I am looking to buy multi-family buildings that are at least 30+ units, with a potential for forced appreciation. I came across a few in Hamilton and especially in Windsor, but I am not too sure about those markets or if it a good area to invest in. I would really like to speak to someone who is very familiar with the market and find out what the potentials are in those areas. Can anyone help?
Windsor and Hamilton Market
- Thread starter Donnette
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- 597
QUOTE (Donnette @ Nov 6 2007, 07:45 PM) I am looking to buy multi-family buildings that are at least 30+ units, with a potential for forced appreciation. I came across a few in Hamilton and especially in Windsor, but I am not too sure about those markets or if it a good area to invest in. I would really like to speak to someone who is very familiar with the market and find out what the potentials are in those areas. Can anyone help?
Hi Donnette,
I Would recommend you to speak to Mark Garrett
You can talk to him on coming REIN meeting or just send him a message via this forum.
He has properties in both cities with quite a lot of experience on each of the markets. In general, you will be better off on Hamilton market than on Windsor.
Cheers,
Boris
Hi Donnette,
I Would recommend you to speak to Mark Garrett
You can talk to him on coming REIN meeting or just send him a message via this forum.
He has properties in both cities with quite a lot of experience on each of the markets. In general, you will be better off on Hamilton market than on Windsor.
Cheers,
Boris
- Joined
- Aug 22, 2007
- Messages
- 2,005
Be VERY VERY cautious with the Windsor market. It has been a consistant underperformer and the fundamentals are not looking so good.
The Hamilton market is poised for strong consistent growth and rates in the Top 10 Ontario Towns research report (click here for details). Especially positive is the opening of the Red Hill Expressway.
The Hamilton market is poised for strong consistent growth and rates in the Top 10 Ontario Towns research report (click here for details). Especially positive is the opening of the Red Hill Expressway.
- Joined
- Aug 30, 2007
- Messages
- 107
Hi Donnette,
as one practise might be to get into, call the economic development office of both cities and by a series of questioning determine which town you feel is making greater headway in terms of progressing their economy and job prospects for their respective city. For Hamilton, break down your query for the west and then the east, two different areas with many different things/developments happening. Ask yourself, am I more comfortable that this area has much job growth so that the reseidents of your property will have jobs for years to come and be able to buy in a number of years when you wish to exit, as well as a strong in-migration to the area.
This practise will beging to make you feel more comfortable with your own ability to choose area for investment.
Donal.
PS. note that this one technique is all covered in Don`s books as one of the steps to determine a "great area for residential property investment" under the "Goldmine Score Card" analysis.
QUOTE (DonCampbell @ Nov 6 2007, 10:09 PM) Be VERY VERY cautious with the Windsor market. It has been a consistant underperformer and the fundamentals are not looking so good.
The Hamilton market is poised for strong consistent growth and rates in the Top 10 Ontario Towns research report (click here for details). Especially positive is the opening of the Red Hill Expressway.
as one practise might be to get into, call the economic development office of both cities and by a series of questioning determine which town you feel is making greater headway in terms of progressing their economy and job prospects for their respective city. For Hamilton, break down your query for the west and then the east, two different areas with many different things/developments happening. Ask yourself, am I more comfortable that this area has much job growth so that the reseidents of your property will have jobs for years to come and be able to buy in a number of years when you wish to exit, as well as a strong in-migration to the area.
This practise will beging to make you feel more comfortable with your own ability to choose area for investment.
Donal.
PS. note that this one technique is all covered in Don`s books as one of the steps to determine a "great area for residential property investment" under the "Goldmine Score Card" analysis.
QUOTE (DonCampbell @ Nov 6 2007, 10:09 PM) Be VERY VERY cautious with the Windsor market. It has been a consistant underperformer and the fundamentals are not looking so good.
The Hamilton market is poised for strong consistent growth and rates in the Top 10 Ontario Towns research report (click here for details). Especially positive is the opening of the Red Hill Expressway.
Thank you for the tip, I will definitely have to put that into practise.
QUOTE (00donal @ Nov 7 2007, 06:58 AM) Hi Donnette,
as one practise might be to get into, call the economic development office of both cities and by a series of questioning determine which town you feel is making greater headway in terms of progressing their economy and job prospects for their respective city. For Hamilton, break down your query for the west and then the east, two different areas with many different things/developments happening. Ask yourself, am I more comfortable that this area has much job growth so that the reseidents of your property will have jobs for years to come and be able to buy in a number of years when you wish to exit, as well as a strong in-migration to the area.
This practise will beging to make you feel more comfortable with your own ability to choose area for investment.
Donal.
PS. note that this one technique is all covered in Don`s books as one of the steps to determine a "great area for residential property investment" under the "Goldmine Score Card" analysis.
