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    Default Calgary Rental Market Outlook and Pricing

    R/E seems to be a fairly hot topic and seems there's a bunch of landlords around here so would like to get input on three things.

    1. With the low interest rates and the current state of Calgary's economy what will happen in rental prices in short term? Prices will go up, down, sideways?
    My view is that rental supply is reducing with landlords liquidating properties since this is a great exit opportunity. On the demand side renters are skewing towards purchasing properties instead of renting since it's always a great time to buy real estate and rent is a waste of money. A scenario that illustrates my point is that rentals typically fall within the range of first home buyers so there's a 1:1 (or close to) reduction in supply and demand so prices will be stable in the near term. Thoughts?

    2. How do landlords come up with their advertised rental price?
    Had a conversation this weekend with a friend about determining a rental rate to advertise. Their approach, as a current landlord, is that rent is a function of their mortgage and total monthly costs. I disagree in that in on a street with 5 similar rental houses there's going to be 5 different monthly costs based on the financing structure. I'd like some insight from landlords what's your process for coming up with a rental price? At what point do you determine to reduce rent? I believe holding out for that one person/fool to cover all of your monthly costs will be far more expensive than reducing rent.

    3. Are inner-city landlords worried about competitiveness/tenant availability with WFH becoming more prevalent?

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    Stonks always go up
    Originally posted by Thales of Miletus

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    fact.
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    guessing who I might be, psychologizing me with your non existent degree.

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    I'm in the process of trying to rent a condo (17ave/14st area) and I have a feeling my rent will need to be reduced. A little less than a year ago, the rental market seemed pretty tight. Now, I'm not so sure. Seems like rent has dropped. Not great for me, since building fees are going up.

    Rent can't be determined by your cost. Its foolish to think it can. Missing out on 1 month rent is a hole to climb out of. My view is reduce rent to get a tenant. My place has rented between 1200 - 1400 per month. $100+- isn't going to break my back, but losing out on a couple months would hurt.

    Check comparable properties in the area and price accordingly.
    Last edited by arcticcat522; 03-29-2021 at 08:24 PM.

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    You forgot MEGA in the title...

    This thread is worthless...
    Mods please delete so OP can be better.

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    We have a couple rentals, and costs are irrelevant, it's what the market will bear that determines rental rate.

    Rent faster has great search filters that make it super easy to tell the current market rate.
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    The 1st rule of landlord club....


    1. Anyone's guess

    2. Your cost has 0 factor to how market is priced. It's supply and demand. I always have my rent lower to have more applicants for me to choose/pick from. And tenant who are historically good and is going nowhere, I don't mind dropping rent to keep them around and did for 1 tenant in 2020.

    3. WFH made burbs and satellite cities more viable = more units to fight with inner city units.

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    Residential real estate is my favorite asset class.

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    Quote Originally Posted by Buster View Post
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    Residential real estate is my favorite asset class.
    Yeah?!

    Buy my condo.

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    Any predictions on what way the local rental market is heading? Will the local primary economy drivers (mainly O&G) need to get closer to growth case before any significant change in rental market occurs? Any other main factors to consider?

    As mortgage interest rates rise, less people can afford to buy, = more renters, = rental rates rise?
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    Quote Originally Posted by cidley69 View Post
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    As mortgage interest rates rise, less people can afford to buy, = more renters, = rental rates rise?
    Variable rates look low as hell.
    High ratio looks very low as well too. So people likely still buying vs. renting, or purposely doing high ratio so they invest money elsewhere.

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    Quote Originally Posted by cidley69 View Post
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    Any predictions on what way the local rental market is heading? Will the local primary economy drivers (mainly O&G) need to get closer to growth case before any significant change in rental market occurs? Any other main factors to consider?

    As mortgage interest rates rise, less people can afford to buy, = more renters, = rental rates rise?
    My guess?

