@Anthony Therrien-Bernard, thanks for the great rebuttal. If everyone could be so reasonable when they disagree with another's opinion, this world would be a much better place :)
One of the main reasons for me to post anything on these forums, besides hoping to add value to the community, is to also educate and/or clarify something for myself in the process of doing so. Your reply was very informative, and I was able to reconcile your info with my own analyses, and for me the conclusion remains unchanged. I won't bore you with the details.
In fact, I'd like to add that I do hope AB (and Canada in general) is able to capitalize on the changing macro trends. For example, I saw a very convincing TED talk about leverage existing O&G tech and experience to build new geothermal energy infrastructure. That seems like it'd be such an easy win, and I really, really hope AB can get in on that sooner rather than later. It'd be to everyone's benefit, and I'd happily jump into the RE market there if it does start to happen.
P.S. I think our debate in this thread could be the gold-standard for all discussions on BP :)
@Khai Hong Thank you so much for an informative response. I really appreciate your input and effort. I will look into Halifax. Interestingly, I don't see any rentals on Zillow, but quickly found rentals.ca showing some.
I hope that I don't fall into analysis paralysis. Now that I'm into long distance investing and considering the US market, it's just hard to figure out where to start. One question I have is, I see you screenshotted an MLS report. What sites/tools/sources do you use for things like areas with steady/increasing population, diversified jobs growth, and limited land. I'm pretty confident in my ability to Google, but I'm sure you and this community can point me in the right direction.
Thanks again!
The MLS tool is super valuable, CREA | Try the MLS® HPI Tool, because at the end of the day, prices don't lie. Prices are the net result of positive and negative factors, and are a good indication of future prices (unexpected spikes and dips eventually normalize back to trend). If you only use one tool to start with, then this should be it. After you find a trend that suits your goals, you can dig deeper into other data. Think of the price incline as an indicator of the cashflow vs appreciation continuum - the sharper the curve, the faster the appreciation, and the lower the cashflow. Flat means good cashflow, and declines should be avoided.
All of my population & unemployment data came from the statcan.gc.ca site. The site has changed a lot since I used it a few months ago, and is much harder to find stuff, unfortunately. Lucky for me, I downloaded a copy of it all in order to generate graphs. I use unemployment as an inverse proxy for jobs growth. 'Limited land' really only applies to metro-Vancouver and southern Ontario, which is a big factor in their outsized price gains. Even then, the limits only really exist because of zoning and lack of infrastructure. Ironically, Calgary's sprawl is well planned and actually contributes to flat prices, because they can just keep building outwards.
One of the many nice things about living in Canada is that there's lots of granular detail at the provincial and city levels. All provinces and most cities have their own stats, and all that data can be daunting, so you'll have to practice up on your Google-fu to get what's useful to you :) As a tech project manager, you shouldn't have any problems interpreting the data. The challenge, however, is choosing which "facts" are important to you. The same info can mean different things to different people, as you can see from the debate between me and Anthony. Cudos to Anthony, btw, for his very reasonable counter-facts. Most people just say 'I disagree' without anything to back it up.
I'm going to do a few separate deep dives into Halifax and some other places for my own understanding, and I'll post the results in separate threads. Please let me know what you find from your own analyses. I'd encourage you to adopt an abundance mindset, there's enough to go around, and what doesn't work for you might work for someone else. In theory, REI is a zero sum game, because if everyone is a landlord, then there'd be no renters. But in reality, very few people have the ability and/or the inclination to succeed at REI - just look at how much thought you have to put into just deciding where to start investing. It's not rocket science, but there is a lot of thought and work involved.
Every new investor goes through the shiny-object-syndrome phase, where each new strategy or market they hear about seems worth pursuing. And from listening to the podcasts, even the experienced investors have to keep it in check. Just be aware that the start of anything is a bit overwhelming, but you'll eventually lean into one or two strategies and markets that suit your personality.