QUOTE (00donal @ Nov 7 2007, 06:58 AM) Hi Donnette,
as one practise might be to get into, call the economic development office of both cities and by a series of questioning determine which town you feel is making greater headway in terms of progressing their economy and job prospects for their respective city. For Hamilton, break down your query for the west and then the east, two different areas with many different things/developments happening. Ask yourself, am I more comfortable that this area has much job growth so that the reseidents of your property will have jobs for years to come and be able to buy in a number of years when you wish to exit, as well as a strong in-migration to the area.
This practise will beging to make you feel more comfortable with your own ability to choose area for investment.
Donal.
PS. note that this one technique is all covered in Don`s books as one of the steps to determine a "great area for residential property investment" under the "Goldmine Score Card" analysis.
Thank you Boris for the contact information, I wil contact Mark.
QUOTE (BMironov @ Nov 6 2007, 10:47 PM) Hi Donnette,
I Would recommend you to speak to Mark Garrett
You can talk to him on coming REIN meeting or just send him a message via this forum.
He has properties in both cities with quite a lot of experience on each of the markets. In general, you will be better off on Hamilton market than on Windsor.
Cheers,
Boris
QUOTE (BMironov @ Nov 6 2007, 10:47 PM) Hi Donnette,
I Would recommend you to speak to Mark Garrett
You can talk to him on coming REIN meeting or just send him a message via this forum.
He has properties in both cities with quite a lot of experience on each of the markets. In general, you will be better off on Hamilton market than on Windsor.
Cheers,
Boris
- Joined
- Aug 30, 2007
- Messages
- 13,881
QUOTE (Donnette @ Nov 6 2007, 05:45 PM) I am looking to buy multi-family buildings that are at least 30+ units, with a potential for forced appreciation. I came across a few in Hamilton and especially in Windsor, but I am not too sure about those markets or if it a good area to invest in. I would really like to speak to someone who is very familiar with the market and find out what the potentials are in those areas. Can anyone help?
While I agree with Don that the Windsor market is very risky due to underperforming auto industry and strong loonie, let`s look at (LOW) PRICE in a FLAT market with a great cash-flow: Let`s assume you can get a 15% CAP rate, i.e. 15% yield after operating expenses and realistic vacancy assumptions if you paid in cash. Of course you don`t pay all cash, so let`s assume you get an 80% mortgage (with CMHC usually), so 20% cash down. This is a 49% ROI on the cash invested in a flat market and 34% in a -3% market !
>>> You do NOT need equity upside in multi-family to make money !
Just the going in price has to be attractive enough / the going-in yield has to be appropriate and the vacabcies have to be managed ! The higher the (anticipated) equity upside the lower the CAP rate usually (like AB or BC right now ..) but excellent cash-on-cash ROI can be achieved in flat or even declining markets - if the yield (or CAP rate) is appropriate - see chart below !!
We don`t really care where we make 50% cash-on-cash !! Do you ?
Conclusion: buy in Windsor: at the right price/yield .. and manage the vacancies / rents / expenses .. you`ll be amazed ...
Cash-on-cash ROI + equity upside using leverage
in 3 different growth markets: + 4%, flat and -3%
Equity Upside 4.00% - "Normal" Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 10.00% 13.50% 15.25% 18.17% 20.50% 24.00% 29.83%
8.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
10.00% 14.00% 21.50% 25.25% 31.50% 36.50% 44.00% 56.50%
12.00% 16.00% 25.50% 30.25% 38.17% 44.50% 54.00% 69.83%
15.00% 19.00% 31.50% 37.75% 48.17% 56.50% 69.00% 89.83% -->20.00% 24.00% 41.50% 50.25% 64.83% 76.50% 94.00% 123.17% 25.00% 29.00% 51.50% 62.75% 81.50% 96.50% 119.00% 156.50%
Equity Upside 0.00% - Flat Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 6.00% 5.50% 5.25% 4.83% 4.50% 4.00% 3.17%
8.00% 8.00% 9.50% 10.25% 11.50% 12.50% 14.00% 16.50%
10.00% 10.00% 13.50% 15.25% 18.17% 20.50% 24.00% 29.83%
12.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
15.00% 15.00% 23.50% 27.75% 34.83% 40.50% 49.00% 63.17%
20.00% 20.00% 33.50% 40.25% 51.50% 60.50% 74.00% 96.50%
25.00% 25.00% 43.50% 52.75% 68.17% 80.50% 99.00% 129.83%
Equity Upside -3.00% - Declining Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 3.00% -0.50% -2.25% -5.17% -7.50% -11.00% -16.83%
8.00% 5.00% 3.50% 2.75% 1.50% 0.50% -1.00% -3.50%
10.00% 7.00% 7.50% 7.75% 8.17% 8.50% 9.00% 9.83%
12.00% 9.00% 11.50% 12.75% 14.83% 16.50% 19.00% 23.17%
15.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
20.00% 17.00% 27.50% 32.75% 41.50% 48.50% 59.00% 76.50% -sizec-->
25.00% 22.00% 37.50% 45.25% 58.17% 68.50% 84.00%109.83%
Left most column is yield / CAP rate .. top line is leverage level
One reason why we see CAP rates rise in AB or BC right now is the fact the the future equity upside is lower than the last few years .. so anticipated rent growth is related to yield going in .. or as Tim Johnston puts it "sell into teh boom" .. i.e. it has the lowest CAP rates !! (but why sell if you can make money in ANY market with cash-flow buildings ??) True wealth is built by holding .. with cash-flow !
