# location for real estate investment?



## chloev (Nov 26, 2012)

Hi all, 

With regards to location, do you guys think it's better to invest in big cities like Vancouver, Toronto and Calgary OR in smaller towns/rural areas, say, Chestermere, which is 20 min drive to Calgary? I know condos in bigger cities will be more expensive so is it necessarily the better investment? I've finally decided to enter the real estate market but i don't know where to start.

Thank you!


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## Cal (Jun 17, 2009)

Are you considering buying an existing condo to rent out or a pre build?


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## sags (May 15, 2010)

If you are buying a condo, I would suggest you read one of Garth Turners latest blog entries http://www.greaterfool.ca/2012/11/29/sacrificial-virgins/ regarding special levies for maintenance on poorly built condos that were slapped together the past decade or so. There are some reference web sites contained within his blog as well.

Glass balconies exploding and shattering glass below............and mile after mile of blue tinted glass tower condos in urban cities that may have to be replaced. Water damage and mould in many buildings. Parking garage repairs. Problem after problem............and very expensive special assessments to fix them.

It is a growing problem and a very expensive one for the owners.

The developer is long gone.........the government offers no help..........so the individual owners are on the hook for the costs.


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## Mall Guy (Sep 14, 2011)

Is Chesterfield just a bedroom community, or does it have some amount of stable industry or other major employers. For instances, if there is a regional hospital, or the head office of a large corporation, you would have a steady supply of qualified tenants. In those market, you want to have a better quality offering than the rest of the rental stock . . . people will pay for a high quality place. Where I live, there are two very large employers and a regional hospital . . . my garden apartment rents for $1000/mo, in a market that is on average around $650/mo . . . because most of the rental stock is older, and not so nice! Yet it is still a smaller market, and I worry about my exit strategy in the future, as rural Canada shifts to the large urban centres.


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## YYC (Nov 12, 2012)

Chestermere is basically a bedroom community for Calgary. If you were debating between Calgary and Chestermere as a location to buy a rental unit, I would say Calgary every time, because there will be a lot more qualified renters. Finding decent renters in a small town is hard. Whether you can buy something and make any money with it, that's a whole other question. However, I think the suggestion to read some Garth Turner is an excellent one, and may give you some hesitation about jumping into the real estate market, especially the condo market, right now.


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## sags (May 15, 2010)

We have been debating between buying a tower condo or a small townhouse in the future..........and I was leaning towards the carefree apartment condo lifestyle with the grand lobby, swimming pool and other amenities.

After reading Garth's blog the last few days.............forget that idea.

I had no idea the kind of maintenance and cost that could be involved that didn't even involve my own unit.

Going to go for the townhouse.............but not until home prices get sorted out.


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## w0nger (Mar 15, 2010)

I'm currently living in a low-rise condo in Calgary and will be turning it into a rental after my new-build home is done. My advice is to just do your research. The rental market in Calgary is juicy and I only see it getting better , IMO. Get involved, I'm on the condo board of my project and you get a lot of inside information and intimate details of the financials. You'll be in a better position to protect your investment and if that doesn't work, at least you have a heads up on when to exit.


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## Sherlock (Apr 18, 2010)

I don't speak from experience, but my opinion is that it's preferable to be a landlord in big cities... larger number of higher quality tenants. In small towns you get a lot of unemployed or underemployed people wanting to rent, anyone who has any decent income and savings can afford a house, but in Toronto or Ottawa you can easily find lots of well paid professionals to rent to.


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## Just a Guy (Mar 27, 2012)

If you are starting out, a big city near where you live is a good way to begin. 

Out of town takes a bit of experience usually since you need to deal with property managers, new laws in some cases, contractors, etc. 

Small town investing can be very profitable, but should be limited to experienced investors as you need to select the right properties and understand local economies very well.

Condos can be a nice place to start, since a well run board takes care of the exterior stuff, but make sure the condo is solvent. The trade off is usually a house has a greater chance of capital gains, but if you want to rent for cash flow, capital gains aren't as important.


