Real Estate

Has anyone here bought rental property in Alberta?

  • Last Updated:
  • Aug 21st, 2019 6:01 pm
[OP]
Newbie
Aug 13, 2019
3 posts

Has anyone here bought rental property in Alberta?

I live in Toronto but travel to Calgary frequently for work. I'm interested in buying a cash flow positive rental and the cap rates on condos in Edmonton and Calgary seem to be much higher than here in Toronto. It makes sense because there is less potential for appreciation but I was still surprised at how high the rents are relative to the very low condo prices by Toronto standards. Also from what I understand the landlord-tenant laws are a lot more fair to landlords in Alberta than they are in Ontario.

For example:
https://www.realtor.ca/real-estate/2045 ... -belvedere
(Listed for $65k, currently rented for $760/month)

https://www.realtor.ca/real-estate/2006 ... lethbridge
(Listed for $115k, currently rented for $1k/month)

Does anyone have any experience with investing in Alberta, particularly condos? Would you recommend it?

Also, when calculating cash flow on condos, what sort of estimates would you use for things like vacancy, repairs, etc? I've been estimating 10% of monthly rent for vacancy, 10% for maintenance/repairs, and 10% for property management (in case remotely managing isn't feasible) but of course that would still result in negative cash flow even with the 10-15% cap rates. I'm hoping those estimates are too conservative. The few hundred dollars of profit left over after mortgage, condo fees, and property tax are subtracted all get eaten up by those estimates plus landlord's home insurance (estimated at $60/month based on a quote I got online).

Any advice is appreciated, thanks!
16 replies
Deal Fanatic
User avatar
Mar 23, 2008
9535 posts
5949 upvotes
Edmonton
brmst1 wrote:
Aug 14th, 2019 11:44 pm
I live in Toronto but travel to Calgary frequently for work. I'm interested in buying a cash flow positive rental and the cap rates on condos in Edmonton and Calgary seem to be much higher than here in Toronto. It makes sense because there is less potential for appreciation but I was still surprised at how high the rents are relative to the very low condo prices by Toronto standards. Also from what I understand the landlord-tenant laws are a lot more fair to landlords in Alberta than they are in Ontario.

For example:
https://www.realtor.ca/real-estate/2045 ... -belvedere
(Listed for $65k, currently rented for $760/month)

https://www.realtor.ca/real-estate/2006 ... lethbridge
(Listed for $115k, currently rented for $1k/month)

Does anyone have any experience with investing in Alberta, particularly condos? Would you recommend it?

Also, when calculating cash flow on condos, what sort of estimates would you use for things like vacancy, repairs, etc? I've been estimating 10% of monthly rent for vacancy, 10% for maintenance/repairs, and 10% for property management (in case remotely managing isn't feasible) but of course that would still result in negative cash flow even with the 10-15% cap rates. I'm hoping those estimates are too conservative. The few hundred dollars of profit left over after mortgage, condo fees, and property tax are subtracted all get eaten up by those estimates plus landlord's home insurance (estimated at $60/month based on a quote I got online).

Any advice is appreciated, thanks!
That first one is located in one of the sketchier areas of Edmonton, and it's a ground floor unit on a busy road. You're not going to get a "quality" tenant in there. You probably realize that from the $760/month rent, but just thought I'd point that out... :)

C
[OP]
Newbie
Aug 13, 2019
3 posts
CNeufeld wrote:
Aug 15th, 2019 10:09 am
That first one is located in one of the sketchier areas of Edmonton, and it's a ground floor unit on a busy road. You're not going to get a "quality" tenant in there. You probably realize that from the $760/month rent, but just thought I'd point that out... :)

C
Appreciate the response. I was hoping you’d chime in (long time lurker and you seem like one of the few non-GTAers here).

That was my fear, but I appreciate you confirming that as admittedly I know nothing about Edmonton. I was just attracted to the <$100k condos in a city of 1 million people which is unheard of here in Ontario. I’m much more familiar with Calgary, maybe I’ll focus my search there even though the cap rates don’t seem to be quite as good as Edmonton (though still much better than the GTA).

You seem very knowledgeable on landlord/tenant issues - any other thoughts on buying a rental in Calgary, Edmonton, or Alberta in general?
Deal Fanatic
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Mar 23, 2008
9535 posts
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Edmonton
brmst1 wrote:
Aug 15th, 2019 10:34 am
Appreciate the response. I was hoping you’d chime in (long time lurker and you seem like one of the few non-GTAers here).

