The REIN Western Conference all day workshop took place last week here in Calgary and as usual, it was packed with information about investing in Real Estate. Particularly about investing in Alberta Real Estate of course, but much of the information was transferable to wherever people invest.
One of the highlights was the latest list of the Top Ten Towns to Invest in Alberta. It’s already in the media, so I guess I can tell you that Edmonton was number one and Calgary was number two on the list. The top five were rounded out by Red Deer in third spot, St. Albert in Fourth, and Grande Prairie in fifth.
Realistically if you pick any of the larger cities in Alberta to invest in and you are looking at holding onto a property for at least three years you should do quite well. Just watch out for one industry towns (unless the industry is oil), especially forestry, and remote areas that are not influenced by the prosperity of larger centers.
Also at the event was Steve McKnight. Steve is a well known Real Estate investor in his home country Australia and he had some very well thought out ideas about Real Estate and wealth. At its basis, it revolved around forming a plan and keeping focused on it. This isn’t too far fetched from any of the success stories you see out there. He did however have a pretty positive bias towards commercial property.
Some of his points were very valid. With commercial properties, your tenants usually sign long term leases and there are yearly increases factored right into the lease. In addition, the tenants pay for all their utilities and your taxes, unlike a residential property where they may pay utilities, but you cover taxes. Perhaps most importantly the tenants are responsible for any improvements in a commercial building and then when they leave, they leave the improvements behind.
This really opened my mind to the thought of looking at some commercial property. Even from a financing standpoint it makes sense, as commercial properties are financed in an entirely different manner than houses. A homeowner has to show that he (or his tenants in our case) can service the debt on a monthly basis. With a commercial building, the banks put the weight of whether the building qualifies for a mortgage on how much it earns on a monthly basis and not how much the buyer earns.
It’s an entirely different sandbox with many different rules, higher dollar amounts and even higher cash flows. But it is intriguing!
One of the other speakers at the event was a former Real Estate agent who discussed some of the “tricks of the trade” that Real Estate agents are encouraged to use in the industry. Most of these are well known to investors, but it was a good reminder.
For the curious some of the main highlights were conditioning, which involves setting a higher listing price than is realistic, just to get the listing, incomplete comparables which may lead to inaccurate price points on both the buying and selling side, and the coincidence of the last house you look at while on tour with an agent fitting you the best. Now not all agents use these tricks and it is really just the weakest Realtors that do. Just realize that they are out there and make sure you choose your agents wisely.
Over all it was a great reminder that we are still investing in the best place in North America, if not the world, and that we have a good run still ahead of us. We just have to make it through this current plateau which has become an incredible buying stage for many Real Estate investors.
As a side note, I am busy learning about Web 2.0, Social networks and other interesting internet tidbits. If any of are on Twitter look me up under BillBiko, or check out my Squidoo page at the following link, http://www.squidoo.com/KatSid.
