Calgary - Investing In Condos

sauderite wrote: ↑ Damn, they only charge $75/month for property management? That is crazy cheap.


Which floor plan did you buy? Do you live in Calgary?

T10- 1B+den, 550 sq ft. I live in Ontario.

I was very very close to getting an unit, though I was late in the game (Feb 20, 2020). It's a T2 unit on the 9th floor asking for $275990. I eventually backed out cuz I have another condo in the GTA that may close in the similar time-frame.

I wonder why do the builder/realtor and people generally think it will cash-flow positive? With the guarantee rent, I do believe it'd cash-flow positive. But after that 2-year guarantee, I don't think it's that certain.
The guarantee was $1495 / month for this tiny (476 sq. ft.) 1BR unit. I am not so sure the rent can stay at this level in the future. But no one knows the future I know.
With rental management fee (almost a must-have given we're all the way here in Ontario?), let's say you hire a decent company charges you 10% at $150 / month, with the current Alberta mortgage rate (2.5%), Condo fee $190, Property Tax $200. The net cash flow is -$142.
Unless I am missing something here (I could very well be)

If it's not a sure-fire cash-flow positive, it's hard to feel confident about this investment because personally, I am not banking on any appreciation in the next 5-6 years (I assume 0% appreciation).

Just my 2 cents.

Era is sold out

The Annex Condos (*Minto*) is available now

Annex condos is another project in Calgary and Minto has agreed to give us a very similar package to Era:

5% deposit (for qualified buyers)
2 year rental guarantee
2 years of professional property management -included
Fantastic location in probably the best neighbourhood in Calgary -Kensington
Steps to subway/LRT and downtown
Built by Minto Communities - one of the best, most reliable builders in Canada

Note: the key difference with Annex vs. Era is that this building is already under construction with occupancies beginning in January 2021.

Where can we get details on this?

Tush171717 wrote: ↑ Where can we get details on this?

Annex calgary condo

Interestingly enough some of the top agents in Toronto are now pushing condos in Calgary.

It’s very intriguing but I can’t help feel like there is something off....

As an example, with the Annex condos. It’s basically built and occupancy starting later this year. It’s been for sale for ever.

Are sales that bad that the developers have reached out to agents in Toronto to sell them knowing that for a typical condo investor here the prices are dirt cheap.

There is of course a great story to tell like any investment opportunity...depressed market, great location, rental guarantees, 5% down, cheapest large city and on and on...

Ok I just sold myself on it. Going to buy a unit now...

What am I missing? Is capital appreciation or lack of it that bad in calgary?

celica00 wrote: ↑ It’s very intriguing but I can’t help feel like there is something off....

As an example, with the Annex condos. It’s basically built and occupancy starting later this year. It’s been for sale for ever.

Are sales that bad that the developers have reached out to agents in Toronto to sell them knowing that for a typical condo investor here the prices are dirt cheap.

There is of course a great story to tell like any investment opportunity...depressed market, great location, rental guarantees, 5% down, cheapest large city and on and on...

Ok I just sold myself on it. Going to buy a unit now...

What am I missing? Is capital appreciation or lack of it that bad in calgary?

I've been wondering the same thing but I think you actually nailed it. I was speaking to a sales rep yesterday and mentioned that I am intrigued and would reach out to some family and friends in Calgary to get their opinion and his response was "People in Calgary are very negative about the market right now with everything going on so I would take their opinion with a grain of salt".

I think they are unable to sell these at all in Calgary and it is actually genius for them to reach out to the Real Estate obsessed condo market in Toronto. People are thinking they can get an investment condo at 1/3 the price. I am still on the fence whether I will do this or not. I did some research last night and I did notice that resale condos are going for about 50-100k less than this new project. I am still undecided and wondering what other people think.

Whenever I see builders giving rental guarantees, I see red flags all over. A big NO NO from me.

Tush171717 wrote: ↑ I've been wondering the same thing but I think you actually nailed it. I was speaking to a sales rep yesterday and mentioned that I am intrigued and would reach out to some family and friends in Calgary to get their opinion and his response was "People in Calgary are very negative about the market right now with everything going on so I would take their opinion with a grain of salt".

I think they are unable to sell these at all in Calgary and it is actually genius for them to reach out to the Real Estate obsessed condo market in Toronto. People are thinking they can get an investment condo at 1/3 the price. I am still on the fence whether I will do this or not. I did some research last night and I did notice that resale condos are going for about 50-100k less than this new project. I am still undecided and wondering what other people think.

I did the same when Era condos was available and saw all the resale condos for >$50k less.
That’s one thing in a Toronto market with condos $700k but when it’s $50k on a $350k condo that’s a big difference
Ultimately that’s why I cancelled my unit I had reserved.

DisneyKruze wrote: ↑ Whenever I see builders giving rental guarantees, I see red flags all over. A big NO NO from me.

Why a big no no?
Rental guarantees are usually optional for the Buyer. Almost like a call option, with the buyer choosing to exercise as late as 6m before occupancy. If market rates are higher, then I don't exercise the rental guarantee. Also, in many cases the Builder sets the rental rate lower than what they're predicting the market rate will be, so that when they outsource management they can still take a cut from the spread.

I know it looks like rental guarantees make the Builder look they're trying to throw in as many perks as possible to get sales. But let me ask you this: if you really liked a project (location, size, layout, price etc) and believed in it, would you rather have the Builder offer the rental guarantee option or not? I would take the option.

