into perfecting the development of secondary suites into SFR's, why would you move your focus onto another strategy?" I have no doubt that I would learn any new avenues quickly considering my current experience, but I would still be taking a step backwards for the time being. Maybe if I was younger it would make more sense, but staying with the method I've used over the last 10 years will only become more refined and efficient. Many, many people have made huge fortunes on SFR's alone.

Speak extensively with anyone who invests in RE and do everything you can to pull out why you *shouldn't* do something. Everyone wants to brag and spout off about how well they've done and which strategy is the yellow brick road to success. The problem is they never tell about their failures, their roadblocks, their stress. Never fully trust anyone that isn't willing to share the negative aspects of all this.

As I'm sure you've experienced, this can be a very rewarding path to take and depending on your grit and determination, overcoming all the pitfalls are well worth the effort.

Cheers and drive safe!

Heya Ethan.

I've completed 7 secondary suite renovations/developments now and it is extremely difficult to do a true BRRRR where you pull every dime back out again after you refinance. I have done it successfully on my last 2 buildouts, maybe 3, but only because I was able to acquire the properties at a very low price and I did all the work in-house (myself and some hired hands on staff). Even still, it could be said that I've still lost money due to my time on the tools instead of prospecting as a real estate agent (the cost of lost opportunity).

If you can truly do 80%-90% of the work yourself (at acceptable quality levels) and you aren't sacrificing your time where you can get better returns for your efforts, then yes, it can work even up here in Canada. Hiring someone to do the work will likely cost too much (I would charge a small fortune, it's an incredible amount of work) and doing things as cheaply as possible will bite you in the *** later when you start having issues with your own shoddy work and/or materials. Remember, in this model, you are planning on holding on to these properties as rentals so pay now in quality, or pay later in headaches and repair costs. I spend roughly $120k on my renovations, but this is for the entire property and developing the secondary suite which certainly costs more (2 new furnaces, all new plumbing, new kitchens and bathrooms with tiled floors and showers).

All said and done, I personally love it. I am a blue collar guy through and through so even though I'm now a realtor, I can never set my toolbelt down for very long before I'm needing to demo, build, and create once again. There is an incredible amount of points to consider when weighing the options on something like this and honestly, I don't recommend it to very many people at all ....even seasoned tradesmen and investors. There are many who will argue my methods and that's fine, it's worked very well for me and has been extremely rewarding in ways that cannot be compensated monetarily. 

Feel free to reach out directly if you'd like to dig deeper into the chaos I've immersed myself in over the last 10 years or so.

Cheers and drive safe

The cost of entry in Red Deer may be appealing to many as well. A legally suited detached with garage is around the $375k - 450k point (in decent shape). 3 bedroom, 1.5 bath main floor around 1100 sqft can rent for $2000-$2200 a month (utilities included). 3 bedroom, 1 bath basement can rent for around $1600-$1800. These are numbers for some of the nicer suites with separate laundry and nicer finishings but it gives you an idea of where things are at here. Often overlooked is the premium for storage space in the city. There has always been a shortage of garage space for rent. A 24x24 shell with no heat or insulation and 15 amp power can rent for $600 a month. That would be for a garage in a convenient location since these always get picked up by contractors for their tool and material storage.

As @Zorya Belanger mentioned, Alberta is definitely the hotspot right now. The demand for real estate purchases and rentals are both very very high and will likely stay that way for the foreseeable future. Red Deer is also another market that has caught the attention of many investors. The price of entry is about $200k less than Calgary, and about $125k less than Edmonton. The rental demands are unusually high so although not on par with either Calgary or Edmonton, they aren't that far behind. With a population of over 100,000 and only an hour drive to either city, you can still find a 1200 sqft bungalow with a suited basement, detached garage, and large yard for around $350k-$375k. Main floor rents for that are around $1600 and basement suites are around $1400. Storage is also a premium with a 22x22 shell of a garage going for $350 a month. That's $3350 gross income on a $350k-$375k property. Keep in mind those rents assumes the landlord pays the utilities (my yearly average is $400 a month across my portfolio). 

Reach out if you'd like more info. Really you can't go wrong in Alberta right now. Oh, and the landlord/tenant laws are the most landlord friendly in the country.

Drive safe

I certainly agree with @Stevo Sun on this. There has also been a statement by the federal government indicating that they will be putting pressure from the top down to discourage STR's. I believe it was indicated that they will no longer allow operational costs to be written off where it pertains to a STR. To my knowledge, there hasn't been any concrete details but it should still be considered moving forward.

Hey @Sam Chicquen, what property class are you looking into/most interested in (SFR, multifamily, suited, etc)? There are a lot of great contributors that will be able to help point you in the right direction, but you'll get a better response if you are a little more specific. For instance, I'm a real estate agent/contractor in Red Deer and my portfolio is entirely comprised of suited bungalows that I've developed myself (think BRRR). Everyone will have their own niche that they will be able to comment on and contribute to a larger picture. While it's important to be able to step back and see that larger picture, you'll likely get better results by focusing on one aspect of the industry at a time.

Cheers and drive safe!

Red Deer, AB with experience across much of the prairies.

Hey Scottie. I've been around Central Alberta and Red Deer since 1994. I own a small portfolio of SFR's between Red Deer and Rocky Mountain House that I've all developed into legal secondary suites. I do all my own development and am also a licensed agent in town so I'd be happy to shop talk any time you like.