Edmonton Property Analysis - Location and Zoning Question

[mandmholdings]

I have a property pending in the Killarney area of Edmonton, Alberta (129 ave and 87 st). According to my analysis it looks good but if anybody has some feedback for me or anything I am overlooking I would appreciate it. In particular, I would like some feedback regarding the location and zoning.

The house was built in 1960 and is approximatley 1050 square feet with a self contained secondary suite in the basement. There are 3 bedrooms up and two bedrooms down. Triple car garage and property sits on an oversized lot. Here is the quick version of how the deal breaks down.

Price: $292500
Rent: $2250 (I think this is low but being conservative...)
Vacancy Rate: 2%
Maintenance: $115 per month
property taxes: $200 per month (they were actually about $160 per month based on 2008)
Insurance: $115

1. I am primarily wondering about the location as I am not overly familiar with that area of town. What are the types of clients that would be attracted? Has anybody ever rented out any houses in this area before? Anything that I should be aware of?
2. It is zoned RF-1 but has a secondary suite. Would this be a concern with moving forward or how should I deal with this? (I know that probably 80% of properties in Edmonton with secondary suites are not zoned accordingly)
3. Any other observations or things to consider regarding the numbers, rent etc. or anything else?

Thanks, any thoughts would be appreciated.
Travis

 

[JaysonSidhu]

Travis,

I myself am an investor and a licensed realtor and work out of Edmonton. I work solely with investors, majority of whom are REIN members. Most investors I work with focus on NorthEast Edmonton and NorthWest Edmonton. I am very familiar with the Killarney area, the first thing I would say is it really depends on where exactly your investment is located. There are small pockets of both desirable and less desirable areas. The farther North you get the better the area tends to be. If you are more southward and closer to railway tracks you are likely in the less desirable area.

This is very important to consider because this will have a direct reflection on your marketability with respect to finding tenants. In any real estate investment if you are in a less desirable area, you will generally attract a less desirable tenant as rents are lower in these areas. Something to consider.

With respect to the basement, I have had many investors invest in single family suited properties. Something to take into consideration are the size of the windows in your suite. Are there windows?? How big are they?? Management companies will not take on a basement property if the windows do not fit thier minimim criteria as this will pose a fire hazard.

Given the zoning of the property your suite would be considered"non-conforming". The city could knock on your door and ask you to remove the suite at any time. I have spoken to the City on numerous occasions and there are talks of new legislation which will allow for suited homes with an RF1 designantion. The reality is, given our housing market that the City is unlikley to remove houses with suites, but it is a risk you take.

Laundry: What`s laundry set up like. Does up and down have thier own laundry?? If so, that`s great. If not, is there a common area for both tenants to use. If the laundry is located in the suite (which is the case more often than not) your property will be very difficult for any property manager to rent to two different tenants. This is a big part of the screening process when we look for suited properties.

Quite frankly, I think your rents are high. It`s hard to say without seeing the property. But in today`s market you are likely to get $1250 up and $850 down. Again, this is without seeing the property.

I hope this helps. Please feel free to contact me if you have any questions or concerns.

 

[mandmholdings]

QUOTE (JaysonSidhu @ Apr 27 2009, 02:12 PM) Travis,

I myself am an investor and a licensed realtor and work out of Edmonton. I work solely with investors, majority of whom are REIN members. Most investors I work with focus on NorthEast Edmonton and NorthWest Edmonton. I am very familiar with the Killarney area, the first thing I would say is it really depends on where exactly your investment is located. There are small pockets of both desirable and less desirable areas. The farther North you get the better the area tends to be. If you are more southward and closer to railway tracks you are likely in the less desirable area.

This is very important to consider because this will have a direct reflection on your marketability with respect to finding tenants. In any real estate investment if you are in a less desirable area, you will generally attract a less desirable tenant as rents are lower in these areas. Something to consider.

With respect to the basement, I have had many investors invest in single family suited properties. Something to take into consideration are the size of the windows in your suite. Are there windows?? How big are they?? Management companies will not take on a basement property if the windows do not fit thier minimim criteria as this will pose a fire hazard.

Given the zoning of the property your suite would be considered"non-conforming". The city could knock on your door and ask you to remove the suite at any time. I have spoken to the City on numerous occasions and there are talks of new legislation which will allow for suited homes with an RF1 designantion. The reality is, given our housing market that the City is unlikley to remove houses with suites, but it is a risk you take.

Laundry: What`s laundry set up like. Does up and down have thier own laundry?? If so, that`s great. If not, is there a common area for both tenants to use. If the laundry is located in the suite (which is the case more often than not) your property will be very difficult for any property manager to rent to two different tenants. This is a big part of the screening process when we look for suited properties.