Hi again @Jason Yong, I grew up in Calgary, yet I would recommend you consider a few other things before committing to investing there. Keeping in mind that the fed gov't has set an immigration target of 1.5 million over the next 3 years, the demand for rentals will be high pretty much everywhere for at least the next decade, and supply likely won't be able to keep up. That's on top of the 1M since 2020, so 2.5M total, which is about a 7% overall increase in just 5 years. Almost all will be renters. So you should be successful almost anywhere, as long as you have good execution (choose a good neighborhood, screen tenants carefully, find good contractors, etc). However, having said that, some regions will produce higher returns on your investment than others.
I hadn't heard of the ACRE system before, but it looks like it's mixing strategy (where) with execution (how). Of the 12 factors, only 2, 3, 5 & 12 would help you decide where to invest. All the other factors are applicable in every city, so they don't help you to differentiate. David Greene has a better framework for choosing where to invest: look for areas with steady/increasing population, diversified jobs growth, and limited land.
In the case of AB, the elephant in the room is that oil & gas make up 25% of GDP, Is it true that oil and gas is Alberta’s largest industry? (albertaworker.ca). That's not taking into account the ripple effects, like how many fewer restaurants would there be without all the O&G jobs, or how much less construction for their homes, etc.
I did a bit of deep dive into the four big Canadian metros here Investing in Calgary (biggerpockets.com), and found out that AB is the only province where unemployment is trending up - which seems to follow the declining oil and gas industry. O&G demand will, I think, in fact go up for the next 10 or 20 years as it is needed to build out the renewables infrastructure (ironically, enthusiastically digging its own grave, as it were), but its decline is inevitable. It's not just EV's, the world is taking sustainability more seriously, especially in light of recent macro events. These types of macro trends tend to be exponential; slowly at first, then accelerating very quickly (charts below). Even using today's tech, 100 square miles of electric panels in the middle of the US could power the entire country. And the tech just keeps getting better.
The AB gov't is trying to encourage a more diversified employment landscape, but so is every other gov't, all around the developed world, in fact. And despite their best efforts, unemployment has been trending up in AB for the past 15 years, whereas it has been trending down elsewhere.
As shown below, prices in AB have been pretty much flat since 2008, despite steadily increasing populations. So are you only looking for rental income for the next 10 or 15 years? Because after that, I think things will noticeably go downhill from there.
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Again, I don't think you can go wrong anywhere in Canada, as long as you execute well. But if you want to maximize your returns, then it pays to be more selective of where you invest. As David Greene often says on the BP podcast, cashflow and appreciation are a continuum, and appreciation is where the real long-term wealth is made. I would suggest you look at markets where there's reasonable cashflow with a good chance of appreciation. Halifax has been another hot market recently, and there I think it's justified. Prices have kept up with population growth, and unemployment is steady. Also, as mentioned by @Jeremie Rochon, northern ON is another hot market. The dominant industry there is mining, which has a brighter future than O&G, Four new mines coming to Canada - Canadian Mining Journal. As the world pivots away from China and Russia, clean and ethical producers like Canada will be the beneficiaries.
As always, I welcome any feedback.
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I own a LTR condo in florida. I manage the property myself. The HOA uses First Service as a way to collect dues each month but they are in no capacity the property managers. I will say they make it easy to pay your HOA fees each month.
Hi @Ryan Karel, any lessons-learned you could share about self-managing? Do you plan on growing your portfolio, or just cash out on this one when you retire?
In my opinion your sources may be off here. I own a PM company in US and have never even heard of FirstService Residential and never in the conversation of the "nationwide aspirants" that every hedge fund and VC group seems to be swooning over.
So, perhaps it is the child of Blackwater or some other MegaBuying entity that handles the management?
