Category Archives: News

2014 Economic Highlights

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There was a ton of Kamloops news in 2014 that relates to Real Estate Investors.  Just a few that point to growth are as follows:

  • $80M Hospital Upgrade
  • Sandman Hotels built in town
  • Record year at airport responsible for over 600 jobs
  • Film industry spent $9M
  • New Casino with 200 jobs announced
  • $190M in building permits, almost a record year and 28% more than 2013
  • Ajax Mine updates
  • Twinning of pipeline
  • TRU added 50 seats for trades.
  • $38.5M waste water plant upgrade among many other infrastructure updates

You can view the full 2014 Kamloops economic year in review here:

It’s in a playlist I created from presentations I did at several meetings: the Real Estate Action Group, Real Estate Network of the Thompson and most recently the Landrush conference.

 

Enjoy!

 

 

Until next time,
Stay S.A.F.E.

Oil Prices Don’t Affect Kamloops

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I kind of drone on a bit in this video(it was late) but the content is good so you will want to check it out.

 

Summary

 

Investing in single industry towns is risky, no matter what the potential upside.

 

I’ve spoken with numerous investors in recent months who are looking for a good return on investment(ROI) of their money using real estate.  There have been new build projects in Alberta and Northern BC that had booths at many Real Estate events I frequent, all looking for investment dollars from people like you and me.

After growing up in a boom-bust town, I know how the volatility of the market can catch people off guard.  Put a $10k down payment, or worse purchase a pre-build for cash, the market turns and your money can be tied up forever.

A recent example is the huge drop in oil prices this week and what this means to real estate investors.

Here is what is happening:

1. OPEC is not reducing oil supply(they are profitable with oil at $40/barrel range) in an effort to squeeze out the newer more expensive oil projects(Canada’s Oil Sands start to lose profitability at $60/barrel).

2. Cheap oil means there is less demand for alternative fuel like LNG.  As result, the final investment decision of the proposed $36B LNG plant in the Fort St John/Dawson Creek area and  the Northern Gateway Pipeline have been postponed indefinitely because the costs of these projects are not attractive enough when oil is under $70/barrel.  We could see oil under $70 until late 2017.IMG_6676.PNG

 

3. Alberta’s Real Estate Prices are vulnerable to oil, shown yet again in this Dec 2 article .  “When growth is on par, or lags the rest of the country, workers don’t flood in. […] Builders, Kavcic says, haven’t been able to put homes up fast enough to meet the recent demand. And if migration does plunge, there’ll be a lot of homes coming to market out of the current building cycle.”

 

What this means for you.

 

Look carefully at the projections offered by the salesman of new construction projects.  For companies to make money on the build, projects frequently sell at market value(or slightly above).

You may find an inflated projection of appreciation to make ROI look better than realistic forecasts.(I heard one salesman point to 4% appreciation – aggressive in my view – and say “this could be 10%”)  An inflated appreciation can make a dramatic difference on your ROI.

Try the numbers with a realistic 2% appreciation(on par with inflation) and see if it is still an attractive investment.

I use 2% appreciation in my calculations, and highlight the Cash-on-Cash ROI – meaning how much cashflow(money is left after expenses each year) is there / total money invested in the deal.

Because rents in Kamloops are so high compared to prices, it is not unusual to receive $10k/yr cashflow for an investment of $100k or less!

 

For an example of a detailed and conservative proforma, subscribe to my deal of the week!

 

Until next time,
Stay S.A.F.E.

 

Nov 2014 Economic Update

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I detail the coming boom in Kamloops(and why we are in the middle of the Recovery Phase of the real estate cycle) in a recent article you can read here.

I will be publishing economic news here and putting it in context on at least a monthly basis, so if you have not yet subscribed, please do so and keep up to date on the Kamloops markets. You will be glad you did!

 

Invest Kamloops Economic Fundamentals

 

Canada’s smartest person is from Kamloops

 

Ok this is more for fun than anything, I promise Canada’s smartest person is not me, just click the link above to read all about Kamloops’ newest claim to fame.

Another Pro Business Initiative

Continue reading →

Evidence of the coming boom in Kamloops

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Kamloops Infrastructure Improvements

Many Millions are being spent in Kamloops upgrading infrastructure, and this is one of the key indicators a housing boom is coming.

Here are some examples:

Westsyde Road rehab to be complete by fall – $1.6 million

http://infotel.ca/newsitem/westsyde-road-rehab-to-be-complete-by-fall/it11852

 

Overlanders Bridge update moving forward – $9.3 million

http://infotel.ca/newsitem/overlanders-bridge-update-moving-forward/it11873

 

Downtown intersection set to reopen- $2.2 million

http://infotel.ca/newsitem/downtown-intersection-set-to-reopen/it11894

 

 

In other cities this may be a common sight, but in Kamloops, a large crane is a novelty. IMG_4377.JPG

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These images are the fruition of plans that were announced in 2011, and represents an $80 Million expenditure on hospital upgrades to meet the population growth for the next 15 years.

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The city spent $100,000 to install the worlds first longboard park. This facility will attract people from all over the US and Canada to train and compete.

