Rental property in Calgary

yangxu wrote: ↑ I'm thinking of buying a rental property in Calgary, likely a studio/1-bed room condo (~200K) or a townhouse (~270K). I haven't done much research on the housing market other than Vancouver and Calgary, mainly because I lived in these two cities and are familiar with the areas.

Vancouver is out of my league because of the insane pricing and 20% down payment. Investing in Calgary seems much more realistic with the dough I saved. I'm eyeing on areas around UCalgary and rent the property to grad or med school students. Given the regressing real estate situation in Alberta, am I insane to invest in that market? Or should I just dump my savings and just buy REIT?

If you can get used to a boom bust economy it is fine but you have to be prepared for the dips...its not always pleasant. Im from Alberta originally and seen it throughout my life. I think Calgary has great potential but AB has never really diversified their economy, perhaps that will change. But if you are prepared to hold and ride things out when it gets rough you should be fine. Just be careful. Mark Loeffler sold close to 200 of his doors in Ontario in 2020 to invest in AB and the US:

yangxu wrote: ↑ I'm thinking of buying a rental property in Calgary, likely a studio/1-bed room condo (~200K) or a townhouse (~270K). I haven't done much research on the housing market other than Vancouver and Calgary, mainly because I lived in these two cities and are familiar with the areas.

Vancouver is out of my league because of the insane pricing and 20% down payment. Investing in Calgary seems much more realistic with the dough I saved. I'm eyeing on areas around UCalgary and rent the property to grad or med school students. Given the regressing real estate situation in Alberta, am I insane to invest in that market? Or should I just dump my savings and just buy REIT?

have you seen the condo fees for those apartments near u of c? i have always preached to get a semi/duplex or single family where you can rent out up and down. better cashflow that way. pm me if you have more questions.

yangxu wrote: ↑ I'm thinking of buying a rental property in Calgary, likely a studio/1-bed room condo (~200K) or a townhouse (~270K). I haven't done much research on the housing market other than Vancouver and Calgary, mainly because I lived in these two cities and are familiar with the areas.

Vancouver is out of my league because of the insane pricing and 20% down payment. Investing in Calgary seems much more realistic with the dough I saved. I'm eyeing on areas around UCalgary and rent the property to grad or med school students. Given the regressing real estate situation in Alberta, am I insane to invest in that market? Or should I just dump my savings and just buy REIT?

You're not insane, you just have to be aware of the realities of investing in Alberta.

As mentioned, the AB economy is largely dependent on oil prices and the GDP ebs and flows with price of oil. Yes, the government is trying to diversify, but nonetheless O&G is still the lions share of the economy, especially in Calgary. At least in Edmonton you have a bit more diversification (Govt).

The Govt predicts that urbanification will intensify in the next 20 years and the population will become increasingly concentrated in the Edmonton - Red Deer - Calgary corridor. This bodes well for property values. Also we're probably coming out of a prolonged oil bear market, which also bodes well for our economy, at least in the short term.

Real estate prices seem to have hit their nadir in 2019 and have been increasing in 2020, and 2021, so it appears that the market is starting to recover as well. One commodity down turn / future recession though and chances are all that appreciation will vanish.

This does create an opportunity at present though, compared to places like BC and Ontario. It's much easier in AB to find a cash flow positive property, compared to these other provinces. On the other hand, appreciation in BC and Ontario has been crazy as of late, with AB certainly being the laggard.

Overall, I would say that If you can get a cash flow positive property I would pull the trigger. The reason I say cash flow positive is that you'll be in an ok financial position if that appreciation never comes. Be mindful of all expenses (ie condo fees, insurance, maintenance expense, vacancy, property management). I would also pay a business to do a condo doc review for a condo / town home specifically, to be sure the strata is in a good financial position and you're not going to face any major assessments in the near term.

Ultimately though a REIT is a true passive investment, while rental properties aren't (even when paying a property management). The trade off is that rental property tends to be higher return due to the leverage involved.