HI @Will Fraser, you're right. I fell for their marketing propaganda about being "North America’s property management leader", that doesn't mean they're the biggest. They only operate in the following markets:
There's a nice list here of the biggest PM companies, a few of the ones included are a bit puzzling because of their low numbers
Top Multifamily Property Management Firms 2021 – Multifamily Real Estate News (multihousingnews.com)
How about your own company, what are your rates? I know rates aren't everything, but they are a limiting factor. What makes you stand out? I recently catalogued about 1000 of the latest BP posts, and a good number of them were people looking for a good PM, so let's hear your pitch :) I will probably try getting into the US market in a few years' time, myself.
HI @Nicolas Houillon, there is the REITE club in Canada, which is a pale comparison to the BP forums - it's not very active. There's a podcast of the same name which I followed for a few months, but's it's not very good, either. The canuck community is actually pretty active here on BP, and I saw a post about reviving a Canadians-specific forum soon.
There are a few things you should consider as you're getting started. First, continue learning as much as you can until you overcome the shiny-object phase. I'm sure most people go through that phase in the beginning when every new REI strategy seems like a great idea worth pursuing, but you'll eventually lean towards one or two that suit your personality the most. There are 3 or 4 main books in the BP store worth buying to build a solid foundation of knowledge, and there are often discount codes if you listen to their podcasts, which I also highly recommend. You'll figure out soon enough what things don't apply to Canada - there aren't many, actually, but they get discussed a lot (eg, VA loans, 1031 exchanges).
As you're learning, share your thoughts and intentions with the people around you and on the BP forums. This reinforces your knowledge and goals, and will reduce your fear of taking action. However, don't rush in because of FOMO. You'll hear a lot of stories of people who jumped in unprepared and struggled and yet still succeeded, so you might be tempted to believe the same will happen to you. The BP forums has a natural 'success bias', meaning the only people who stay on here are the ones who have achieved some degree of success in the REI game. We'll never know about the multitudes of people who tried and failed, because they don't contribute to the forum. I'm guessing there a lot, lot more who gave up than those who succeeded. So why not take the time to learn from other people's mistakes and successes to increase your own chances for success.
I'm pretty sure the phrase 'time in the market vs timing the market' is meant to inspire people to take action if they're delaying and looking for the 'perfect' deal. I don't think it's meant to encourage people to go in unprepared. The more you learn, the more you'll realize that having an abundance mindset will be of more benefit than having a scarcity mindset. In theory, REI is a zero-sum game, because if everyone is a landlord, then there'd be no renters. But in reality, only a small percentage of people are willing and able to play the game, so there's enough to go around and there's no need to rush.
Second, the ongoing cashflow vs appreciation question/debate is, well, puzzling, because I think it's pretty much been settled by David Greene, the host of the BP podcast. That question seems to come up every few shows, and his answer is pretty much the same every time. The answer: every property should cashflow, but how much cashflow you need depends on what your portfolio looks like. As you start investing, you'll need higher cashflow to cover unexpected expenses and to buy the next property. And if you plan to rely on cashflow to replace your job, then you'll need more cashflowing properties. However, appreciation is where the real wealth is created, and there are many ways to 'force' appreciation. So as your portfolio grows, you can start adding properties in higher appreciation (lower cashflow) areas because the income from several properties can more easily cover unexpected costs in any one of them. Cashflow and appreciation are a continuum, and you have to choose where you want to be on it at your stage of investing. Some people are perfectly happy with one or two rental properties nearby that they can manage themselves. Others want to invest all over the world.
One great thing about investing in Canada is that there's lots of free data to help you decide where to invest. I've used the StatsCan and CMHC sites a lot, as well as the CREA site, Zillow and Redfin. The 3 factors David Greene suggests to look at (and I agree) are population & employment growth, and land availability. If the first two are growing and land is limited, then that's good for appreciation. If the first two are stable or increasing gradually, then that's likely good for rentals. He also suggests buying the worst property in the best area you can afford, and fix it up to get the maximum return on our investment.
