Alberta will literally not stop calling, so let’s play their message and see what they have to say.
If you are in the GTA, there is about a 100% chance that you’ve been the target of a steady flow of Alberta-centric marketing, urging you to pack your bags and call a new province home. And if you’re anywhere in Canada (even in Alberta) the narrative that Alberta is the place to invest your real estate cash this fall is impossible to miss. So what is the hype all about?
Today we’re breaking it down by the numbers with the help of our Alberta-based realtor partner, Dragic Janjic. Let’s see what Alberta has to say.
You can’t walk down the street in Toronto lately without hearing chatter about “moving to Alberta,” and if you frequent the Bloor-Yonge station then you have no doubt become well-versed in the province’s lower taxes, housing affordability, shorter commutes and proximity to the Rocky Mountains. In a now infamous ad campaign, funded by Alberta itself, the province is lauded as a haven for the young, skilled workers of Ontario who are up against some of the most unaffordable homes in the country if they stay in their home province. But all of this talk of moving “out west” has piqued the interest of investors nationwide, as much of what makes Alberta so inviting for young people to call home, also enhances the draw investing in income properties within provincial lines. So, what does Alberta have to offer investors? Let’s take a look.
The Perks of Owning on the Prairies
Cash Flow
Currently, prices are about 50-70% less in Alberta than in most of Ontario and BC while rents are only about 20-30% less. The result? Nearly every income property situation in Alberta will net massively better positive cash flow than anything you might find in Toronto or Vancouver, with few exceptions.
Landlord Options
Unlike much of the rest of the country, where rents can only be increased 1-2% per year, there is no rent control in Alberta to speak of. Does this give you, as a landlord, a free pass to drive rents sky-high? Absolutely not - I am in no way proponent for inflating rents or taking advantage of people. What it does mean, however, is that you will be able to adjust rents in your properties as market rents fluctuate to ensure that your cash flow remains net positive. Combined with looser regulations around lease renewals and evictions, Alberta landlords tend to have more ability to protect the longevity of their investments than those in other provinces.
Live in Alberta already?
Will the Rental Market Stay Strong?
All of this buzz around Wild Rose Country begs the question - will the real estate landscape and rental market remain strong for the long term, or will this push to purchase there now result in losses a few years down the line? As of right now, it appears the need for rental homes in Calgary, Edmonton and the surrounding smaller cities will remain strong for decades to come.
Immigration numbers are skyrocketing more by the day, and Canada’s population is estimated to grow by about 10 million by 2043 - with about 3 million of those new faces expected to head to Alberta (and need places to live).
The prairies are a hotbed of employment opportunities - from the traditional energy sector work, to renewable resources, and including everything from tech to film to manufacturing and beyond, there are about 100,000 openings available right now. And with Alberta expected to top the nation’s GDP growth in 2022, we can expect that this trend will continue. These jobs will draw skilled labour into the province and give them cash in their pockets to pay rent reliably while they save to purchase their own first homes!
An Example
All the talk around Alberta investment hits close to home for me, as I followed this lead and became an Alberta landlord last year. To give you an idea of the cash flow and wealth building possibilities, I thought I would give you a peek at what it’s looked like for me!
I purchased this suited home for $380,000 with 20% down ($76,000) last year. I put about $6000 into renovations and upgrades, and at a rate of 4.4%, my mortgage payment is $1515/month.
In year 2, my monthly cash flow looked as follows:
Mortgage - $1515
Home expenses (taxes/utilities) - $788
Total rental income - $3300
Total positive cash flow per month - $996
And my return on investment (ROI) looked like this:
Net rental income (cash flow after expenses): $11957.96
Initial cost of investment (down payment, closing costs, renos): $84000
= Total return of 14.24%
So what does this mean for you? Even with rates on the rise and prices on the decline across the country, most Canadian homeowners have more equity in their pockets than they think. So, if you’ve been considering getting into property investment, but wondering about the right opportunity, Alberta’s siren call could be the chance you’ve been waiting for. With low list prices, healthy market rents, and all of the perks I mentioned above for making the prairies your first investment rodeo (Calgary pun intended), you might be pleasantly surprised to find that your first income property could be closer than you think!
What’s Available Right Now?
Our team has been working for years now with Alberta-based realtor, Dragic Janjic, helping our shared clients get into their dream homes. When we mentioned to Dragic that we wanted to shine a light on his fair province, he offered to share some possible investments with all of you to give you an idea of what’s available.
Edmonton half duplex with Legal Basement Suites (Total Units - 2)
$549,888
20% down payment: $110,000
Est. mortgage payment at 5.5%: $2,454.35
Est. property tax (monthly): $200
Est. total rental income: $3000/month
Est. monthly cash flow: $345/month
So, all of this to say - I truly believe that there are going to be some incredible opportunities in Alberta for investors and homeowners alike this fall and winter. If you’ve got questions about how you might be able to dive in, what the cash flow opportunities would look like, give me a call. I know investment opportunities like this are not for everyone, and that we are undoubtedly going into a time of downturn when many of us are looking to lock down our spending. But for some who have been waiting for the right chance to grow their wealth through real estate, this could be it!