To add to my comment - I actually already own 2 condos in Calgary that I bought 4-5 years ago and have been renting them out using a property management company. They are 1 BR + Flex (Den) less than 600 sq ft both the same layout in the same condo downtown. I get $1495/mo on one and $1575/mo on the other. I've had no problem keeping them leased out and I paid about what the Annex condos are going for (but I paid this 4-5 years ago). I am cash flow negative about $250 a month total between the two condos. I've never had a period where my condos have stayed empty, Infact, I find that when the market crashed over there the rental market remained strong since nobody could afford or wanted to risk buying a place, they all decided to rent. Rents dropped a bit but there were tons of people lined up to rent the condo.

I believe investing in the Calgary market is still promising if you are willing to hold for 5-10 years, but I think I am leaning more towards a re-sale project than this new build. I'm not sure it is worth the extra 50-100k.

Tush171717 wrote: ↑ To add to my comment - I actually already own 2 condos in Calgary that I bought 4-5 years ago and have been renting them out using a property management company. They are 1 BR + Flex (Den) less than 600 sq ft both the same layout in the same condo downtown. I get $1495/mo on one and $1575/mo on the other. I've had no problem keeping them leased out and I paid about what the Annex condos are going for (but I paid this 4-5 years ago). I am cash flow negative about $250 a month total between the two condos. I've never had a period where my condos have stayed empty, Infact, I find that when the market crashed over there the rental market remained strong since nobody could afford or wanted to risk buying a place, they all decided to rent. Rents dropped a bit but there were tons of people lined up to rent the condo.

I believe investing in the Calgary market is still promising if you are willing to hold for 5-10 years, but I think I am leaning more towards a re-sale project than this new build. I'm not sure it is worth the extra 50-100k.

The rental market dipped pretty big in 2015 to 2017 after the oil crash. We rented it out our rental property in 2016 for 1450, when this tenant moved out and we got a new one in 2017, we had to drop the rent to 1300 and give half a month free rent to get a renter that year. The unit stayed vacant for pretty much a full month. We eventually raised the rent to 1350 in 2018 as things picked up, re-rented to a new tenant last year for 1350. We had literal lineups and mass group showings last year (great tactic, rented it out within 3 days of market and hand picking the best tenant).

This unit would have gone for 1600-1700 as a 1 bedroom in 2014.

Several huge benefits of being a landlord in Calgary. Laws here are much more neutral to landlords (almost pro landlord in some ways) than in Ontario. Condo prices are a bit depressed, and great deals to be had. There is no artificial rental price caps, meaning you can adjust at will to market conditions. This also keeps rental prices honest, they were very high in 2013-14 and in high demand, and lowered when market conditions warranted it. Supply and demand, a pretty simple concept that works. I made a post a year ago, I don't think the properties being talked about in this thread are necessarily good to buy though.

yylover wrote: ↑ I was very very close to getting an unit, though I was late in the game (Feb 20, 2020). It's a T2 unit on the 9th floor asking for $275990. I eventually backed out cuz I have another condo in the GTA that may close in the similar time-frame.

I wonder why do the builder/realtor and people generally think it will cash-flow positive? With the guarantee rent, I do believe it'd cash-flow positive. But after that 2-year guarantee, I don't think it's that certain.
The guarantee was $1495 / month for this tiny (476 sq. ft.) 1BR unit. I am not so sure the rent can stay at this level in the future. But no one knows the future I know.
With rental management fee (almost a must-have given we're all the way here in Ontario?), let's say you hire a decent company charges you 10% at $150 / month, with the current Alberta mortgage rate (2.5%), Condo fee $190, Property Tax $200. The net cash flow is -$142.
Unless I am missing something here (I could very well be)

If it's not a sure-fire cash-flow positive, it's hard to feel confident about this investment because personally, I am not banking on any appreciation in the next 5-6 years (I assume 0% appreciation).

Just my 2 cents.

I just saw this post. 1500$ for a 476 sq ft shoebox? Those guys are smoking something . If we are talking of the ERA condos, that thing would have difficulty renting for 1100$. My unit is way better than those, a higher end building, better location downtown and bigger, and renting for 1350$.

Condo fee will be guaranteed higher than the builder's number and be around 300-350$ within a year.

You will not be cashflow positive with that thing, but to be honest being cashflow positive is quite difficult unless you go for a slum or older building.

GaryR28626 wrote: ↑ The Annex Condos (*Minto*) is available now

Annex condos is another project in Calgary and Minto has agreed to give us a very similar package to Era:

5% deposit (for qualified buyers)
2 year rental guarantee
2 years of professional property management -included
Fantastic location in probably the best neighbourhood in Calgary -Kensington
Steps to subway/LRT and downtown
Built by Minto Communities - one of the best, most reliable builders in Canada

Note: the key difference with Annex vs. Era is that this building is already under construction with occupancies beginning in January 2021.

I will say, if all things are equal and you are getting a similar price with Annex as you would have with Era, Annex is a much better buy in the long term.

Although Kensington has dropped down in quality, it's still one of the most desired places to live in Calgary with a mix of young and older retired folks.

The spot next to the Safeway is a homeless and drug addict hotspot. That won't matter to the demographic generally living in Kensington but be aware. The LRT is a great selling point, but also brings crime and petty theft such as car break ins from the crackheads.

Annex is a much much better buy and future proof than Era.

Nothing is selling in Calgary, so take that in the understanding and not a slight on Annex. People will still continue to rent, and you are better to buy low if you are in the rental market anyways. You could do much worse than that unit let's say.

People in Toronto investing in Calgary condos deserve to get burned as they probably will.

There is also the Theodore building in Kensington for sale.

https://theodorecondos.com/big-deal-con ... estor-deal

Little cheaper than annex but doesn’t have the rental guarantee.

Which also highlights rental guarantees are baked into the price.