That was my fear, but I appreciate you confirming that as admittedly I know nothing about Edmonton. I was just attracted to the <$100k condos in a city of 1 million people which is unheard of here in Ontario. I’m much more familiar with Calgary, maybe I’ll focus my search there even though the cap rates don’t seem to be quite as good as Edmonton (though still much better than the GTA).

You seem very knowledgeable on landlord/tenant issues - any other thoughts on buying a rental in Calgary, Edmonton, or Alberta in general?
Thought about it, but too busy right now to make it happen. Actually one of the thoughts that came up recently was as a result of our (my GF's and my) hairdresser. She moved into a house that was converted into small "suites" for beauticians/estheticians/hairdressers. I think she pays about $1500/month, and there's approximately 7 suites like that. No hassles with LTB's, more revenue, but more expenses in modifying the building, I'd guess...

If you want input on other units in Edmonton (location, etc), drop me a note. My cousin recently bought a condo for her mom, with the idea that in the future, it can be rented out. It cost about 2x what the unit you posted cost, but it would also rent out for 2x as much (or more), and you'd get a better class of tenant, I think. I've also got a realtor here in town that we were happy with.

C
Deal Addict
Jan 13, 2014
1316 posts
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Calgary
rental in calgary sucks. Go with edmonton. we do property management in edmonton (portfolio of over 55 properties) and the rents are much higher. even basement apartment go for 1100+. We are finalizing a deal for a duplex right now as well. Also i would look at getting a 2 storey and then rent out top and bottom separate. Issue with condo is the condo fees being hit with special assessments which is very common.
Sr. Member
User avatar
Sep 19, 2008
695 posts
348 upvotes
Calgary
masarwar wrote:
Aug 15th, 2019 1:27 pm
rental in calgary sucks. Go with edmonton. we do property management in edmonton (portfolio of over 55 properties) and the rents are much higher. even basement apartment go for 1100+. We are finalizing a deal for a duplex right now as well. Also i would look at getting a 2 storey and then rent out top and bottom separate. Issue with condo is the condo fees being hit with special assessments which is very common.
Rents are higher in Edmonton? Yeah I don't think thats true lol
Member
Jul 8, 2014
280 posts
127 upvotes
AB
I have a 3bdr townhouse rental unit in Edmonton. It's currently $300 cash positive a month, rent is $1600. I had the unit for just over a year, and no issues with the tenants.
Jr. Member
Nov 5, 2009
138 posts
83 upvotes
I own a few rentals in edmonton. Overall rental market has been just fine for me. I've had one condo rental for 9 years and had rent as high as 1950 for many years. It's just recently come down to 1550 as the areas become more developed.

Alberta has far less restrictions then Ontario when it comes to landlord laws. For example we have no rental caps. This topic came up a couple years ago but the political parties here dismissed it quickly.

If you have a reasonabley priced condo it shouldnt ever sit empty. In all the years I've owned my rentals I've never had one sit empty for a month.

I just Reno'd one of my rentals last year as a rental incentive for the tenant to sign a long term lease. Other then that repairs on my units have been super minimal. Replaced a toilet once and fixed a few clogged drains at the expense of the tenants.

Typical move out stuff but have always had it covered by damage deposits.

Last year when I rented the one property I had significantly more applications when compared to 2 years previous.
Deal Expert
Aug 2, 2001
15760 posts
5945 upvotes
Personally I think you would want to first talk to an Edmonton (or other Albertan city) based realtor. The property you posted is literally in one of the worst neighbourhoods in the city. It is virtually behind the Transit Hotel, which has closed down, and was one of the biggest dumps in the city. The average condo selling price in Edmonton was $222K in June 2019, so you are literally looking at a condo that is one quarter of the average condo price.

Reddit has a realtor who posts great information in the Edmonton sub - u/EdmRealtor - I would highly recommend checking him out. He makes amazing infographics and has a great knowledge of the city.

I don't want to be rude, but just merely looking at price is not a good idea. I really don't think you'll get a good tenant in Belvedere or other similarly priced areas like Alberta Avenue. Pay more to get a good property and tenant.
Jr. Member
Nov 5, 2009
138 posts
83 upvotes
not to be rude trevor but if you look at an area like you are and immediately ignore it then your probably not ready to invest.

