Local Kitchener Waterloo

How profitable can investing in Kitchener Waterloo Real Estate be?

I just got this email from a client, who bought his first real estate investment property in 2008. He now owns 4 rental properties in Kitchener Waterloo, including student rentals, single family homes, and a future development site (currently rented).

Hi Ben, I hope this message finds you and Sarah well and enjoying married life.

I’m sold on the value of Real Estate investing. We are generating positive cash flow from every property plus I just received my mortgage statements from last year. My tenants paid my mortgages down by over $25,000 in one year. Not including the cash flow or appreciation.

We are proceeding to build an addition onto 1234 Cedarbrae and by Sept.1st we will have two extra rooms available to rent. I owe you the credit for that property. You saw the value when I didn’t. Now I will gain over $100k in post-construction value plus the extra cash flow will pay for the construction in less than 5 years.

I am tinkering with my properties, trying to maximize the value. The property at 1234 Weber St. was purchased as a duplex for $222,000. I am considering trying to convert this into a triplex, with three 2 bedroom units. Would you be able to give me a rough ballpark as to what the value might be post-construction? This will help me in my decision process.

Thanks in advance, Larry

For information on how Larry and his wife have built their portfolio, contact me today. I’d love to serve you the way we’ve served Larry’s family over the years (yes, we help more than one generation of his family

You know where I am – Benjamin@BenjaminBach.com or call me at 519 772 4376

Commercial and Investment Real Estate Market Heating Up

What a gorgeous day in Kitchener Waterloo – it’s sunny, warm(ish), and dry! 

Earlier this week we looked at the strength in the investment, student (Student Rental Market Update – Waterloo, Ontario) and commercial real estate (Commercial Real Estate Market Update – Kitchener Waterloo & Cambridge) markets in Kitchener Waterloo, Ontario. 

It’s not just KW – the commercial real estate (CRE) market is gearing up all over.  Let’s take a look at a few stories from the Canadian CRE world.

On Thursday, the New Brunswick Business Journal had a story about Kilam Properties Inc (listed on the TSX as KMP) looking to acquire up to $150 million in new properties this year. Kilam is a major owner of apartment buildings in Atlantic Canada, and is looking to potentially expand into areas including Kitchener Waterloo, Ontario

Fraser said the plan for Killam is to spend up to $150 million on acquisitions in each of the next five years.

The Halifax-based company is already one of the country’s largest residential landlords, with 118 apartment buildings in Atlantic Canada’s six major urban centres.

The company also runs 55 so-called manufactured home communities across Canada, with the majority of those trailer parks located in Ontario.

Overall, Killam owns and operates 18,150 units in 173 properties, representing total real estate assets of roughly $720 million.

But in 2009, the company’s pursuit of new properties came to a halt, largely because of the sagging economy.

On Wednesday, Fraser again said the company is examining the Toronto, Ottawa and Kitchener-Waterloo markets for buildings to pull under the Killam banner.

“We continue to see opportunities for Killam to grow in Ontario by focusing on high-quality properties, including newer buildings and more established properties in prime locations,” he said.

Thursday’s National Post has a story about $500 million worth of Real Estate Investment Trust (REIT) IPOs coming to market this year, including one by a landlord with significant holdings of apartment buildings in Kitchener Waterloo, Transglobe:

It’s been four years since the real estate investment trust sector last saw an initial public offering on the Toronto Stock Exchange but that is about to change, with IPOs worth about $500-million expected in coming weeks.

The Financial Post has learned TransGlobe Property Management will be the latest private company to go public, with an IPO estimated to be worth between $200-million to $250-million, in a deal led by CIBC World Markets. The TransGlobe deal will likely wait in the wings as the market consumes a $150-million IPO from Northwest Healthcare Properties that has already filed with regulators.

There are a couple of interesting tidbits about Transglobe throughout the article, including: “It’s not clear whether all of its buildings would be included because some of its properties may have too much leverage to be palatable for a REIT.” 