Yet another example of forward thinking mayor and council who are investing heavily on infrastructure.
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House prices are up 2.5% over last year!

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A $400k home last year is now worth $410,000. If you purchased that house with 20% down($80k), your ROI is 12.5% this year alone: $10k/$80k x 100% is 12.5% !

Add the $6k mortgage paydown your tenants made for you and that’s 20%: $16k/$80k x 100% is 20% !!

Now if you had cashflow of at least $200/mo (I do on all my properties), you got 23% ROI last year !!!

Compare that to your other investments, perhaps it’s time to add some cash flowing real estate to YOUR financial plan…
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150 more permanent jobs, and millions spent on construction: new casino to open in Oct 2015. That means only 1 more year before yet another upward pressure on rents and house prices – buy now while it’s still cheap!

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Stay tuned for more Kamloops news, subscribe now.

Until next time,

Stay S.A.F.E.

Kamloops Feature Employer – Aviation

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Kamloops airport is indeed an Economic Engine!

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(Source)

For all my accountant and engineer readers, here are some numbers that might make you drool in excitement: As of 2013 there is
– 610 jobs at YKA
– $27M/yr in wages
– 250 more spinoff jobs in food/accommodations
– the airport contributes $38.9M to Kamloops GDP

Kamloops’ Fulton Field turned 75 in 2014, and has recently undergone some major expansion.

The runway was extended, and the terminal was expanded in 2009 to the tune of $25M.

This year is shaping up to a record breaking 300,000 people traveling through Kamloops airport. Already travel numbers are up 9% over last year. (Source)

The increased passenger traffic has resulted in the the following updates:
– a competitor to the Shell station is currently under construction to service increased charter and corporate travellers(private planes)
– 80 new parking stalls with 100 more in the next couple years
– over $200,000 will be spent upgrading the bathrooms this year because

Like any public facility you are typically judged by your bathrooms, it’s what people remember

This article cites the cause of growth to increased tourism and out of town workers. Many passengers are northern/Albertan oil and gas workers living in Kamloops with their families, commuting through the airport for the rotating 21days of work and 7 days off.

Three of my tenants are in this exact situation, they are paying higher than market rents(not price sensitive) and very easy to please.

Since Kamloops is such a great place to live for families, this situation makes sense to these hard working folks. The family gets to live it up in the great weather with lots to do while dad is away at work, and days off are like going away on holidays!

Although the oil and gas segment of tenants is the minority in Kamloops, they do drive up the rental market and help with some amazing cashflow!

Kamloops own industries are diverse and robust. The added demand for housing from outside forces such as oil and gas commuters builds the already rising pressure on the price of rents and housing.

This is great news for owners like me and other real estate investors in the Kamloops market!

If you have any questions for me about my blog or Kamloops, please comment below!!

Until next time,

Stay S.A.F.E.

Be careful who you get advice from

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If you are looking for financial advice, be very careful who you listen to.

Make sure the advice is in YOUR best interest, and not in the advisor’s.

Case in point: BMO bank advised everyone to lock in mortgage rates two weeks ago, see the feature photo.

Now, big banks are well organized businesses that post billion dollar profits every year. Planning departments are well educated and well informed. These corporations are involved in the minutiae of our financial system.

Continue reading →

AJAX mine video

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Click below to view: http://www.youtube.com/watch?v=QM4wGIcn298&feature=youtu.be&app=desktop

Click below to view:
http://www.youtube.com/watch?v=QM4wGIcn298&feature=youtu.be&app=desktop

Here is a new promotional video from AJAX

Some call it promotional, some call it propaganda. I call it opportunity.

Here is an in depth look at the mining industry in Kamloops and what we can expect if when further mining comes to the area.

Also a new report shows a big jump in GDP(which mean a jump in housing prices) when the AJAX project starts.

That date could be sooner than later. A modified application could be as soon as March 2015 with construction beginning soon after.

I am keeping a close eye on this project and Kamloops economic fundaments as a whole. For monthly updates from me please subscribe here.

Until next time,
Stay S.A.F.E.

Beware negative attitudes!

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major employers

I prepared a short video to illustrate why it is important to seek out facts when you hear something negative.

 

Here is a summary of the transcript:

This is Sam from investkamloops.com.

Yesterday my truck was in the shop for warantee work. The courtesy driver picked me up when it was done, and then another passenger was picked up. The new passenger and the driver knew each other well(I guess he had a lot of problems with his new car and had to keep bringing it in) and the conversation turned to the economy.

The conversation was negative on the job market(although they were hopeful that the Ajax mine would go through) and they shared thier opinions that the Domtar pulp mill, a major employer(about 1000 people including contractors), would shut down soon in the next couple years. That was news to me!

When I got home I saw the paper was delivered. The front page article was about a new and efficient upgrade to the pulp mill, a new conveyor system that increased efficiency 16 times! The article further states that this is a 20 year investment to be competitive in a global economy, and only part of $120 Million invested in the mill since 2011. You can read the full article here.

There is no facts to support the mill is closing soon, it is just an opinion.

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The take away is to remain critical of opinions, and do research and make you decisions based on facts 🙂 The truth is often different than conventional wisdom.

 

Until next time,

Stay S.A.F.E.