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## chloev (Nov 26, 2012)

pre build is fine too actually i'm planning on renting it out in the future


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## chloev (Nov 26, 2012)

Mall Guy said:


> Is Chesterfield just a bedroom community, or does it have some amount of stable industry or other major employers. For instances, if there is a regional hospital, or the head office of a large corporation, you would have a steady supply of qualified tenants. In those market, you want to have a better quality offering than the rest of the rental stock . . . people will pay for a high quality place. Where I live, there are two very large employers and a regional hospital . . . my garden apartment rents for $1000/mo, in a market that is on average around $650/mo . . . because most of the rental stock is older, and not so nice! Yet it is still a smaller market, and I worry about my exit strategy in the future, as rural Canada shifts to the large urban centres.


Well, Chestermere is 20 min drive from Calgary, which means people with families who work in dt Calgary would probably like to live somewhere like Chestermere. That's why I am considering Chestermere


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## chloev (Nov 26, 2012)

Just a Guy said:


> If you are starting out, a big city near where you live is a good way to begin.
> 
> Out of town takes a bit of experience usually since you need to deal with property managers, new laws in some cases, contractors, etc.
> 
> ...


Well, I live in Vancouver and housing is very expensive here. If I invest in small towns I can bank on its growth, especially in somewhere like Alberta. I feel like vancouver real estate is dying down.


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## chloev (Nov 26, 2012)

YYC said:


> Chestermere is basically a bedroom community for Calgary. If you were debating between Calgary and Chestermere as a location to buy a rental unit, I would say Calgary every time, because there will be a lot more qualified renters. Finding decent renters in a small town is hard. Whether you can buy something and make any money with it, that's a whole other question. However, I think the suggestion to read some Garth Turner is an excellent one, and may give you some hesitation about jumping into the real estate market, especially the condo market, right now.


Hey thanks for your input. Thank you for recommending articles too. I recently subscribed to a property investment magazine called boom. There is an article in there about investing in big cities and small towns. I actually quite like the articles in this magazine! u can check it out www.bestofourmarket.com. i think u need to register tho.


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## chloev (Nov 26, 2012)

w0nger said:


> I'm currently living in a low-rise condo in Calgary and will be turning it into a rental after my new-build home is done. My advice is to just do your research. The rental market in Calgary is juicy and I only see it getting better , IMO. Get involved, I'm on the condo board of my project and you get a lot of inside information and intimate details of the financials. You'll be in a better position to protect your investment and if that doesn't work, at least you have a heads up on when to exit.


Yea I've done quite a bit of research and I think smaller towns are more affordable for me for now. Alberta is definitely somewhere I want to invest in though. Thank you for your input!


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## Sampson (Apr 3, 2009)

Chestermere isn't exactly the most desirable of the satellite towns around Calgary. I would stay away.

Rent really has picked up again over the past 2 years.


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## Just a Guy (Mar 27, 2012)

Yeah, Vancouver and Toronto don't offer many opportunities, however there are some options surrounding them like in surrey, port alberny, etc. but, that being said, Alberta definitely holds more opportunity. 

What you need to be aware of, when shopping in a lower priced province is what is a good price for THAT province. Alberta has been overpriced as well, in my opinion, for the past few years, as "investors" flooded in, and drove up prices. It happened in Saskatchewan lately as well. 

The nice thing is, you can pick up some nice pieces when these "investors" go into foreclosure.


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## Sampson (Apr 3, 2009)

Just a Guy said:


> Alberta has been overpriced as well, in my opinion, for the past few years, as "investors" flooded in, and drove up prices.


But housing has been relatively flat since 2008/09 in Calgary. One could argue that the huge spike we saw in 2006-2008 was warranted given the high incomes, terrific job prospects, and undervaluation compared to other cities (at the time back then).

Rental rates continue to climb, one bedroom, 600 sqft downtown condos going for $1500+.

still lots of jobs around too.


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## Berubeland (Sep 6, 2009)

I wish they'd stop building condos in Toronto so rent prices go up for condos.


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## Sampson (Apr 3, 2009)

Berubeland said:


> I wish they'd stop building condos in Toronto so rent prices go up for condos.


That is the major difference in Calgary and Toronto.