This has caused some people to say:

“We will sit down and listen to the story and see what happens, but these really are not of the quality I am looking for,” said Sandy McIntyre, chief investment officer of Sentry Select, about the current deals on the table. BPO Properties is another story. “I’d rather see a big industrial portfolio or office portfolio come forward. The BPO conversation could be used as an opportunity by Brookfield to sell down its position.”

Looking at why we’re seeing these offerings come to market now, and why the public will likely show alot of interest in them:

As it stands now the S&P/TSX 60 has no real-estate companies, something Mr. McIntyre figures could change.

“As we go into the next decade, real estate with yield is going to be a beneficiary.”

For now, the sector will have to be happy with some mid-priced initial public offerings.

The NorthWest deal, which includes 45 health care-related buildings, has been priced to yield 7.25% to 8.25%.

LeisureWorld is being priced in the 8%-to-9% range. Investment banking sources say both deals are attracting plenty of interest.

It’s not hard to understand why there would be demand for REIT product, when you consider the dearth of IPOs. Crombie REIT was the last TSX offering, in early 2006.

…

“I think real-estate investment trusts proved their worth in this dry spell. They kept their vacancy rates [low] and most of them continued their distribution,” said John O’Bryan, vice-chairman of CB Richard Ellis.

Also in the news:Tim Horton’s is renovating and expanding many of its stores, as well as adding new-format locations:

The iconic Ontario-based company known for its coffee, doughnuts and light meals says it expects 900 new stores of various formats by 2013.

They would include 600 stores in Canada where Tim Hortons already has more than 3,000 locations under its banner.

Up to 60 locations in Canada will be converted to include the Cold Stone Creamery concept in partnership with an American ice cream chain.

The restaurant operator says it plans to spend $180 million to $200 million this year to support its growth initiatives.

That’s a pretty big investment in commercial real estate infrastructure!

If you have questions or comments on the commercial real estate market, leave a comment below, or email me at Benjamin@BenjaminBach.com, or call me now at 519-772-4376

Market Update: Real Estate selling fast in Kitchener Waterloo

“I can’t believe this sold in 2 days – the market is crazy these days!”

– a client who wanted to invest in a condo this weekend (2nd unit in this complex that sold inside 3 days too)

Homes and condo’s are moving very quickly in KW these days – our clients are involved in a multiple offer situations fairly regularly on smaller properties (condos, 5 bedroom student rental houses etc), and we’re even seeing multiple offers on apartment buildings that are in good shape, well rented and fairly priced.

So far in 2010, 56 homes have sold in 3 days on market or less, 144 residential properties have sold in less than 7 days, and 357 have sold in inside of two weeks (note: these Days on Market times include days where the property was tied up with a conditional offer, and due diligence periods).

That means over 32% of homes sold in 2010 were listed on the MLS for less than 14 days (note: a small % of these homes may have been relisted)

The Record has some more insight:

It appears that homebuyers are trying to get a jump on the Harmonized Sales Tax (HST), which goes into effect July 1 and will boost the cost of buying a home. But the biggest factor sparking the surge in sales is historically low interest rates, said Ted Scharf, president of the Kitchener-Waterloo board.

“Consumers are taking advantage of current interest rates now before they are predicted to rise this summer,” Scharf said in a news release.

The Bank of Canada plans to keep the key bank rate at 0.25 per cent through June. However, in the wake of a report Monday that the Canadian economy is growing more rapidly than forecasted, economists say borrowing rates may increase sooner and rise more aggressively than had been expected.

With the strong sales, there was another double-digit increase in prices last month. The average sale price in Kitchener and Waterloo rose 12.2 per cent to $276,891; in Cambridge, it rose 14.3 per cent to $280,996.

Strong demand for homes in higher prices ranges contributed to the increases. For example, in Kitchener and Waterloo there were 75 sales in the $300,000 to $350,000 price range, an increase of 150 per cent from a year earlier.

Leave me a comment below with any questions, and please contact me for more information at 519-772-4376 or via email at Benjamin@BenjaminBach.com

Student Rental Market Update – Waterloo, Ontario

We looked at commercial real estate sales in February & a lot of our clients focus on student rental properties in Waterloo; let’s have a look at some recent transactions:

3 properties on Bricker Avenue, directly across from Wilfrid Laurier University (WLU) sold for $8,450,000. There were 143 beds in the 3 properties, and per room revenues were lower than other comparably located properties.

