A Deeper Dive Into Our Calgary Townhouse Investment

We’ve had a lot of questions from people about how everything worked with our Calgary Townhouse investment, and I thought it would be fun to do a deep dive into everything that happened, so you can see it all from start to finish.

We’ll also mention all of the people we worked with (lawyers, insurance, property management) in case you’re in need of good people.

Our goal

Melissa and I had a plan to invest in one property a year in her 40’s.  The thinking is that we have no more than 20 years of work left in us… and by the time we retire, the properties would be mostly paid off and we could live off the rental income.

In real estate, we don’t have a pension.  It’s up to us to set ourselves up for retirement.

Plus, let’s be honest.  Our kids are going to have a VERY hard time getting into the real estate game.  We don’t have enough supply and we have lots of demand… and it will be this way for a very long time.

This was for them as much as it was for us.

Our guideline for the purchase price of each property would be in the $400,000 to $500,000 range.  It’s a good sweet spot traditionally that is likely to go up in value in the future, and still in an affordable range.  We’ve never been extravagant spenders… so we knew if we worked REALLY hard, we could do this.

The opportunity

One day I got a random email about a new project in Toronto, so I e-mailed my pre-construction expert Andrew LaFleur from TrueCondos.com and asked him about it.

Andrew has been a longtime friend and he’s one of the smartest people I’ve ever met in real estate.

He said, “Most of our investors are buying in Calgary.  Want to know why?”

Of course I was curious.  I had friends who did well in the good times in Alberta, but it always seemed like a volatile environment where it was boom or bust.

Right around the same time, I had clients/friends that sold their Milton house and bought a few properties in Edmonton and they were telling me how amazing the numbers looked.

These clients were both custodians with the Toronto School Board and realized during COVID how unstable their careers really were.  I’ll get them on a podcast interview at some point, they’re amazing.

Andrew brought up these points about Calgary:

 

 

Watching Andrew’s videos, we also saw that Calgary is Canada’s fourth largest city… and far more affordable than the first three (Vancouver, Toronto and Montreal).

There’s a young workforce whose average income is higher than the Toronto area.

My impression was a Province and a city that is business-friendly, low-tax, and an oil-based economy that’s diversifying towards technology and other industries.

Basically, the Province of Alberta is our “Canadian version of Texas”.

Oh, and here’s a HUGE one for Ontario Landlords… there’s no rent control, and you can actually get a Tenant out of the home in a few months at the most.

The rules are MUCH more fair than in Ontario… a place where the Tenants hold pretty much all of the cards.

So… we were sold at this point.

Our next purchase would be in Calgary.

We ran a webinar with Andrew and sent invites to our past clients and Daily Homes & SoldWatch subscribers, and had about 40 attendees show up by Zoom.

When we find something interesting, we always try to share it with our large network.

Partly because we are excited and want others to succeed… but also because we like to utilize the power of “group think” to get feedback about any concerns they have that we might not have considered.

The response was overwhelmingly good.

The property

Truman is a large developer in Calgary who had multiple projects on the go, and we liked their offerings.  There were two projects in the northeast around Skyview Ranch, and one project in Chestermere, which is a small community a few minutes east of Calgary with a large lake in the middle.

It was interesting because Chestermere looked like a really cute place but it was further away.  We wanted this first investment to be more central.

For the Skyview Ranch homes, there was a new light-rail LRT system in that area, but ultimately we saw that the northeast was close to the airport, and not seen as the most desirable area.  It reminded us a lot of Brampton.

In fact, MANY of the neighbourhoods we explored reminded us of places we knew in the GTA.  The northwest reminded us more of Etobicoke and Bloor West in Toronto, and ultimately that’s where we saw the right project.

It was in a new community called Carrington.

Mattamy was building there, and while we all have our thoughts about Mattamy… they build a pretty nice community when it’s all said and done.

We watched promotional videos showing plazas, parks, future LRT stops and the expansion plans for the Stoney Trail highway.

This video in particular really helped us to envision what it would look like:

The location of the Carrington Truman project was also halfway between two Costco stores.  Say what you want about Costco… but they invest MILLIONS in research about where to strategically place their stores.

We checked the zoning maps to make sure there wouldn’t be any massive high-rise condos built right next door, verified some details about the maintenance/condo fees, asked a few questions about construction, and were satisfied with all answers.

Truman’s Carrington Townhomes were offering middle-unit townhouses for $389,900 and end-units for $399,900.

