All Forum Posts by: Dale Plant

I was reading through this old post and thought I would give an update. Can't believe its been three years.

There is mixed pressure on the market as a whole here now. Loss of Jobs applying the expected downwards pressure while the destruction of over 2400 structures by the fire in 2016 has resulted in a building boom that will continue into the rest of this year.

Almost half of my workforce never returned after the fire when the entire city was evacuated. Prices except for a few exceptions where someone was selling below market because they "were getting out of Dodge" and moving back to the Maritimes. There is a running joke that its almost impossible to find someone who was born in Fort Mac. This is actually true as most people are from somewhere else.

I still pay $1500 for a lot no bigger than 30' BY 100' in a trailer park. To buy would be $210,000 same as it was three years ago.

I just checked Rent Moola, they require 50 units minimum.

I am currently Working in Fort McMurray and can tell you that we have experienced crazy pricing in real estate. Land is made available sporadically by the municipality creating mini building booms. It costs $1000/month to rent a room in a mobile home. You can buy a lot in a trailer park for $450,000 plus or rent for $1500 plus.

That was of course until the oil price drop. Some rents are easing, but rentals and pricing are remaining high. I think this is due to people having a wait and see approach for now anyway. It really depends how long this goes on for. There are no bargains yet so there are no buyers and the owners will try to recoup as much as they can.

If this goes on the downward pressure on pricing will increase. I think it would take a combination of things to happen before this becomes a buy town.

1. The seller become motivated, for example looses job and needs to move back East.

2. There are signs of rebound and investors see favorable price points to move in.

Either way the window will be narrow and with high risk

What's subtle about it?

@Roy N.

As always you provide the best advice. Before reading your post I came to the conclusion that my confusion over the Saint John market was a result of how I was looking at the market now and not within historical (recent) context. Your explanation is right on and explains a lot.

I am going to Fort McMurray next month but plan to keep looking at Saint John for opportunities so patience I have and bidding down is no problem. I will also keep eye on Fredericton and Woodstock, NB as I have personal connections to these areas. So if I can make something work there that would be my preference although I will not be investing emotionally (I hope).

I will check that building out.

Thank you

@Account Closed

I too am looking for investment areas. I feel that I need to look outside my own city as the local market here in Saint John seems confused. There is a lot of inventory for sale. High vacancy rates and high prices yet properties stay listed for long periods of time. There does not seem to be a lot of buyers investing right now but the sellers are not adjusting and are holding out for higher values. To me it seems that it should be a buyer market yet the sellers are treating it as a sellers markets. It does not seem to follow the normal supply and demand metrics I understand from economics.

If someone who knows the Saint John or the wider New Brunswick market wants to comment on the above I would love to hear their impressions.

I am totally new to this and I am at the preliminary stages so I will just tell you a little of what I am doing.

Step 1 Create list of cities/towns you may be interested in

I am using statistics such as entrepreneur friendly cities, cities with increasing average wages and a list of areas I think may hold promise or which I have personal connection.

This document from the Canadian Federation of Independent Business lists top cities for entrepreneurs.

Step 2 Narrow your results by finding cities that have favorable economic indicators

This Wikipedia page has resource links to various websites (many banks and government) that discuss the housing affordability index. Basically how easy is it for people earning average wages to afford an average home.

http://en.wikipedia.org/wiki/Affordability_of_housing_in_Canada

Use Statistics Canada to find areas with increasing average incomes. I will not list here as there are charts for several different parameters such as by province and industry.

Use demographics and other stats here http://www.statcan.gc.ca/tables-tableaux/sum-som/z01/cs0007-eng.htm to find tons of data to narrow your search.

Step 3 Look at other criteria such as migration trends, transportation infrastructure improvements, look at outlying areas of boom towns, areas that attack business startups and jobs, and areas that are transitioning from one economic class to a higher class (gentrification).

Of course this is just a start to create a qualified list of potential areas to invest. The next step would be to start evaluating properties in those areas.

Good luck

US Data

People will handle this very differently some will not go anywhere near the property as it give bad vibes, some will just not care and others will pay you a premium to rent/buy the place because they are into the macabre. The more famous the case the higher the premium.

Different strokes and all that.

@Ming Lim

There are various websites that are apartment rental specific where you can list. People often post notices on billboards where people gather, such as grocery stores, churches and community centres. Ads in newspapers or in those local newsletters that are placed in waiting rooms at doctors offices.

Your own website with properties and individual apartments listed with lots of photos, community info etc. Can also be used to have people apply online and streamline things for you.

Track everything you do marketing wise. Perhaps use different codes for each marketing tactic used and/or ask applicants where they heard about the rental. That way you can gage what is working and what is not.

Never forget the power of word-of-mouth. Let everyone know you have vacancies. Don't be annoying about it just try to casually spread the word.

Check out the CMHC website. They do have good info there even though it is government run.

If I understand what you are saying you are talking about holding a mortgage within your RRSP?

How does it work?

The investor has to have enough assets within the RRSP to cover the mortgage on a primary or commercial residence.

Once setup with the bank(s) the RRSP holder makes mortgage payments, at a prearranged interest rate, back to his/her RRSP.

The Benefits

The investor is basically paying himself the interest.

The investor has the option of setting the interest rate to the highest allowable at the time.

For those who are risk adverse, the predictable growth of the RRSP may be suitable for their risk profile.

Disadvantages

Depending on the relative size of the mortgage to the rest of the RRSP, your RRSP portfolio may lack diversification.

High fees – make sure you take all the associated fees into account as this will affect your ROI. There are many fees here and they are substantial.

Although you own the mortgage and are in effect paying yourself is you default the bank will act as with any other mortgage and foreclose to pay your RRSP.

I disagree that the profit is tax free, the interest earned on the mortgage accumulates within the plan tax free, however when you withdraw the funds it will become taxable. This is basically a tax deferral.

I do not understand your 40% return analogy. If you have 2 investments that earn 20% each your return is still 20% not 40. You have to take your entire investment into calculations.

Your rate of return is the same but your actual dollars is larger in example 2.

One last point you can withdrawal from your RRSP if is this is your first home tax free. You then either have to payback a portion withdrawn back into the plan or take amount as a taxable amount as income. I think it is over fifteen years so if you took out $1500 in the RRSP Home Buyers Plan your would have to payback $100 into the RRSP or include it in your tax return as income.

@Joel Owens

I realise that your opinion is that of a broker and has some validity in the sense agents do not want to waste time. However I believe that @Vana G.

is talking about leaving a message with the agent and they are not bothering to call back to even find out if she is a legit prospect.

I have the same attitude with tradespeople who can not be bothered to call back. I do not deal with them. A short call back seems worthwhile to vet someone in less than a minute. The upside for the agent or tradesperson is far higher than the loss of a minute here and there.

As a broker I think I would want the agents to respond to these enquiry calls as they could lead to multiple future commissions, even if many of the callers may turn out to be duds.

I guess I find that attitude of not returning calls irksome and unprofessional.

@Josh C.

you have a point that she should go through her own agent to make contacts and other advice and service the agent could provide her.