Explained in 5 Min: How I Made 200K Investing in Calgary Real Estate Posting a 778% ROI in One Year
In 5 Min I will explain:
How I made $200K in 1 year buying Calgary Real Estate
1) Step 1 – Why Calgary
2) Step 2 – in 2019 I saw an opportunity in Calgary – prices were depressed, and I could invest in Calgary with a low capital commitment (5% and 10% down options)
a. It is the 4th largest city in Canada
b. It is the 4th largest economy in Canada
c. Alberta will also grow by 48 percent over the next two decades – double the rate of Ontario
d. Calgary has the highest wages in Canada
3) In 2019 I bought my first pre-construction investment condo in Calgary.
4) Fast-forward to March 2021 – and I now have 3 investment condos in Calgary. These condos range in price from $270K to $589. With locations ranging from the South East to Downtown. The closings are between 2023, 2024 and 2025.
5) At this point I received an opportunity to purchase a detached home with a finished income suite in the basement
a. The details:
i. Purchase Price: $525,000
ii. Deposit $27,000
iii. Closing in March 2022
iv. Gross monthly rent of $3,700 – even at 5% interest rate the property will cashflow at $1,000 per month
6) Fast-forward to March 2022 – the property is completed and the builder transfers title to me. It is now worth over $700K
7) So instead of renting the property out I sold it. We received 3 offers on the property with the highest offer being $735,000.
8) So – lets go over this
a. Purchased property for $525,000
b. Build time 1 year
c. Deposit was $27,000
d. Sold property for $735,000
e. Profit from sale - $210,000
f. 1 year ROI - $210,000/27,000 = 778% RETURN
STOP – ALEX YOU SAY NEVER SELLER _ WHY DID YOU SELL
1) My Transactional Costs are Much Lower in Alberta
a. There is no land transfer tax in Alberta – if this was in Toronto on closing there would have been extra tax of $13,950
b. There are development charges and other additional charges in Ontario when closing a new building – add another $20,000 worth of closing costs
c. I would lose my HST rebate in Ontario which would be another $24k
d. In total this represents $57,950 of additional costs I would have to factor in if I was in Ontario.
2) My wife told me I had to buy here a house in Toronto by April 30th
a. Remember this slide from the last video 😊 – check out the video how I own two detached houses in Toronto worth 5.5 Million explained in 5 min. Click here to watch video.
3) Houses are more work to maintain than condos – I knew there could be extra issues that could come up while renting the house out. The ROI on the investment was attractive enough for me to trade in the future cashflow for current appreciation.
4) I still have 3 condos in Calgary and I am still looking at investing more in that market.
Conclusion
- I bought this house based on cashflow fundamentals FIRST! This is how I have purchased all my investments. I only based my projects at 3-5% annual growth of the asset each year.
- Second, I saw upside in the Calgary market and was rewarded by making investments based on traditional real estate investment principals.
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