Category Archives: Report on Kamloops for RE Investors

InvestKamloops TV – New Purchase

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My deal of the week last week was a townhouse that is very similar to a deal I just completed.  I did a tour two weeks ago prior to the renos being complete, so here is a video tour now that it is done.

 

 

And here are the numbers in case you are curious:
208,500 cash purchase(private financing).

$5000 for paint, counters, fixtures, install dishwasher, paint.

$215,000 appraisal.

New mortgage at 2.88% for 30yrs for $161250, payments are ~$650

2nd mortgage $400. P&I

Taxes $70

Utilities $200

Insurance $27

Strata $151

Prop Manage $187

Internet: $40

TOTAL EXPENSE: $1725

Lease agreement signed for $1877. DD and 1st mo already paid= $2815.50.

Cashflow is about ~$150/mo on a fully leveraged property!

The trouble with fully leveraged property is that the ROI is infinite, so suppose 25% downpayment were here($53,750), cashflow would be about $550/mo($6600/yr), mortgage repayment is $~3000/yr.

That is $9600/ $53,750 = 17.9% ROI/yr . Not bad, but if you factor in appreciation(these places will be $250,000 within 5 years) ROI gets closer to 30%.

These are great little deals, pick one up before prices rise too much(previously bought for $187K, now selling for $208K!!)

 

Until next time,
Stay SAFE

Kamloops sits between Million dollar markets

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The average single family home in Vancouver has been $1M for years, but now Calgary homes are reaching this price in record numbers.

Investors have been struggling in Vancouver’s Lower Mainland(LMD) and Calgary to get real estate to cashflow(pay for itself as a feasible investment).

Investors in these markets must use strategies like Rent To Own, super suites(furnished rentals), or building houses.

All these strategies are fine, but they add a layer of complexity to real estate investing(and more opportunity for things to go wrong) that require a real expert to navigate(like the links I provided above).

The added risk of complex strategies is simply not needed in real estate investing, because there are plenty of simple buy-and-hold deals outside the hot LMD and Calgary markets.

Kamloops rent($3000/mo) to purchase($345k) ratio for a typical suited home frequently offers a higher Return on Investment(ROI) than even advanced strategies in other markets.

Also Kamloops incomes(and rents) have risen above the average of many neighbouring communities, so housing affordability is much better.

With house prices substantially below the LMD and Calgary, it’s inevitable Kamloops prices will increase closer to those of it’s neighbours in the near future.

Perhaps when shopping for your next deal, you will consider Kamloops: the “dark horse” of the real estate world.

Until next time,

Stay S.A.F.E.

PS
Learn more about why “boring” buy-and-hold deals in Kamloops are a great alternative(with better ROI) to the riskier strategies in other markets: subscribe for a weekly newsletter and get Kamloops’ deals of the week!

3 proofs of the coming BOOM in Kamloops

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I am headed to several Real Estate Conferences in the near future to share my message that Kamloops streets are paved in gold(you just need to bend over to pick it up).

The most common question I get is “can you tell me about the coming boom in Kamloops?”  This is probably because I have it screen printed on all the shirts I wear 🙂

I bring attention to  “the boom” because, unfortunately, appreciation is the profit center of real estate that gets the most attention. – Although my recent purchase July 2014 produces cashflow of $667/mo on a $67,000 investment(Deal of the Week), and 12% ROI on cashflow alone is nothing to sneeze at!

Since this entire website is about economic fundamentals that are leading to an increase in property values,  I will condense ALL the content on this subject  to the most compelling points:

1. Real estate cycles are predictable.

Because of this, I know Kamloops is in the Recovery Phase.  “Secrets of the Canadian Real Estate Cycle” is a good read to learn for yourself how to predict the Boom, Slump and Recovery.  Identifying where a town is in the cycle involves analyzing media headlines and key drivers, while ignoring market influencers. I won’t get into this in detail here, but in future posts I will outline why Kamloops is in the Recovery.

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2. Real Estate value increases are preceded by clear indicators.

Nothing sums these up better than REIN’s GDP graph:

20140709-001118-678396.jpg Kamloops is sitting at the “decreased vacancy” and “increased rents” points on this graph.(I just had a turnover in a 2 bedroom basement unit and increased rents from $925 to $1200 – in November!)

Also of note is Kamloops’ score on the REIN Property Goldmine Scorecard. Here is the one I completed for my last purchase downtown Kamloops.

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Read about these Economic Influencers at the Report on Kamloops for Real Estate Investors available for download at InvestKamloops.com

 

3. Population growth and property value correlation

Here is a local example of the GDP graph in action.

Kamloops Population Growth - Stats Can Census Data

Kamloops Population Growth – Stats Can Census Data

Kamloops Prices from 2000-2014

Kamloops Prices from 2000-2014 – BCREA

Pop vs Home $ overlay

GDP graph, updated overlay of home prices and population growth

Here is a table to make the overlay information more legible.

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As population has been growing, there have been massive increases in property values.  As population growth(estimates) have slowed, housing price growth also has slowed. However, I believe the population at the 2016 census will be far greater than the estimates from Stats BC.  I say that because my rents and demand for rentals has skyrocketed in the past 2 years, and new tenants are rarely relocating from another part of Kamloops.  So why have house prices not climbed high yet?
A: There is a pent up demand for housing being created thank to a Market Influencer: tougher mortgage qualification. First time homeowners are forced to save a bigger downpayment to avoid 25yr amortizations, or must earn more to service the debt.