Alberta ave used to be avoided by many investors but it's got phenomenal potential. I know lawyers who have bought and now live in what was considered a horrible area. I know many people who have bought and now rent out in these areas.

I think that's what differentiates a real investor is someone who sees the potential while understanding the risks.
Deal Addict
Jan 13, 2014
1316 posts
372 upvotes
Calgary
cbr600 wrote:
Aug 19th, 2019 3:37 pm
Rents are higher in Edmonton? Yeah I don't think thats true lol
Well. I am only going by the rentals that I manage in Calgary compared what my family member manages in Edmonton.
Deal Expert
Aug 2, 2001
15760 posts
5945 upvotes
gwill211 wrote:
Aug 20th, 2019 12:08 am
not to be rude trevor but if you look at an area like you are and immediately ignore it then your probably not ready to invest.

Alberta ave used to be avoided by many investors but it's got phenomenal potential. I know lawyers who have bought and now live in what was considered a horrible area. I know many people who have bought and now rent out in these areas.

I think that's what differentiates a real investor is someone who sees the potential while understanding the risks.
A real investor is not someone looking to purchase their first unit while handing it off to a property management company to take their 10%.

While obviously an extreme, many "real" investors in Alberta Avenue / Belvedere are slumlords such as Carmen Pervez (https://www.cbc.ca/news/canada/edmonton ... -1.3189763).

You have to be a seasoned landlord to handle all the "unique" situations that will occur by renting in such a depressed area. I would never recommend someone look at investing in these areas - someone who has to ask should not.
Newbie
Jul 27, 2019
9 posts
3 upvotes
I am also looking into this as an income generating investment. Best places in Edmonton as a landlord? Any general advice for potential buyers?
[OP]
Newbie
Aug 13, 2019
3 posts
TrevorK wrote:
Aug 19th, 2019 11:38 pm
Personally I think you would want to first talk to an Edmonton (or other Albertan city) based realtor. The property you posted is literally in one of the worst neighbourhoods in the city. It is virtually behind the Transit Hotel, which has closed down, and was one of the biggest dumps in the city. The average condo selling price in Edmonton was $222K in June 2019, so you are literally looking at a condo that is one quarter of the average condo price.

Reddit has a realtor who posts great information in the Edmonton sub - u/EdmRealtor - I would highly recommend checking him out. He makes amazing infographics and has a great knowledge of the city.

I don't want to be rude, but just merely looking at price is not a good idea. I really don't think you'll get a good tenant in Belvedere or other similarly priced areas like Alberta Avenue. Pay more to get a good property and tenant.
Not rude at all - I appreciate the input. Since I don’t yet have a grasp of rent prices by neighbourhood, I was only searching for listings of places currently rented that had the rent price in the description so I could immediately calculate the cap rate to get a gauge of cap rates in Alberta. I would prefer to pay a higher price for a better place and attract a higher quality tenant. I have no interest in being a slumlord.

I’ve subbed to r/Edmonton and followed u/EdmRealtor and will start reading his posts now. Thanks!

Thanks to everyone else for their inputs as well. I wasn’t expecting this many Alberta landlords to be on here. Seems like it’s worth continuing to research.
Jr. Member
Nov 5, 2009
138 posts
83 upvotes
TrevorK wrote:
Aug 20th, 2019 11:14 pm

A real investor is not someone looking to purchase their first unit while handing it off to a property management company to take their 10%.

While obviously an extreme, many "real" investors in Alberta Avenue / Belvedere are slumlords such as Carmen Pervez (https://www.cbc.ca/news/canada/edmonton ... -1.3189763).

You have to be a seasoned landlord to handle all the "unique" situations that will occur by renting in such a depressed area. I would never recommend someone look at investing in these areas - someone who has to ask should not.
You've made a lot of assumptions on the op and with investing in general. Let me guess with your narrow minded view on investing that the only investable condo are the new locations in the suburbs or the new towers downtown??
GerryFolds wrote:
Aug 20th, 2019 11:31 pm
I am also looking into this as an income generating investment. Best places in Edmonton as a landlord? Any general advice for potential buyers?
it's way too broad of a question to really answer. Your best bet is to meet with a few investors that can help narrow things down.

First thing first is what type of $$ are you investing and what's your budget. From there what product line. Condos/duplex/townhome. Once people know rough ideas it's easier to help suggest areas to look.

IMO there are a lot of great deals in condos at the moment. There are also a lot of new developments with townhomes without condo fees but your paying new build premiums.

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