Rents in Airdrie during recession time

[kenko]

Hi Everyone:



I am interested in purchasing a townhouse in Airdrie, AB as it is ranked 3rd place in Alberta top 10 towns.



However I am trying to do my due diligence and tries to plan the worst case scenario. I want to find out what the rental market was like during last recession time.( 2008-2012, I am trying to risk mitigate by considering what may happen during bad time, as my rental properties in Calgary have experienced about 10-15% rent reduction during last time) Would Airdrie, being a small town, experience more of rent reduction during bad time?



If you have invested in Airdrie or have invested in small towns, I would greatly appreciate to hear your thoughts/experience.



Thanks in advance!



Ken

 

[Thomas Beyer]

Based on our considerable experiences in smaller markets rents will drop far harder than Calgary, so budget 20-25% rent reduction AND vacancies will go up, too, say to 20%. But since you can usually buy at 25-50% below Calgary it may still make a lot of sense to buy in smaller towns; however they do have far more risk !



You cannot budget for the "worst case". Worst case is: interest rate go to 23%, oil is deemed illegal or levied with carbon offsets of $1000/barrel, Alberta experiences ex-migration of 50%. is that possible: yes. Is this likely: no !

 

[kenko]

Thank you for your insight, Thomas.



In this case, do you have any advice on how I should risk mitigate "appropriately" for investing in small town? Such as have a reserve fund for 6 months instead of 3 months?



Greatly appreciated.



Thank you,



Ken

 

[brightdreams]

Hi



Did you already buy property in Airdrie. I am looking at buying a house in there and wanted some insights as to which neighborhoods to target. Can you give me some advice? The reason I am looking there is I have a tenant who would like to move there.



Thanks

 

[Thomas Beyer]

[quote user=kenko]

In this case, do you have any advice on how I should risk mitigate "appropriately" for investing in small town? Such as have a reserve fund for 6 months instead of 3 months?
Yes, you have a higher reserve and lower leverage (loan-to-value say 65-75% as opposed to 80%). Airdrie is "almost Calgary" or "Calgary soon" so Airdrie won't be as bad as say Didsbury further out.