All Forum Posts by: Tom Stromar

Hi Alejandro - I think you're off to good start having a base plan to work off of. How large of a multi are you thinking? There is drastically financing requirements as you get into larger properties. For example, where a duplex or quad can secured with standard residential financing, a medium sized apartment block will require things like environmental assessments, etc... 

We're in Nanaimo which has had explosive growth in the last 4 years and a low vacancy rate which has had the rents rise with prices so the cap rate has not been eroded.

I'm trying to find a company (or government agency) that can do a title search for me on some properties in Redmond - who has a recommendation of where I can get this done? The title system up here in B.C. is completely different in that we use a registration based system and don't have any deeds, etc...

Thank you!

Hi John,

Welcome to Bigger Pockets! Nice to meet a fellow Nanaimo-ite :-)

Are you working with that Firm at the North end of town?

I wonder if developing out a property might be a good option if you're looking to take advantage of the PPT rebate (although perhaps in the long term scheme of things it's not as important as it seems).

Here's what I'm thinking: a single family home where you either develop a suite or add a carriage home / lane house. The latter will take 4-8 months to complete, you'll be on site and in the end you'll realize a nice return on the new unit, probably 2 or 3 times the cap rate (i.e. current cap is about 4.5-5%. Coach construction 50K-100K with 800-1200 rental possibility)

We find that tenants like the 'separate' nature of laneway houses, turnover is less, rents are more.

Yes, obviously it was easier to find a deal in 2012 then now, but that being said, depending on what someone wants to take on, I've seen more than a few this year. My wife and I were joking around the other night before leaving the office if it was too late to just go out and buy a house that night given how low the inventory is (the joke being the prices will continue to raise)

Here, the coach house allowance is not restricted by zoning. Only lot configuration, so any SF zoning that is a corner, large or on a lane will work

Hi John,

How are things going up there in Courtenay?

You're right the run up in prices this past year (21%!) applied some pressure to the cap rates however the rents have increased markedly as well. There has been some compression but not nearly as much as expected.

One strategy to develop a return greater than the market cap is to develop properties that are suitable for coach houses / laneway houses. With a construction cost of approximately $80,000 to $100,000 (this is hands off) and rents ranging from 800 to 1300, a tidy boost to the return can be had.

It's interesting to think if, should the recent influx of people to the island continues, whether Port Alberni may end up being a good risk / return play as it appears they have not seen the crazy appreciation happening elsewhere.

Here in Nanaimo, the inventory has been low since March and continues to be. This makes it double tough to not only located properties but also purchase them as many have multiple bidders.

Jan & Tom

Hi Andrew,

The purchase part isn't too complicated but arranging financing and the tax implications can be. Are you thinking of a conventional mortgage? Also, you'll want to consult your accountant so that you can plan appropriately.

It's hard to pin down exactly when the seller's market might shift. We have seen a bit of the 'froth' taken off with the changes to mortgage qualifying recently implemented by the federal government. But while there is a shortage of supply and sustained or excess demand, I would expect market conditions to remain in the seller's favour.

As for the annual market cycle, yes, you're absolutely correct, while you can see the extra activity of 2016 in the lower chart, the double camel hump is clear for both years. Typically activity peaks in May and October with August and December being the slowest months.

Hi Jeff,

There is definitely a lot of work that would go into this type of project. Engineering environmental assessments, development cost charges, (don't forget landscaping!), additional legal, setting up the Strata, etc.. Might be quite a bit to bite off if you don't have established relationships in place.

Also, for a smaller market such as Nanaimo, 143 units represents a significant portion of the market. Of course in 2016 the inventory has been so low the product would be welcome! That being said we have noticed a bit of a shift in the market with the recently legislated changes to borrowing, etc...

Fortunately the realtor fees would be lower than expected however this might be offset by additional marketing costs depending on how how aggressively the project is advertised.

Although it is a Seller's market there are still some deals to be found. Further, recent zoning changes have opened up the opportunity to create 'small' developments that can have a fairly nice return (used to be spectacular last year)

The last 9 months has seen the busiest market Nanaimo's ever experienced. I recently did a search for all homes that sold both in 2015 and also in 2016. So the exact same house - and found that prices has increased 21% for those properties! (Tyler - you've made a bit of cash anyway ;) )

Fortunately we are finally seeing upward pressure on rents as well to mitigate the compressing cap rate in town.