    Eventually there will be stonks on RE prices due to low interest rate, bidding wars, material cost increase etc. Rentals are gonna sucks in 2021/22 and landlord feeling stress is probably going to cash out now and remove units from the market. Once everyone can buy one got one, and if the skilled labor shortage for Energy sector materialize as some predicted (much like Calgary came out of 90s), rental market will make a come back (but if it ever happens, I think it's 2-3 years out).

    Remember, more people are moving out of AB then moving in, not counting international immigrants:
    https://economicdashboard.alberta.ca...ed%20to%202019.

    Our 20-24 age group is also shrinking.
    https://www.cbc.ca/news/canada/calga...ysis-1.5444969

    Trend is less renter sand whatever left in the renter pool is of lower quality.


    Disclaimer:
    I may be FUDing to remove competitors from the market
    Last edited by Xtrema; 03-30-2021 at 10:59 AM.

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    Has someone mentioned how stupid it is to set rent price based on cashflow/op cost? No? Well it's pretty darn stupid.

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    Based on responses so far I'd like to pose what I'm seeing. Is a 10% increase from comparable units too great? Would you negotiate with landlord #3 or am I missing something
    Search parameters: Marda Loop townhouses with 3 beds and 2.5 or more baths. Let's approximate utilities at 250/month including electricity, heat, internet, etc and apply where needed.

    1. 2,585 + all utilities, single garage parking. Total cost of $2,835 https://www.rentfaster.ca/ab/calgary/rentals/townhouse/3-bedrooms/altadore/pet-friendly/398260
    2, Best value due to double car garage - $2,700 + electricity and internet, total cost of $2,825 (assuming $75 for internet and $50 for electricity) https://www.rentfaster.ca/ab/calgary...riendly/330619
    3. 3,000 includes most utilities and single car garage. Total cost of $3,075 (assume $75 for internet) https://www.rentfaster.ca/ab/calgary...riendly/426303

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    They all seem comparable on cost. Electricity will be closer to 100+ I imagine. My 500sq ft condo is +-60$/mth with 1 resident

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    Quote Originally Posted by blainer View Post
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    Based on responses so far I'd like to pose what I'm seeing. Is a 10% increase from comparable units too great? Would you negotiate with landlord #3 or am I missing something
    Search parameters: Marda Loop townhouses with 3 beds and 2.5 or more baths. Let's approximate utilities at 250/month including electricity, heat, internet, etc and apply where needed.

    1. 2,585 + all utilities, single garage parking. Total cost of $2,835 https://www.rentfaster.ca/ab/calgary/rentals/townhouse/3-bedrooms/altadore/pet-friendly/398260
    2, Best value due to double car garage - $2,700 + electricity and internet, total cost of $2,825 (assuming $75 for internet and $50 for electricity) https://www.rentfaster.ca/ab/calgary...riendly/330619
    3. 3,000 includes most utilities and single car garage. Total cost of $3,075 (assume $75 for internet) https://www.rentfaster.ca/ab/calgary...riendly/426303
    I think guy 3 is a bit out to lunch just trying to cover costs on the newest build. Highly doubt they're interested in negotiating. Maybe if you ask to write out the Utils / Cable as separate costs to yourself.
    I would choose 1 over 3 based on the garage being single instead of shared.

    Obviously need to go and see the layouts...

    Not sure who's paying this premium to be an end unit with no utils incl.
    https://www.rentfaster.ca/ab/calgary...calgary/422193
    Last edited by jwslam; 03-31-2021 at 09:14 AM.

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    There needs to be 10% more value to justify a 10% price increase. Pricing something 10% more than comparables is just going to result in renters choosing the cheaper one. It's simple.

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    Quote Originally Posted by cjblair View Post
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    Has someone mentioned how stupid it is to set rent price based on cashflow/op cost? No? Well it's pretty darn stupid.
    Ideally rentals should start off like that right? You pay enough down or stretch your mortgage enough to stay afloat each month. Problem is, expense adds up over time and likely faster than you can increase your rent, and the risk of pricing yourself out of the renter's market. Despite what most people think, it's not as simple as put in a down payment and you get to sit back and have the renter pay for your mortgage.


