Furnished short and long term rentals in Grande Prairie, AB

[freshcoast]

Hi,

Not all areas have a high demand for furnished rentals but I wanted to share my experience in case it could help you make higher returns for you and your partners.

Grande Prairie is a very a transient place and due to the lack of local skilled workers needed there is a large number of people coming and going all the time. This is true in most western provinces that are growing and have more employment than the other provinces. Other places were furnished rentals could play a strong role are near colleges or universities.

I have found that although the tenants or companies that are looking for the furnished rentals we provide are more short term than long term the benefits are still far greater. To furnished a house nicely with new beds, dressers, lamps, couches, TV's, kitchen supplies, pictures, etc. can be between 5-10k depending on how many living rooms, bedrooms and kitchens.

This money can be made back in the first 3-6 mths again depending on your rental terms. We usually cater to the tenants needs and charge different premiums for different lengths of lease agreements or simply charge by the number of beds in the house. They pay a large deposit as its furnished and regular cleaning is mandatory. This keeps the maintenance down and the deposit or the company will take care of any damages right away. Peace of mind and additional profits are a win win for you and the property.

The additional work involved as we have anywhere from 1-3 tenants per year is factored in and paid for in the higher premiums. We do cover the utilities and the insurance is higher but we inspect 3 times a month and have worked out the kinks, making it as profitable as possible. Its very easy to save a company money and provide their workers with a comfortable hotel alternative while putting some extra cash in our investors pockets.

If you are thinking of doing furnished rentals and would like some more details regarding my experience contact me anytime. Aaron Bellmore 780 882 3396

 

[Thomas Beyer]

With lower oil prices and flat to declining gas prices in 2015 .. what is your take on GP right now as (oil and gas) drilling rigs are shut down all over the province ?

 

[kfort]

If it's anything like Estevan right now, it's ugly. I know GP is far bigger but the furnished market in Estevan went from $2k-$2,300/ month for a new 2 bed 2 bath condo to ... Well, ads now posted for $1400 are sitting vacant. Everything is on pause.

 

[freshcoast]

Thank you very much for the question Thomas. I am not an economist but I'd say my guess is as good as most and glad to share my opinion.

Your comment is very much the same as the commercial lenders I have been working with lately and as a remote location with strong oil and gas roots we could be facing some challenges. The last economy downturn gave Grande Prairie the highest vacancy at one point and prices dropped off quickly. We did however recover quicker than most areas. Prices took a little while to recover but the vacancy rate went down quickly as work picked back up here.

My feelings are that these swings in the market are happening more often but with shorter highs and lows. Past cycles being 7-10 years with great unstable highs and long drawn out lows. I feel this will be going back an forth for most of 2015 but there will be enough work to keep this rental market strong. Don said at one meeting this is not a bad thing its just settling down and becoming more manageable. I wont be upset if it becomes a nice consistent pace over the long run for Alberta.

In regards to Grande Prairie we are fortunate to have some major projects such as the new hospital and water treatment plant that are only half way done. There is also a lot of commercial retail, office space going up and 2 new schools that I know of and a couple that were just completed. We have many long term contract from different companies involved in these projects in our furnished. Although the other half of our tenant profile is oil and gas based there seems to be a lot off activity still. We have consistent inquiries through our office from people coming in from other areas were the oil and gas is slowing down such as fort Mcmuray, Bonnieville, hinton, and the major cities as well.

Spring and summer may be tough and we have been getting into defence mode. Reserve funds are there, expenses can be reduced in certain areas and for us to be a little over half occupancy we can still cashflow. The last downturn we did not lower our rates and I don't anticipate the need this time. With the uncertainty people will still pay a little more for a flexible term which is what we offer.

Long term buy and hold is our plan and I believe with the growth here and the surrounding areas like the Dam in Ft St John, LNG plants in Kitimat, Pipelines to service, seven generations going public, Shell in Peace river and all the work that has been going on here to improve the infrastructure Grande prairie will continue to outperform.

My partners know that if I have to I'll be doing the cleaning and maintenance and they wont be getting a cash call from this JV. We don't make money unless they make money and that's the way it goes. I am confident in our ability to adapt and ready go the extra mile whenever necessary.

That was a long response and thank you again for the response. I wish everyone the best in these times and hope they use what rein has been teaching.

 

[freshcoast]

That's definitely a challenging situation. I have hear of many jobs and projects as well put on hold. There is a lot of companies preparing to avoid a hit like 2009. Even if you were very proactive and stress tested your properties its hard to imagine rent reductions that low.

Preparation is really important for a long term buy and hold strategy but sometimes you really got to adjust in order to make things work. Is real estate still a safer investment than most? Does the leverage out way the work involved? Is there a better way to save for retirement?

Im pretty bias on the subject either way but even after self managing for many years it still makes sense to me

All the best,

 

[kfort]

Yeah it never was intended as a rental property. I've found a bit better luck during the downturn with emphasizing weekly vs monthly rates. But very minimal.