Here’s the floor plan we chose, which was the end-unit.

It’s a total of 1570 square feet, with tall ceilings on the main level and a double garage.  The added fourth bedroom on the garage level was a nice bonus, and that space could also be used as a work-from-home office.

The bedrooms were all nice-sized, and the main floor had a lovely, open layout with a washroom.

Everything looked perfect.  No concerns whatsoever with this floor plan.

I thought to myself, “This is a slam dunk.”

I used to show 1,000 square foot condos in Toronto for $210,000.  I showed bungalows in Etobicoke for $350,000.  Detached homes in Leslieville for $380,000.

I watched Milton townhouses go from $150,000 to over $1 million.

OF COURSE Calgary was next up.

Looking back, I regret not buying MORE units in this project.  But as Warren Buffet says, “Hindsight is 20/20”.

But we bought one to “try it out”.

Truman made it super easy because they said you can get the dark finish package or the light finish package.

We chose the light one.

Some people LOVE choosing all the little details in their new home, but Melissa and I can’t stand the thought of doing that.

Those renderings looked great, give us all of that.  DONE!

We didn’t pay for any upgrades, and appliances AND window coverings were included in the price.

Compared to Ontario, this was such a refreshing change.  It felt like they were going to build you a nice, livable home for a fair price… without any surprises.

Also included was a Rental Guarantee.  For two years after we moved in, a property management group was going to guarantee $1,975 a month for two years after taking possession.

We took the deal, not knowing that rents were going to explode in the next 18 months.

But more on that later.

So we paid 5% upfront on signing (around $20,000), and another 5% sent by wire transfer 90 days later ($20,000).

The balance of $40,000 or so to reach out total 20% downpayment was due on closing.

Another thing people from Ontario will love… there’s NO land transfer tax.  You just pay a lawyer and THAT’S IT.

Honestly, at this point I can say that almost EVERYTHING about this process is better in Alberta.

We chose Chestermere Law to represent us, based on the recommendation of Andrew, and it was a smooth process.  They send us a PDF to print, and went over everything by Zoom.  We couriered the package via FedEx to their office, which was about $50 to send.

Remember Landlords… keep ALL of your receipts for write-offs!

On the mortgage side, Steve Cabral from RBC has been a longtime friend of the team, and he did a fabulous job with our mortgage.  The rate he held for us ended up saving us a lot of money in our rising interest rate environment.

Overall, every person and company we worked with for this purchase turned out to be really strong, which is part of the reason we wrote this article… so you can follow in our footsteps, if you like.

Possession date

We had one delay notice from the builder, and then we were told that our final closing would be in mid-July 2023.

Melissa has family in Alberta, so we made a plan to travel to Calgary and visit them, and then do our pre-delivery inspection and visit our new property.

We also went to the Calgary Stampede.  Picture the CNE, but bigger and better.  Very, very fun.  We took the LRT downtown, which was right outside our hotel… and it was a great experience.

More write-off receipts were tucked away for the “fun” part of our trip, including a trip to Banff and high tea at Lake Louise!

We LOVED everything about Alberta.  It was our first time visiting in more than 20 years.  It was clean, the food was delicious, and it was refreshing to only pay 5% tax on anything you purchase.

You really see how broken Ontario is when you go somewhere else like Europe or Alberta.  Anyway, that’s another story for another day.

Back to the home…

We waited a bit too long to arrange insurance, so it was a bit of a scramble near the finish line.  We asked for some recommendations, and ultimately Jay Sproule at Sproule Insurance did a fabulous job and was extremely quick and detailed.

That rental guarantee we mentioned earlier?  Rents were hovering in the $2,400 to $2,600 range by the time we closed, so the builder reached out to us and recommended we decline the offer.

YES, that would mean we would have to pay a manager part of the rent, but the NET money was still better than taking the guarantee offer.

When we met the builder and saw the completed townhouse on closing, we noticed that the build quality was EXCELLENT.

VERY few issues compared to the issues we see in Ontario.

They had landscaping already done, even though not all the units were completed.  It felt much more FINISHED than a similar product in Ontario.

We took a couple of rolls of toilet paper from our hotel and put them in the washrooms, and did an assessment for what else we would need.

The builder even had FOUR sets of keys ready for us.

It was SO nice not to have to cut more keys for our property manager, which we met on closing.