Quite frankly, I think your rents are high. It`s hard to say without seeing the property. But in today`s market you are likely to get $1250 up and $850 down. Again, this is without seeing the property.

I hope this helps. Please feel free to contact me if you have any questions or concerns.

Thank-you for your reply. It is only a few blocks north of the yellowhead; right on 129 ave and 187 St. I was there for about an hour and the neighborhood seemed quiet and well kept. There are some older houses in the neighborhood but also some newly remodelled larger homes.

The basement windows I think are okay size. They are not overly large; however, I will look more into that during the property inspection. Do you know what the minimum size should be for the basement?

Regarding the zoning, how difficult is the process and how much does it cost to get it re-zoned?

The laundry is a good set-up. It is shared in the common area in the basement. Both the upstairs and the downstairs have 2 private entrances (for a total of 4 for the house).

Regarding the rents, at the rent prices you gave me it would still cashflow at $400 a month based on my calculations with a 4% 5 year fixed mortgage. I have not included any management fees because I am planning on managing it myself.

Thanks for your reply and look forward to any other feedback or thoughts from anyone who might have some insight.

Travis

 

[wbullock]

QUOTE (mandmholdings @ Apr 28 2009, 08:46 AM) Thank-you for your reply. It is only a few blocks north of the yellowhead; right on 129 ave and 187 St. I was there for about an hour and the neighborhood seemed quiet and well kept. There are some older houses in the neighborhood but also some newly remodelled larger homes.

The basement windows I think are okay size. They are not overly large; however, I will look more into that during the property inspection. Do you know what the minimum size should be for the basement?

Regarding the zoning, how difficult is the process and how much does it cost to get it re-zoned?

The laundry is a good set-up. It is shared in the common area in the basement. Both the upstairs and the downstairs have 2 private entrances (for a total of 4 for the house).

Regarding the rents, at the rent prices you gave me it would still cashflow at $400 a month based on my calculations with a 4% 5 year fixed mortgage. I have not included any management fees because I am planning on managing it myself.

Thanks for your reply and look forward to any other feedback or thoughts from anyone who might have some insight.

Travis

I think you may find that the zoning issue is a non-issue. Check out http://www.edmonton.ca/city_government/pla...suites-faq.aspx

You can also find links in there to the fire and building codes that will tell you the window size. I`ve looked in that area, too, and am still doing analysis on a house a block or two away.

Good luck!

Bill

 

[mandmholdings]

QUOTE (wbullock @ Apr 28 2009, 02:48 PM) I think you may find that the zoning issue is a non-issue. Check out http://www.edmonton.ca/city_government/pla...suites-faq.aspx

You can also find links in there to the fire and building codes that will tell you the window size. I`ve looked in that area, too, and am still doing analysis on a house a block or two away.

Good luck!

Bill


Thanks for your response. So in your analysis have you come across anything that would steer you away from this neighborhood? Have you invested in this area before?

Travis

 

[wbullock]

QUOTE (mandmholdings @ Apr 28 2009, 03:32 PM) Thanks for your response. So in your analysis have you come across anything that would steer you away from this neighborhood? Have you invested in this area before?Travis


I haven`t found anything against the area, except that, as Jason says, the rents will be a touch lower. I also haven`t invested there (yet).

Looking at it from a "would I rent this place?" point of view, I found that the bus route that runs on 130 AVe is a little hard to get to anywhere - it takes you to Northgate eventually, but it`s tough to get downtown. If you`re on foot, you have to pass through a school yard and a park before you can get to 132 Ave. Also, it`s a little ways away from any stores. You would have to target the mid-middle class demographic, who usually have cars, but the rent is a little low.

I drove around the area, and saw that there were a few back windows of cars with rocks in them, and a few cars looked a little rough (the one next door to where I was looking had no muffler, and the guy who is selling the house said that it had been like that for quite a while).

There are also quite a few For Rent signs around, mostly on houses, but some on duplexes, and a few on the apartments close by on 132 Ave. May be a higher vacancy in the area.

BTW, the window size needs to be .35 m2, with no dimension under 380 mm, according to the fire code. http://www.edmonton.ca/for_residents/fire-...ndary-suit.aspx

An excerpt from the brochure on the page is: "3. Each bedroom in a secondary suite must have at least one window for emergency escape during a fire.
Windows in bedrooms are intended to provide occupants with an alternate exit during a fire emergency. A secondary suite may contain a number of bedrooms, and each bedroom must have at least one window with an unobstructed opening size of not less than 0.35 m² and no dimension less than 380 mm. In existing secondary suites, bedroom windows that do not meet this requirement will have to be modified. Tenants must also be able to access the window and any protective enclosure (such as security bars) from the inside, without the use of keys or tools to get to the outside."

Good luck!

Bill