    Quote Originally Posted by blainer View Post
    This quote is hidden because you are ignoring this member. Show Quote
    Based on responses so far I'd like to pose what I'm seeing. Is a 10% increase from comparable units too great? Would you negotiate with landlord #3 or am I missing something
    Search parameters: Marda Loop townhouses with 3 beds and 2.5 or more baths. Let's approximate utilities at 250/month including electricity, heat, internet, etc and apply where needed.

    1. 2,585 + all utilities, single garage parking. Total cost of $2,835 https://www.rentfaster.ca/ab/calgary/rentals/townhouse/3-bedrooms/altadore/pet-friendly/398260
    2, Best value due to double car garage - $2,700 + electricity and internet, total cost of $2,825 (assuming $75 for internet and $50 for electricity) https://www.rentfaster.ca/ab/calgary...riendly/330619
    3. 3,000 includes most utilities and single car garage. Total cost of $3,075 (assume $75 for internet) https://www.rentfaster.ca/ab/calgary...riendly/426303
    If you feel your place is worth 10% more, start there. Most renters will still come to check it out, while some will negotiate, some will just bulk. It's the amount of hassle/risk you're willing to take on.

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    Quote Originally Posted by blainer View Post
    This quote is hidden because you are ignoring this member. Show Quote
    Based on responses so far I'd like to pose what I'm seeing. Is a 10% increase from comparable units too great? Would you negotiate with landlord #3 or am I missing something
    Search parameters: Marda Loop townhouses with 3 beds and 2.5 or more baths. Let's approximate utilities at 250/month including electricity, heat, internet, etc and apply where needed.

    1. 2,585 + all utilities, single garage parking. Total cost of $2,835 https://www.rentfaster.ca/ab/calgary/rentals/townhouse/3-bedrooms/altadore/pet-friendly/398260
    2, Best value due to double car garage - $2,700 + electricity and internet, total cost of $2,825 (assuming $75 for internet and $50 for electricity) https://www.rentfaster.ca/ab/calgary...riendly/330619
    3. 3,000 includes most utilities and single car garage. Total cost of $3,075 (assume $75 for internet) https://www.rentfaster.ca/ab/calgary...riendly/426303
    It's always your call. Charging 10% more may or may not risk unit sitting longer, I don't know that area so it's hard for me to gauge. And break even point is about 1.5 month of vacancy. You lose if it's vacant for more than that.

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    Quote Originally Posted by cdnsir View Post
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    Ideally rentals should start off like that right? You pay enough down or stretch your mortgage enough to stay afloat each month. Problem is, expense adds up over time and likely faster than you can increase your rent, and the risk of pricing yourself out of the renter's market. Despite what most people think, it's not as simple as put in a down payment and you get to sit back and have the renter pay for your mortgage.
    Are you explaining why a fiscally irresponsible person needs to try and charge higher than market rate to rent a place that they're overleveraged on? That's not up for debate; I was commenting on the fact that some people think the market should/can bear the cost of their poor investment, and that is what I think is stupid. It's obviously not simple to turn a profit with real estate, otherwise everyone would be successful at it.

    My (and everyone else's point) was rent should be based on market price, cashflow should be derived from that, and adjusted for downside risk. If someone jumps into a 6-7 figure investment without wrapping their head around that, they kind of deserve to get boned on it IMO.

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    Quote Originally Posted by cjblair View Post
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    Are you explaining why a fiscally irresponsible person needs to try and charge higher than market rate to rent a place that they're overleveraged on? That's not up for debate; I was commenting on the fact that some people think the market should/can bear the cost of their poor investment, and that is what I think is stupid. It's obviously not simple to turn a profit with real estate, otherwise everyone would be successful at it.

    My (and everyone else's point) was rent should be based on market price, cashflow should be derived from that, and adjusted for downside risk. If someone jumps into a 6-7 figure investment without wrapping their head around that, they kind of deserve to get boned on it IMO.
    meanie

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