Potential First Property in Red Deer =)

[BCbsfc]

Hi all,

I have been a REIN member since Feb 2008 after QuickStart in Vancouver. I finally got together with my business partner and made a trip to Red Deer. This town just blow me away. I was not expecting that many big names in this city. However, since this town is away from our home (Vancouver) and being our first property, we are hesitate in putting in an offer. Here are my story on the trip and the property that we have targetted in getting. Hope to see if other REIN member has any inputs.

On the first day of the trip, we familarized ourselves to the city and then arranged properties viewing with realtor on the second day. We found one detached house that might be great for cash flow and equity building. However, it will require quite a lot of touch up as the property is 50+ years old. The property has two levels: main floor and basement. There are 2 rooms and one full bath on the main level. The main floor just require minor touch up before renting out because it has been renovated recently. The basement requires far more renovation and would take quite some time before this suite is ready. Since we do not live in Red Deer, we are planning to defer a lot of the things to property management, such as arranging renovation. To what extents would the property management team be willing to go to typically? We understand that we will have to pay a premium in doing so. Our initial planning is to do everything over phone or fax from putting in an offer to closing and renting out the property. Anything that has to be done local to the property will have to be handled by property management. What are some experience that REIN member has in terms of this kind of arrangement.

If anyone has any comments on Red Deer, feel free to reply to this thread.

Thanks in advance for any input.

Cheers,
Billy

 

[invst4profit]

There will definitely be a premium involved in renovating long distance. Contractors do not make decisions with your costs as a priority. A job site requires daily visits by someone in control of the purse strings. Do not expect this diligence from a property management company. There will be many delays that will result in cost overruns depending on the extent of work involved. Without the owner available every time a money decision needs to be made your work crew will put down there tools and wait for direction (on your dime) or worse make decisions in there best interest that will drive up your expenses.
I would advise you to double or triple your initial cost and time estimates if you are not available to oversee the work on site yourself on a daily basis if this involves more than simply cleaning and painting.
All of this is assuming everyone hired is trustworthy.

Placing your trust and your money in the hands of strangers is risky under the best of circumstances. Depending on unknown contractors (property managers included), long distance can potentially be financially disasters.
This is my opinion based on personal experience of decades working with all types of contractors.

 

[HeatherBrandt]

Hi Billy,

I agree with what Greg has said. I live and own property in Red Deer. There is enough discussion about finding adequate property management without throwing renovation responsibilities into the mix.

When you are not taking the position of general contractor, there are just too many people in the picture. After working with our manager for a few years, I`ve come to the conclusion that the assessment of the work to be done and followup is my responsibility, their responsibility is to do the tasks that you instruct (ie paint the suite, change out the toilet). If it gets more complicated than that, you see the problems that Greg mentioned.

Another thing to keep in mind is the perpetual labour movement in Alberta. Your property manager (owner) is the same, but the people you interact with will change. For repairs and maintenance, they will use contractors instead of their own employees, which decreases the manager`s control. Even if they use a well established company (many are 1 person businesses), they have turnover and you may not get the same tradesperson twice. Many variables.

Finally, if you are planning on fixing up or putting a suite in the house, be aware that the managers have figured out that they have a high PITA factor and will charge accordingly (or possibly restrict their efforts). On a positive note, the city is looking legalizing pre-existing suites, the matter is before council now.

Regards,

Heather

 

[BCbsfc]

Thanks Greg and Heather for your input.
I will definitely factor in the points that were mentioned when considering that property.

Heather: Do you know any REIN members that are interested in JV and are located in Red Deer? I am very interested to know if there are other ways to enter the Red Deer market.

 

[brightdreams]

Hi

I live in vancouver and own one condo in Red Deer and am looking to invest more in Red Deer. I found Red Deer to be very good city to invest when i visited last month. But i believe as other people said that if you are looking for an older properties you have to factor in maintenance. For me it would be very difficult if i am not physically there.

I looked up few older duplexes but finally decided that i don`t want heavy maintenance-depending too much on other people, frequent maintence, devoting your energy and time etc-all these by sitting in vancouver. I would prefer easy to manage properties.

I believe William is Red Deer based REIN member and can be helpfull. He does JVs. He can be reached at 403-342-7499.

If you need to share more info let me know.

Firoz


QUOTE (BCbsfc @ Sep 18 2008, 01:34 AM) Thanks Greg and Heather for your input.
I will definitely factor in the points that were mentioned when considering that property.

Heather: Do you know any REIN members that are interested in JV and are located in Red Deer? I am very interested to know if there are other ways to enter the Red Deer market.

 

[Thomas Beyer]

QUOTE (BCbsfc @ Sep 16 2008, 12:56 AM) Hi all,

I have been a REIN member since Feb 2008 after QuickStart in Vancouver. I finally got together with my business partner and made a trip to Red Deer. This town just blow me away. I was not expecting that many big names in this city. However, since this town is away from our home (Vancouver) and being our first property, we are hesitate in putting in an offer. Here are my story on the trip and the property that we have targetted in getting. Hope to see if other REIN member has any inputs.

On the first day of the trip, we familarized ourselves to the city and then arranged properties viewing with realtor on the second day. We found one detached house that might be great for cash flow and equity building. .... What are some experience that REIN member has in terms of this kind of arrangement.

...
Billy: please do NOT buy a property after just one visit. Do more homework. Plan to go 3 to 5 times before you write any offers. During the 3rd or 4th visit meet with 2 - 3 property managers to discuss your need. One good one is Hearthstone (Debbie Bradford - please say "hi" to her). Ask them what their policy is. Usually they will charge 10-15% of major work as GC overhead, plus they may require a minimum monthly fee until the property is rented. Expect to pay 10-12% of rent as a fee, possibly even if not rented for year one.

Do more due diligence. The market is soft in AB right now .. no need to rush. If you are too eager you will likely pay too much ! Specialize in an area and a type of property. Once you know what good value is, wait while you work with a few realtors. Then pounce on the right opportunity only.

Also read this REIN post here on "How to get Started": http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

 

[HeatherBrandt]

I agree with Firoz that William is the best one to contact. He is the chair of our Real Estate Action and Support Network (REASN). I know he does joint ventures and if needed he could let other REIN members that you are interested. He has managed his own properties for several years and I believe he is assisting others. I know he is excellent at developing and implementing his systems.

He is "Red Deer William" on this site, but I`m not sure how often he logs on.

Heather

 

[Ian]

QUOTE (BCbsfc @ Sep 18 2008, 01:34 AM) Thanks Greg and Heather for your input.
I will definitely factor in the points that were mentioned when considering that property.

Heather: Do you know any REIN members that are interested in JV and are located in Red Deer? I am very interested to know if there are other ways to enter the Red Deer market.

In regards to a JV, are you looking to be the `Real Estate` partner or the `money` partner?

Ian