After digging into the 4 big Canadian metros, see my post here Investing in Calgary (biggerpockets.com), I was surprised that Calgary is so popular with investors. The main draw is the landlord friendly regulation. Its population is growing, but it's the only big economy with unemployment trending up. Plus, there's pretty much unlimited land. The economy is more cyclical and is too reliant on oil & gas, and the clock is ticking for that industry. We'll certainly need increasing amounts of O&G in the next decade, maybe two, to build the infrastructure for the post O&G world, but beyond that there's going to be a pretty drastic drop in demand. Will business friendly government be enough to overcome that decline? I doubt it. Certainly, a lot of investors are successful in areas that most people avoid. 'Be a big fish in a small pond', or 'be greedy where others are fearful' and all that. Oh yeah, that's another thing David says to check, whether an economy is dependent on one company or industry.
Finally, I'm a big proponent of house hacking, especially since you live in Vancouver. I would suggest starting with that before looking elsewhere, because again, appreciation is the best way to grow your wealth. See my post here Post: Seeking Advice On How To Achieve My REI Goal (biggerpockets.com)
Thank you all for the recent replies. Apologies for the delay as I've just welcomed my son to the world and currently busy with what comes with taking care of a 5 day old 😉.
@Khai Hong Thanks for the reply. Yes! great to see fellow Canadians. Especially as resources tailored to us are less abundandant than our neighbours down south. Really appreciate the points you made on house hacking and it makes total sense. It's just that I'm with a family of 4 right now plus dog and I don't think that fits our lifestyle even though it would accelerate our wealth building. KW was on my list to check out, but I may try to find other places that can provide positive cash flow.
RE: Your crypto idea, I think it's great and kudos to you for exploring this idea. First, I would say to really think about how the tokenomics would work. I know you mentioned advertising (also look in affiliate marketing), but tying payments to an on chain token is no easy task. However, that just means if someone figures it out, they are primed for success. Launching the token itself can be done in a few clicks. Checkout Coinvise or Aragon. It's tying back value such as advertising revenue that would be tricky. perhaps you set up the set so that advertisers must use your coin to buy advertising space, thus creating demand (value) for the coin (this is tokenomics). Awarding coins for helpful reviews isn't the largest project, but would still probably require more than a "sprint" (2 weeks or 80 hours). One tricky thing with such endeavours is most onchain activity costs "gas'. doing this on Ethereum would be expensive and not feasible. Doing it on an Ethereum L2 like Polygon or optimism is cheaper but still infinitely more expensive than reddit upvotes for example. If you expand to other chains beyond Ethereum you may sacrifice security for cost and speed, which may not be a bad thing just something to consider.
@Drew Sygit thank you for your reply!
I will look into the links you provided when time allows. As a Canadian I am ignorant of the nuances of investing in the US and appreciate your points. I plan to dive deeper into my learning journey of investing in the US and will circle back. 🙏
Wow, congrats @Jason Yong! My son is 2 so I still remember the first few weeks, what a crazy mix of happiness and exhaustion :) I guess it goes without saying, but take lots of pictures & vids. I have my pics running continuously on tablet in the living room, and they always make me smile.
Thanks for the great tips about working with blockchain, I may very well look you up when I finalize my business plan. I didn't realize there's such a thing as crypto project accelerators, but it totally makes sense.
If you're open to investing in the US, I highly suggest you get in touch with David Greene's team, host of the BP podcast. That's what I'd do for sure, but I'm currently tied to the Vancouver market for personal reasons. After I secure my next property here, I'll be ringing him up. I salivate at some of the opportunities I hear about to the south.
Hi @Sylvia H., my reply is probably too late, but I would suggest you pay for the repair *and* evict her, and then take it out of her deposit, and then tighten up your screening criteria for the next tenant. She's obviously a troublesome tenant, and there's a good chance she will deliberately cause damage on her way out if you upset her. She could tell a friend to drive by and shoot out your windows once a month... In our society, it's much easier to be a bad person than to be a good one.
I live by the saying “prepare for the worst but hope for the best” (Benjamin Disraeli), and in the case of being a landlord that means buying in good areas, and screening for good tenants, and then treating your good tenants well. A detailed lease agreement is all well and good if the renter is a reasonable person, otherwise it might as well be toilet paper to be soiled and flushed.