When the credit crunch hit, maybe the developers in Calgary were more sensitive but everything basically came to a stand still. Many projects cancelled, scaled back etc. And even over the past few years, only those projects were re-initiated. Somehow in Toronto, someone didn't get the message and they turned everything on full-steam again. From what I have read and seen, I would be very very very scared to speculate in the Toronto condo market. Seems like disaster waiting to happen.

I think it is slightly different from Vancouver too, not nearly as much new development in that city compared to T.Dot.


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## chloev (Nov 26, 2012)

Just a Guy said:


> Yeah, Vancouver and Toronto don't offer many opportunities, however there are some options surrounding them like in surrey, port alberny, etc. but, that being said, Alberta definitely holds more opportunity.
> 
> What you need to be aware of, when shopping in a lower priced province is what is a good price for THAT province. Alberta has been overpriced as well, in my opinion, for the past few years, as "investors" flooded in, and drove up prices. It happened in Saskatchewan lately as well.
> 
> The nice thing is, you can pick up some nice pieces when these "investors" go into foreclosure.


Yea thanks for the tip! I've only been to Calgary once so I'm a little iffy about putting my money there but it does seem like a good place to invest in. It's still more affordable than BC i find. Everything is overpriced nowadays.


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## chloev (Nov 26, 2012)

Sampson said:


> Chestermere isn't exactly the most desirable of the satellite towns around Calgary. I would stay away.
> 
> Rent really has picked up again over the past 2 years.


Are there any other options i can consider then? aside from chestermere i mean.


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## Sampson (Apr 3, 2009)

you've only been to calgary once so you are reluctant to invest.

how often have you been to chestermere?


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## Just a Guy (Mar 27, 2012)

You really need to understand your area before jumping in. The "desperate" investor is just going to lose his shirt. Right now, in Alberta, the prices have started to go down a bit to the point where you could maybe make money as a landlord. 

The problem is, the "flippers" are bidding up the prices for a short term gain...

The prices have been so high, for so long that, when they come down a little, everyone thinks that it's a "great opportunity" and try to jump all over them, ignoring the reality of location, and the numbers. 

You need to have a proven strategy and stick to it. I've seen places in Alberta listed fairly, but sell 50% higher than list making them too expensive. The problem is, flippers can sell them to owners who will generally pay more for a place than makes sense for a landlord looking for cash flow. 

Of course, if the market continues to soften, the flipper will lose his shirt, ANC the landlord can pick up a reno'd place after the second foreclosure....

Long story short, you will probably need to wait longer than you think, and there is a lot of others doing the same, so be careful you don't overpay just to get into the market. Real estate investing for cash flow is not a quick game, you're more the tortoise than the hare.


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## Sampson (Apr 3, 2009)

I'm not sure you can lump all of Alberta into a single pattern.

I can only speak of Calgary, but prices have not been softening of late. Vacancy rates have gone down pushing rent up, but the cost of housing has been consistently (albeit slowly) rising for 2+ years.


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## chloev (Nov 26, 2012)

Just a Guy said:


> You really need to understand your area before jumping in. The "desperate" investor is just going to lose his shirt. Right now, in Alberta, the prices have started to go down a bit to the point where you could maybe make money as a landlord.
> 
> The problem is, the "flippers" are bidding up the prices for a short term gain...
> 
> ...


Yea, thanks for your advice. I've been waiting to get in the market for a while actually. Now that the market is cooling down, I think it's a good time to at least consider entering. Perhaps Alberta is overpriced, but it's still more affordable than Vancouver.


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## chloev (Nov 26, 2012)

Sampson said:


> I'm not sure you can lump all of Alberta into a single pattern.
> 
> I can only speak of Calgary, but prices have not been softening of late. Vacancy rates have gone down pushing rent up, but the cost of housing has been consistently (albeit slowly) rising for 2+ years.


So I've recently subscribed to this online property investment magazine called boom. I find their articles insightful and interesting. There's an article about investing in big cities vs. small towns in their latest issue. Oh, and they are donating a dollar for each subscriber now (for Christmas) go to www.bestofourmarket.com to resgister. Just thought i'd share this with people like me who are interested in the subject.


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## Sampson (Apr 3, 2009)

I see....

No magazine or website is going to give enough insight as to where to invest. People don't really want to live in Chestermere and commute to Calgary. the website might tell you this, but that would be wrong.


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