A duplex on Hickory Street , very close to WLU, just sold at $630,000, after being on the market for 30 days.  The property is licenced for 10 students.

A 10 bedroom licenced lodging home on Regina sold for $550,000

Two detached 5 bedroom homes recently sold, both for above their asking prices. One sold at $333,500, the other traded at $336,000, 11K above the list price.  A client offered on one of these, but we felt the properties were not worth the above list price premium being paid.  You have to know when to walk away!

A few licenced condo units have sold recently. One traded at $228,000, another at $186,000

If you have any questions about how you can start investing in student housing, email me at Benjamin@BenjaminBach.com or call me at 519-772-4376

Tight Real Estate Market in Kitchener Waterloo

Property listings are down 33% at the end of January, compared to last January – there are less homes available for sale, and we have more demand from buyers and investors.  Many people are trying to take advantage of historically low mortgage interest rates, and others want to buy and invest before the mortgage changes coming in April

We’re seeing some properties selling for $10,000+ above list price in multiple offer situations; 

There are units and buildings available that are good real estate investors, ranging from $125,000 to several million dollars.  Contact me for full details, and a cash flow & return on investment analysis

If you are looking to buy, sell or invest, send me an email or give me a call.

Centre Block to bring $95 million development to Kitchener downtown

Exciting news this week about a new development in downtown Kitchener, on the Centre Block land that the city has acquired over the past 10 years at a cost of about $13 million.  From The Record:

During a closed-door meeting councillors gave their final authorization to staff for an agreement between the City of Kitchener and Brampton-based Andrin Homes for the redevelopment of Centre Block with 385 condominiums, four new buildings, underground parking, a boutique hotel-spa and a parkette.

“It has been a long time coming, obviously,” Mayor Carl Zehr said.

By 2000 the city had purchased almost all of the properties and buildings that wrapped around the western half of the block, which is bounded by King, Young, Duke and Ontario streets. So far the city has spent about $13 million on all of the costs associated with buying the land, buildings and businesses.

Andrin gets the 2.6 acre site and two heritage buildings for $3.1 million.

Many people wonder how the city got into the land assembly business.  Turns out, it’s an interesting story…

[Carl Zehr] has held the mayor’s chair for 13 years and Centre Block has been an issue for at least 10 of those years. Looking back on it now, Zehr said the city never wanted to get into the business of assembling the land and attracting a developer.

It started when someone called Zehr saying a cinema for porno flicks was about to open on the second floor of a building along the King Street stretch of Centre Block. City councillors quickly rezoned the land to prevent that from happening, and the owner sued. The settlement had the city buy the building and compensate the owner for the loss of his business.

He said the entire council deserves credit for taking the long-term view of Centre Block.

Under the terms of the development agreement, Andrin must take out building permits for the first phase by Nov. 30, 2012. The first phase includes an underground-parking garage, a condo building with about 240 units and a three storey building. Those buildings will be on King Street.

The second phase calls for another condo building, with about 140 units, at the corner of Young and Duke streets with another building that wraps around that section of the block.

The third and final phase includes the development of the Mayfair Hotel into a boutique hotel-spa. The city, development and some downtown property owners are looking for ways to advance the redevelopment of that corner.

…

The cost of the entire development is estimated at $95 million. Regier credits the city’s work to attract the University of Waterloo school of pharmacy and the Wilfrid Laurier University faculty of social work to downtown Kitchener in helping to secure Andrin as a developer for Centre Block.

“I think things are coming together right now, the real estate market in this region remains strong and people are excited about the downtown,” he said.

The city and the developer are hoping to repeat earlier successes with downtown condos. Andrin redeveloped the old Kaufman factory on King Street West into condos that sold quickly. Lofts on Mansion and the condos at the Kitchener Market also proved popular.

Are you excited for this development to come to downtown Kitchener?  Do you think it will be a great place to live? 