And as the saying goes, "an ounce of prevention, is worth a pound of cure". It's much better to have a strict screening process in the beginning, than to try being strict in enforcing a lease agreement after an incident. When screening, talk through each point of your agreement, get their initials beside important points, and then ask them afterwards if they think it's a fair agreement. Only accept them if they agree. If there's an incident, remind them of the lease and that they agreed it was fair. Consistency is an amazingly powerful human motivation - everyone should read the book Influence, by Robert B Cialdini PhD. And if you have to wait for a good applicant, then wait. It's a tight rental market, and possibly giving up a few months of rent is better than headaches like this one. How much was this stress worth to you?
Anyway, please update and let us know how it goes.
They're the largest PM company in US and Canada, but there aren't any posts mentioning them here (I searched) ...? Their rates seem really good, 8% for monthly rentals, and 4% for leases. Online reviews seem to indicate they're mostly okay - I tend to discount 1-star ratings for anything (if you're one of those people, please stop; your whining annoys more reasonably minded people).
HI @Josh Hoover, it bears repeating that you're off to a great start! 19 y.o. and already a homeowner, you are in a super elite group. Having ambition, taking action and being willing to ask for help will get you very far in life.
For now, your best next step is to spend some time thinking about your 'why'. Your mindset and goals will be the biggest drivers of your future actions and happiness. What's your purpose behind wanting fin. indep.? If it's so you can go on to do bigger and better things outside of real estate, then that will lead you down a different REI path than, say, if you want to sit on top of a real estate empire and watch your wealth grow.
Thinking about your 'why' will also guide the way you live your life now. Are you willing to save the money you get from rent to further build your wealth, or do you want to spend it having a good time with your friends? When your friends find out you own a house, some will expect you to be a big spender, some will want to learn from you, others may be jealous or say you're crazy for taking so much responsibility instead of having fun while you're young, etc. Having a solid 'why' will enable you to consistently deal with different situations and overcome any difficulties.
Getting to your real 'why' may take some time, so in the meantime, learn as much as you can about REI so you can narrow down your own investment strategy. There are many, many ways to do REI, and your current strategy of house hacking is a complement to pretty much all of them. David Greene, the host of the BP podcast (which you really should listen to) often says that everyone should be house hacking at least one property every year, regardless of what other strategy they use. The idea is that you hack one house for a year or two to build up cash and/or equity in order to fund another purchase, and then another, and another, etc.
While you're saving up for your next purchase, you can practice analyzing deals and thinking like an investor. Can you improve your house to attract higher paying tenants? Does it have a pool that you can rent out (yes, that's a thing)? Can you hack the floorplan to create another room for renting, or build an ADU? Was the one you bought the best deal? If yes, then look for others like it and consider wholesaling to other investors. If no, then look for better deals for your next purchase. Maybe get a realtor or broker's license. Consider where you want to invest next, and start building relationships with investors, agents, contractors, brokers, etc in that area.
If you don't want to deal with HML/PML, then consider looking for joint venture deals and partners. Now that you have one property, other investors are more likely to hear your pitch, especially if you can show them very detailed analyses for deals that you propose. Getting part of a deal is better than no deal at all, especially if you get introduced to an experienced investor's network.
Finally, you may want to reconsider why you don't want to work with HML/PML. In some ways, they're better than JV partners (clear exit, experienced investors, clear division of responsibilities, etc). If your main reason is because you don't like the idea of giving up some of your profit, then consider again that getting part of a deal is better than getting no deal. So let's say you could have gotten $40k from a property after 1 year, but the lender gets 50% of that, you still end up with $20k that you wouldn't have gotten without that deal.
Finally, finally, you can start a youtube channel and/or training course to teach (for a fee) other young people about how to invest in RE and/or about FI. Most people your age (and older) have no idea about those things.
Lots of things you can do for next steps, it all depends on what you want to get out of REI.