While I agree with Don that the Windsor market is very risky due to underperforming auto industry and strong loonie, let`s look at (LOW) PRICE in a FLAT market with a great cash-flow: Let`s assume you can get a 15% CAP rate, i.e. 15% yield after operating expenses and realistic vacancy assumptions if you paid in cash. Of course you don`t pay all cash, so let`s assume you get an 80% mortgage (with CMHC usually), so 20% cash down. This is a 49% ROI on the cash invested in a flat market and 34% in a -3% market !
>>> You do NOT need equity upside in multi-family to make money !
Just the going in price has to be attractive enough / the going-in yield has to be appropriate and the vacabcies have to be managed ! The higher the (anticipated) equity upside the lower the CAP rate usually (like AB or BC right now ..) but excellent cash-on-cash ROI can be achieved in flat or even declining markets - if the yield (or CAP rate) is appropriate - see chart below !!
We don`t really care where we make 50% cash-on-cash !! Do you ?
Conclusion: buy in Windsor: at the right price/yield .. and manage the vacancies / rents / expenses .. you`ll be amazed ...
Cash-on-cash ROI + equity upside using leverage
in 3 different growth markets: + 4%, flat and -3%
Equity Upside 4.00% - "Normal" Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 10.00% 13.50% 15.25% 18.17% 20.50% 24.00% 29.83%
8.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
10.00% 14.00% 21.50% 25.25% 31.50% 36.50% 44.00% 56.50%
12.00% 16.00% 25.50% 30.25% 38.17% 44.50% 54.00% 69.83%
15.00% 19.00% 31.50% 37.75% 48.17% 56.50% 69.00% 89.83% -->20.00% 24.00% 41.50% 50.25% 64.83% 76.50% 94.00% 123.17% 25.00% 29.00% 51.50% 62.75% 81.50% 96.50% 119.00% 156.50%
Equity Upside 0.00% - Flat Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 6.00% 5.50% 5.25% 4.83% 4.50% 4.00% 3.17%
8.00% 8.00% 9.50% 10.25% 11.50% 12.50% 14.00% 16.50%
10.00% 10.00% 13.50% 15.25% 18.17% 20.50% 24.00% 29.83%
12.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
15.00% 15.00% 23.50% 27.75% 34.83% 40.50% 49.00% 63.17%
20.00% 20.00% 33.50% 40.25% 51.50% 60.50% 74.00% 96.50%
25.00% 25.00% 43.50% 52.75% 68.17% 80.50% 99.00% 129.83%
Equity Upside -3.00% - Declining Market
0.00% 50.00% 60.00% 70.00% 75.00% 80.00% 85.00%
6.00% 3.00% -0.50% -2.25% -5.17% -7.50% -11.00% -16.83%
8.00% 5.00% 3.50% 2.75% 1.50% 0.50% -1.00% -3.50%
10.00% 7.00% 7.50% 7.75% 8.17% 8.50% 9.00% 9.83%
12.00% 9.00% 11.50% 12.75% 14.83% 16.50% 19.00% 23.17%
15.00% 12.00% 17.50% 20.25% 24.83% 28.50% 34.00% 43.17%
20.00% 17.00% 27.50% 32.75% 41.50% 48.50% 59.00% 76.50% -sizec-->
25.00% 22.00% 37.50% 45.25% 58.17% 68.50% 84.00%109.83%
Left most column is yield / CAP rate .. top line is leverage level
One reason why we see CAP rates rise in AB or BC right now is the fact the the future equity upside is lower than the last few years .. so anticipated rent growth is related to yield going in .. or as Tim Johnston puts it "sell into teh boom" .. i.e. it has the lowest CAP rates !! (but why sell if you can make money in ANY market with cash-flow buildings ??) True wealth is built by holding .. with cash-flow !