More Tech Innovations Come out of Waterloo

One of the reasons that investors like this area is because of the innovation and creativity.  Here is another example

Google Buzz, the latest Social Media platform, came out of Google’s office that I drive past every day, right here in Waterloo Ontario.

 

http://www.financialpost.com/news-sectors/technology/story.html?id=2542955

Just as Google’s simplistic homepage belies the advertising power, technological sophistication and global reach of the Mountain View, Calif.-based company, Google Waterloo’s unassuming offices appear a cover for what has become a rising star among Google’s network of regional offices.

Since its opening in 2005, Google’s Waterloo operations have grown from three employees to a team of several dozen and have become one of the company’s most vital recruitment centres and product development hubs.

Yesterday, the technology world watched as Google unveiled Google Buzz, a new tool that adds social-networking capabilities popularized by such sites as Facebook and Twitter to the company’s Gmail email service. Although millions of Gmail users around the world will begin using Buzz today, most will be unaware that the Google Waterloo team played an integral role in the creation of Buzz. 

Whether it’s building Gmail and YouTube applications for the iPhone and BlackBerrys, sowing the seeds for the company’s ambitious Chrome operating system or refining Google’s core advertising technology, Google Waterloo’s engineers are key players in many of the company’s most ambitious and strategic initiatives.

*******

Google, much like other technology giants before it, sees the University of Waterloo and the surrounding region as one of its top three recruitment centres for undergraduates, alongside the Massachusetts Institute of Technology (MIT) in Cambridge, Mass., and Carnegie Mellon University in Pittsburgh.

"Waterloo graduates and people from this area who come into Google … have done really well, not just at this site, but other sites and Mountain View," Mr. Woods says.

RIM’s connection to the University of Waterloo and its ability to use the school’s engineering and computer science departments as a de facto farm system has been well documented. Other home-grown tech companies, including Open Text, have also recruited heavily from the university.

Microsoft Corp. is another tech giant that has viewed the Waterloo region as a key recruitment location. Microsoft chairman and co-founder Bill Gates has been a regular visitor to the university over the years to speak to students.

…

Still, it is not just the nearby wealth of talent that makes Google Waterloo special. The engineers here are at the centre of a number of projects key to Google’s strategy going forward. According to several internal metrics, Google Waterloo has more impact per engineer than any other Google site.

When it comes to Google’s online advertising business – the lifeblood of the company and its primary revenue generator – Google Waterloo is responsible for overseeing and refining key pieces of the company’s advertising technology.

 

Tim Jackson appointed CEO of Accelerator Centre in Waterloo

One of the reasons that Kitchener Waterloo attracts so much attention from investors across the world is that the region is a hub of high tech companies (read: Life in a High Tech Powerhouse, 3rd article down) that continue to innovate and grow. In that light…

Exciting news announced yesterday: Tim Jackson (@timothyjackson on twitter) has been appointed CEO of the Accelerator Centre in Waterloo.  The Accelerator Centre is one of the premier high tech incubation centres in the world, housing 26 hi tech companies. It is in the Research and Tech Park at the University of Waterloo, across from RIM, Google, and more.

Congrats Tim!

Tim Jackson new CEO of Accelerator Centre
TheRecord.com

WATERLOO – Technology entrepreneur Tim Jackson is taking on another assignment.

Jackson, a partner of venture capital firm Tech Capital Partners and a board member of several local non-profit organizations, is the new chief executive officer of the Accelerator Centre, a technology business incubator in the University of Waterloo Research and Technology Park.

He also has been appointed associate vice-president of commercialization at the university, it was announced today.

“His dynamism and passion for entrepreneurship have been instrumental in building Waterloo Region’s technology leadership on the world stage, and his hands-on leadership will be invaluable in advancing commercialization technologies incubated within the university setting,” UW president David Johnston said in a news release.

The Accelerator Centre was launched in 2006 to help accelerate the growth of emerging technology businesses. It offers supports services as well as office space, and currently is home to more than 25 startups.