Kamloops remains a Buyer’s Market – for now.  Rents are high but houses still cheap, so taking action now results in massive cashflow! 12% cash-on-cash ROI is achievable!

Besides all the economic data that supports a real estate boom coming soon to Kamloops, locals I have met have anecdotal evidence: the trend for prices in Kamloops appears to be 7 years of flat prices, followed by a sharp rise in a short time.  One person blames the geography: since the only suitable building lots are to tear down existing homes or build on the hillsides, new home construction in Kamloops is expensive.  Builders wait until there is a sharp demand to ensure they can make a profit.  This graph sums up this idea and appears to support the trend:

Report on Kamloops For Real Estate Investors (2)
Until next time,
Stay S.A.F.E.

Ajax Mine – Fact vs Fiction

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There has been a lot of controversy ever since the Ajax mine project was announced in Kamloops a few years back.

This project could bring a few hundred high paying jobs to the area and be a healthy source of tax revenue for the city for 20+ years.

As the environmental review, a PR campaign and red tape is navigated by the company(KGHM International), the people of Kamloops are forming opinions.

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.

Invest Kamloops Newsletter | July 16, 2014 | Vol 1 | Issue 6

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20140716-085840-32320869.jpgWow! July is half over, and 2014 is entering the second half too!

I only have a fraction of my goals from January completed, but I received a gift much better instead!

I must apologize to all those who messaged me, I know this newsletter is 2 weeks late, but for good reason…

My personal life has changed big time! Marcy and I are overjoyed to welcome Lavinia(23 months) and Landen(7 months) to our family! We are still in the midst of bonding as a family, but already our two little angels are such a blessing!

Thanks to all our friends and family for the support while we waited for our kids, and for all the awesome hand-me-downs!

Reluctantly(I could talk all day about my kids), on to business…

FEATURE BLOG POST
What if interest rates rise?

I recently described my business model to a friend, including my use of mortgages to finance rental property.

He was intrigued but was worried about one thing:
Q: What if interest rates go up like they did in the 1980′s? Won’t you go bankrupt? Continue reading →

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.

How to get ahead of a real estate boom

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Don’t you wish you could have bought a bunch of property in the 1990s before prices doubled?!

What if you knew for sure that a fortune could be made if you found a way to buy just one more house?

How would that money impact your life ? Or the lives of your loved ones?

My guess is that the extra wealth would provide security and more options for you to live fully.

But, it is impossible to know what the future holds….

Or is it?

With a basic knowledge base in economics and the workings of our financial system, we can accurately predict the future.

Don’t get me wrong.

I have no idea the exact date when real estate prices will surge upward again.

But I do know prices will rise rapidly, and one day we will be lamenting “if only I bought more in the 2010s.”

I know another boom is coming by following this proven formula:
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1. Signs of Kamloops GDP growth include tourism numbers up 19% in March

Also TRU’s growth from Caribou College now has it contributing $355M to the Kamloops Economy

2. There is 2 years of construction jobs during 2015-2017 for the Kinder Morgan Pipeline Twining.

At the same time the Ajax mine will likely begin construction(source).

Both these projects will lead to big demands for rental housing.

3. The Kamloops younger population is growing fast – future renters and buyers. (Source)

This is over and above those moving here for jobs.

4. Kamloops Rents are already rising(proof: read this article, and I just re-rented a unit for $75 more/mo without any renovations).

Another article: More rental available but at higher cost

5. Existing economic fundamentals are already influencing prices. House Prices have inched up 5% over last year(source) so imagine what will happen to this town when 2 large construction projects start simultaneously!

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As you can see, by following the news and recognizing the signs, we can position ourselves in front of the next boom in Kamloops!

Until next time,

Stay S.A.F.E.

Where “Stay S.A.F.E.” comes from

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Someone recently asked about my signature at the end of my blog posts and newsletters “Until next time, Stay S.A.F.E. ”

Besides the link to my business model for investing(Starter homes, Attractive to families, Fairly priced, Economic fundamentals), this salutation has a very personal meaning to me.

Continue reading →

The BEST Way to Invest in Real Estate

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housecoins1

As a student of real estate investing since 2008, I have seen almost every way to make money in real estate. I have spent thousands of dollars and just as many hours taking courses, reading books, speaking with other investors, and trying methods I learned.

Here are a few examples of how to make money with real estate, keep in mind this list is not exhaustive:

Rent to Own(tenant first or traditional)
Sandwich Lease/ Agreement For Sale
Furnished Rentals(ie High Street)
Bird Dogging/Assignments(Sourcing deals and selling them to other investors)
Reno/Rehab/Flipping
Student Rentals
Development/Building New
Selling Real Estate(Realtors)
Multifamily/Apartment buildings
Commercial Buildings
Foreign Real Estate(ie US)
Joint Ventures
Buy-and-Hold
REITs (stock market)
Mortgage Investing
Single Family/Condos
Property Management

For each vehicle and strategy to invest in real estate, a risk/reward analysis should be made, assessing your strengths, assets, capabilities, and your willingness to invest the time needed for each.

Of all possible options to make money in real estate, I believe one is BEST and here is why… Continue reading →