We actually had window covering people lined up for quotes, only to realize that the builder ALREADY INSTALLED THEM.

The one thing we missed in our agreement that we should have had the builder install was an air conditioner.

After closing, it’s a bit more of a pain to get permission from the condo management to install it.  But we’re working on it.

Do you NEED to be there for possession?

You wouldn’t necessarily need to be physically there on closing, but it’s highly recommended that an experienced property manager is there on your behalf if you’re unable to be there for closing.

Personally, I very much prefer to be there to see the workmanship and ask questions about how the equipment works.  They do have some differences compared to Ontario properties.  But it’s not a requirement.

Ultimately the goal with a property this far away is to remain hands-off as much as possible.

Finding a Tenant

We interviewed two property managers and found similar pricing.  Generally in Calgary, you’re looking at a monthly rate of 8-12% of your gross rent, plus extra costs like renewal fees and initial setup fees to cover the costs to take photos and put the listing up.

Unlike Ontario, they don’t post lease listings on their MLS system.  Most people use RentFaster.ca.

And imagine this… to help Landlord and Tenants, you actually need to be CERTIFIED.

(The number of real estate agents in Ontario that do NOT understand the Residential Tenancies Act is mind-blowing.)

We chose Citysearch Rental Network to help us, partly because the owner’s husband and daughter are friends of ours.  They also have a good waiting list of Tenants and they’re very experienced.

We ended up arranging a bit of a special deal with them, so mention the “Charlton” deal when you speak to them.

The fact is… not only did we buy our unit, but about 20 clients and people from our mailing list also bought in Calgary at the same time.

So it’s a win-win to put together a bit of a group rate.

We had some issues with the Agency agreement they sent, but I like to read everything line-by-line and scrutinize anything that could cause problems.  When it comes to paperwork, it’s my job to attack anything that’s not in the clients’ best interests.

We worked through those things with Citysearch, and ultimately reached an agreement we were both happy with.

We filled in some forms about the townhouse, and professional photos and floor plans were taken.  Everything was excellent quality.

The home was posted on the Citysearch website and RentFaster, and we were getting steady showings and a few applications a week.

We reviewed the lease paperwork ahead of time and it was well-written.  A good Tenant applied in the first few days and we thought we were good to go… but they backed out at the last minute after finding another property they liked more.

About a week went by and we had another strong application.  Everything was signed quickly, and these Tenants are moving in at the end of August… about 40 days after our initial possession.

Ideally we were hoping for sooner, but they were good Tenants and they paid on the high side of fair at $2,600.

Since there’s no rent control, at the end of every term (typically one year), you re-negotiate a lease price.  You can also take damage deposits for pets.

Ultimately you hire a property manager to give you peace of mind, and everything has been super easy once we got all the initial setup done with them.

I created a folder in Google Drive with all of our documents, and it’s been very helpful to share links to documents when they’re needed.  Have a look at some of the names of the folders in case you want to start your own.

The numbers and final notes

This ended up being a real home run of a property.  On the closing date, our best guess was the property has increased by more than $130,000.

Rents also went up more than $600.

In the interests of full transparency, here’s how the other numbers look:

Our mortgage payments were based on a 3-year fixed rate, and they ended up being about $1,760 a month.

Condo fees come in around $260 and taxes will likely be around $200 per month.

Property management would be about $300/month by the time you add up the one-time fees for renewals, etc.  I spoke to someone today about this and he was surprised at how high it was.  But remember the big goal is PEACE OF MIND and long-term growth.  We are willing to pay someone (and write it off) that is willing to allow us to be more hands-off.

So… with high interest rates AND a property manager, we’re still squeaking in with a slightly positive cash flow.

The truth is… we don’t need this one to spit out monthly cash.  We wanted it to mostly carry itself, with the promise of a nice increase in value and rent down the road.

It’s still better than ANYTHING we can find in Ontario, with rules that are much more comfortable for us as Landlords.

This is a property we plan on keeping for a long time, and we look forward to a long and wonderful relationship with real estate in Calgary.

Did I miss anything in this summary?  Let me know in the comments or send me an email.

Hopefully you found this really helpful.

If you’re interested in buying your own investment property in Calgary, let us know.

We’re constantly watching things, including new developments and infill housing, which is buying land and splitting one lot into two lots.  That’s a common thing in Calgary, and the numbers are VERY exciting.

We think there are a lot of really good years ahead in Alberta.  It’s definitely not too late.