Jackson, who previously served as the centre’s vice-chair, will continue in his role as partner of Tech Capital.

Jackson co-founded the Waterloo-based venture capital firm with Andrew Abouchar after serving as chief executive officer of PixStream, a video networking startup that was shut down in 2001, just months after Cisco Systems bought it for $550 million.

Tech Capital invests in technology companies that serve the wireless, communications, new media and internet markets. Local companies it has invested in include Sandvine, Covarity, Avvasi, Coreworx, Livehive Systems and Metranome.

Jackson also has a high profile in the non-profit sector. He is the president of the board of the Food Bank of Waterloo Region, chair of the Waterloo Public Library Board and chair of the board of Centre in the Square. He recently completed a term as chair of the board of the Waterloo Regional Children’s Museum.

Jackson also has been a key player in efforts to have Kitchener and Waterloo hold a referendum in this fall’s municipal elections on the issue of holding merger talks between the two cities.

He also has been heavily involved in efforts led by the Prosperity Council of Waterloo Region to boost funding for local arts organizations.

At the Accelerator Centre, Jackson succeeds Tom Corr, who recently was appointed president and chief executive officer of the Ontario Centres of Excellence.

Open House in Kitchener Waterloo this weekend

If you’re looking for a new home, or just want some decorating tips, check out these Keller Williams Golden Triangle Realty open houses this weekend:

 

$232,900 ~ A7-175 David Bergey Drive, Kitchener ~ Sat Feb 6^th 2-4pm and Sun Feb 7^th 2-4pm

Great location! Backs onto forest and all amenities close by! Come buy this well maintained 3 bedroom, 2 bathroom home with new hardwood and walkout basement! MLS

$250,000 ~ 123 Rolling Meadows, Kitchener ~ Sat Feb 6^th 2-4pm

Gorgeous single detached family home, 3 bedrooms, 2 bathrooms and rec room.  MLS

$289,900 ~ 58 Brubacher Street, Kitchener ~ Sun Feb 7^th 2-4pm

Imagine having this immaculate home AND a fully Insulated 2.5 Garage at one Great Price! MLS# 1011016

$169,900 ~ 60 Glen Road, Kitchener ~ Sun Feb 7^th 2-4pm

Ideal for First Time Buyers, Empty Nesters & Single Parent Families!  Many Upgrades, Must be Seen! MLS# 1011560

$220,000 ~ 400 Wilson Ave Unit 45, Kitchener ~ Sun Feb 7^th 2-4pm

Well maintained 3 bedroom townhome with finished basement and all appliances included.  MLS

$205,000 ~ 63 Ingleside Drive, Kitchener ~ Sat Feb 6^th 2-4pm

Fantastic Starter Home! Semi-detached 3 bedroom, 2 bath with finished basement and fenced yard! Nicely renovated and ready for immediate possession! MLS

$177,500 ~ 634 Strasburg Road Unit 11, Kitchener ~ Sun Feb 7^th 2-4pm

A beautiful maintenance free 3 bedroom townhome.  This home shines from top to bottom with many upgrades including remodeled kitchen and bathroom, new flooring and new furnace and A/C.  Modern lighting for the perfect comfort of home.  Nothing left to do here just enjoy all this plus a great complex you can’t go wrong!  MLS

$495,000 ~ 4 Venus Cres, Heidelberg ~ Sat Feb 6^th 2-4pm

Relax in your 3 season sunroom overlooking your almost 1/3 acre estate lot before soaking in your indoor hot tub/spa room with skylights! This is the life! MLS

Let the Realtor know that you saw the info on BenjaminBach.com.  Thanks for reading!

Property Management for KW investment property

A big part of our client base lives outside of Kitchener Waterloo – other parts of Ontario, Canada, and even people living in other countries.  They are able to live   where they love, but invest where the numbers make sense because they employ quality property management companies.

Even a lot of our clients who live in the KW area use property management to take care of their rental properties; it’s just easier, and can be very affordable (depending on who you deal with)

Here’s a bit of info for you:

Contant me “Benjamin AT BenjaminBach.com” for a referral to a great management company

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