Monday, February 17, 2014

Real Estate in Calgary: Boring but quite profitable

I haven’t written a lot about real estate lately. Well the stuff is just boring…. but quite profitable.

 With Calgary’s GDP growth forecasted to be just shy of 4% and with population growth in 2013 at 18,000 and next year's growth forecasted to be around 15,000 what can one wish more? Oh, the unemployment rate is 4.5% or so.


 
These numbers and the above graphs are courtesy of CREB’s 2014 "Calgary Thriving on Growth" regional housing forecast. GDP growth and net migration are major drivers for future housing sales, rental rates and property prices. The forecast is a bit concerned that with the global economy improving, Calgary may not be that attractive any longer for new-comers. CREB (Calgary Real Estate Board) is also a bit concerned that apartments and townhouses may do better than single family dwellings in the near future as single family dwellings are a bit less affordable. They expect apartment prices to rise around 5.8%. WHAT? WOW! (that is me)

So you want to make a whopping 10% in the stock market next year? Hmmm Let’s do some math. Take the 2013 median apartment price at $250,000; property taxes are around $1200; landlord insurance $230 per year; condo fees around $325 per month or $4200 per year. Hmmm repairs? Only inside the unit (the condo corporation takes care of the rest): $500. Rents are: $1400 with vacancy rates 1.2% Yahoo! 

Based on those numbers. Net Operating Income (NOI) per year is $10,768 or a capitalization rate of 10,768/250,000 = 4.3%.  Add to that the annual appreciation forecasted by CREB of 5.8% and your total return on investment is 10.1%. These returns were calculated with the same spreadsheet as shown below using a Loan-to-value ration = 0 (no debt). 

Now, if you paid down 50% of the purchase price and borrowed the remainder using a 25 year, 5 year term mortgage at an 3.25% interest rate, then the spreadsheet below would calculate a return on your down payment (investment) after financing costs of 16.9%. Now with returns like that, who does need a stock market or for that matter a 5 year GIC that returns you barely 2% per year?
 
 
 
 

21 comments:

  1. Apartment is a basic needs for us. There are many people looks beautiful apartment.If you wants to buy beautiful apartment you can see this Foreclosre auctions website.

    ReplyDelete
  2. This means that these companies can be either involved in a leveraged buyout or LBO, or a managed buyout or MBO. Mezzanine stage is when a company is ready for mezzanine capital.cryptocurrency prices

    ReplyDelete
  3. Commercial real estate is a great option for investing in real estate.Though many only think in terms of residential real estate, there are big (in fact huge) profits to be made in commercial real estate investing. Apartments, rental units, strip malls, retail space, warehouses even vacant land are all commercial investments with huge profit potential.Many Home Listings in Vaughan area

    ReplyDelete
  4. Here, we provide a few facts that will be useful for those considering investment in Real Estate in the US and Califonia in particular.my site

    ReplyDelete
  5. Hey very nice web site!! Man .. Beautiful .. Amazing .. I’ll bookmark your web site and take the feeds also…I am happy to find a lot of useful info here in the post, we need develop more techniques in this regard, thanks for sharing. . . . . . Saint Thomas Walk Condo

    ReplyDelete
  6. Really it's amazing and informative information and helpful for the good real estate agent Gordon Rutty and others.

    ReplyDelete
  7. And another result of the rise in available properties is that more and more people are becoming first-time homeowners. read more

    ReplyDelete
  8. You make so many great points here that I read your article a couple of times. Your views are in accordance with my own for the most part. This is great content for your readers. calgary psychologists

    ReplyDelete
  9. Positive site, where did u come up with the information on this posting? I'm pleased I discovered it though, ill be checking back soon to find out what additional posts you include. Calgary Alberta

    ReplyDelete
  10. The stats came from the Calgary Real Estate board. The methodology came from several sources such as REIN (real estate investor network), realtor training and learned as an investor.

    ReplyDelete
  11. Find out if the company you are interviewing is a full time real estate auction firm. Many real estate agents are getting auction licenses yet have no experience with the auction method of marketing. Home Values

    ReplyDelete
  12. Hello there! Good post! Please inform us when I will see a follow up! drukarki 3d

    ReplyDelete
  13. Calgary's arrival on the top of the real estate heap really comes as a surprise to some and no surprise at all to others.

    ReplyDelete
  14. This comment has been removed by the author.

    ReplyDelete
  15. The author is not a writer but he is a real estate investor. There will be grammar mistakes and errors, so don't be too critical of the grammar but focus your energy on what is being said. daintree residence

    ReplyDelete
  16. So things are generally advantageous and doubtlessly the vast majority of domain operators have at long last comprehended what this business is extremely about. It takes a considerable measure of persistence and capacity to keep up your property's estimation among top ones on land advertise. Villa for sale Reserva Alcuzcuz

    ReplyDelete
  17. In any case, those property listings don't remain nearby any longer. By its temperament, the Internet is a worldwide marketplace and neighborhood MLS and CIE listings are ordinarily disseminated for display on a wide range of Web destinations. the opus

    ReplyDelete
  18. It is imperative that we read blog post very carefully. I am already done it and find that this post is really amazing. villas for sale puerto banus

    ReplyDelete
  19. By its temperament, the Internet is a worldwide marketplace and neighborhood MLS and CIE listings are ordinarily disseminated for display on a wide range of Web destinations. Warehouse For Sale In Dubai

    ReplyDelete
  20. Really your blog is very interesting.... it contains great and unique information. I enjoyed to visiting your blog. Its just amazing.... Thanks very much. Juniper Hill Allgreen Properties

    ReplyDelete
  21. In most cases, only properties listed by member real estate agents can be added to an MLS. The primary purpose of an MLS is to enable the member real estate agents to make offers of compensation to other member agents if they find a buyer for a property.https://www.valuationsvic.com.au/

    ReplyDelete