Then & Now: Looking Back Over 12 years of Airdrie Real Estate Investing

airdrie

By Neill Taniguchi

Life is about timing and opportunity.  It is one of my favourite sayings, and my wife Lynda and I are living proof of the adage.  We moved to Airdrie in 2000 when the population was 19,165. In only fifteen short years, it has become home to us as well as the majority of our rental portfolio holdings.  This city has been very good to us, from both a quality of life as well as investment perspective.

We began the Airdrie part of our revenue property investing journey in 2002 (when the population was at 21,979) with the sale of our first local personal residence (a beautiful but poorly built new house) and purchase of a temporary townhouse condominium to live in while our new home was being built.  We kept and rented out that property starting in 2003. We had both been landlords prior to getting engaged and moving to Alberta:  Lynda owned a side-by-side duplex and rented out one half, which helped her to subsidize her mortgage expense while living in the other unit, while I rented out individual rooms in my house.

The purchase of that single townhouse, combined with our summer reading choice a few years later of ’s book Real Estate Investing in Canada, led us to join REIN in 2007.  Our original goal, which was to have five rentals paid for by the time we retired, is today a distant speck in the rear view mirror.  While none of our properties have actually had their mortgage retired, our portfolio’s cash flow today has allowed us to both step away from our permanent jobs and live our Belize, spending time with family and friends as well as travelling.  While we both made above average earnings and were passionate about our chosen fields (and I still do miss the “buzz” and fast pace of Calgary BMW), the trading of large chunks of hours to earn said dollars proved to be too great of a demand in the long run.

Money is a (for the most part) renewable resource; time is not.

We have been fortunate to have experienced two of the cycles of growth in local housing prices.  The first one, from 2005-2007, allowed for a complete re-finance of our holdings at the time.  By pulling the equity out of eleven revenue properties plus our own personal residence, we were able to fuel additional long-term personal buy-and-hold purchases.  Our gains made at that time were truly due to 90 percent lucky timing and 10 percent watching the dwindling supply in local newspaper’s classified rental ads. Does anyone else remember what those are? 

Meanwhile, the city of Airdrie continued to grow – 2007’s census count was 31,512.

Joining REIN taught us a number of things.  Among the many lessons learned:  to treat it like a business, and how to structure joint ventures (at last count we numbered sixteen parties that had chosen to put their trust in Lynda and me), how to be better landlords and renovate and market above average properties, and most importantly,about economic fundamentals that drive real estate.   A highlight from our “early” days as REIN newbies was the Calgary bus tour, which made a stop in Airdrie.  We were quite happy to find out that our rents were the same or higher than northeast Calgary, but at significantly lower house purchase costs. We had purchased locally more out of convenience and default than any other reason.

We subsequently attended a different kind of REIN seminar in Edmonton in 2009, where Ron Legrand presented and gave a quick introduction to the quick turn aspect of the business.  Like many others, I was mesmerized; I recall saying excitedly to Lynda “It’s like cars, only with more zeroes.”  We signed up for additional training with him on the spot.  Little did we know how that one weekend combined with the slight dip in the economy would set the table to push our real estate investing to the next level.

With housing prices receding and stabilizing from 2009-2010, and then remaining relatively flat for 2011 and 2012, we heard loudly and clearly Don’s message that it was time to buy. The result of that spending spree was the addition of 37 properties to our portfolio over that four year span.  The majority of these new acquisitions were placed into our Peak Housing Solutions Ltd. corporate rent-to-own portfolio.  With their increased cash flow, and the rising market in 2013-2014 that helped support the “quick” turn profits on the sale of the houses. Sixteen of 27 RTO deals initiated on our 2009-2012 acquisitions have since exercised their option to purchase, with another seven either pending sale or still working on qualifying. This meant we were well positioned to enjoy and benefit from this second wave of price growth.  Buy-and-hold properties were only added if they presented above average cash-flow returns, or had an immediate lift in value at possession. 

Even through the recessionary times, Airdrie continued to grow, recording population counts of 38,091 in 2009 (essentially a 100% increase from our arrival nine years prior), a meagre increase to 39,822 in 2010 and resuming more significant growth for 2011 to 43,155.

We were also very fortunate to get involved with a mastermind circle of fellow REIN quick-turn investors, meeting once a month to grow and share together.  This group truly became the catalyst that allowed us to leverage and capitalize our quick turn learnings against a backdrop of renewed growth in the market, ultimately allowing us to become 100% self-employed.  My work exit was initially intended to be and structured as a one-year leave of absence; however, six months in, I gave my permanent notice.  The group helped us commit to the taking the one year leave, the actual date, and then held us accountable to the deadline.  Our continuous thanks and hearts go out to these folks.

Airdrie’s population smashed through the 50,000 mark soon after the 2013 spring census count of 49,560.

In this current climate of economic uncertainty (oil prices, NDP majority government, persistent chatter of the country being in a recession, China’s stock market meltdown, the Greek referendum, etcetera, etcetera), there were a couple of nuggets of information that were released in succession over the past week related to the Airdrie market and economy that caught my attention.  Thank you again to Don and REIN for your teachings over the years on economic fundamentals.

Positive News to Share:

1) 2015 Census indicates continued growth

The population of Airdrie now sits officially at 58,690 – a 6.92% increase over 2014.  The press release from the City of Airdrie distilled this growth down to an easy visual statistic: 10.4 people per day on average arrived in our fair city over the last year. 

We continue to watch in wonderment as the growth continues, with new townhouse projects going up unabated in the neighbourhoods of Williamstown, Bayside, Windsong, Kings Heights and more.  The town has come a long way in fifteen years, more than tripling the census tally of just over 19,000 when we first moved here in 2000.

2) Airdrie resale market is hot

A recent tweet from Calgary realtor and market stat guru Mike Fotiou showed that, while not at 2014 volume peak levels the market here has been humming along quite nicely.  Digging a little deeper into the stats package that he includes with his blog post revealed that June 2015 YTD MLS Airdrie sales of 759 units has only been eclipsed twice in the last ten years: in the boom of 2007, 827 houses changed hands, and last year’s figure of 899 represents the high-water mark for the city. 

Drilling down one level and looking at detached houses only, the same result can be seen: June 2015 YTD MLS Airdrie Sales of 525 units also represents the third highest result on record in the last decade.

Our local Airdrie “boots on the ground” realtors have also confirmed that, similar to Calgary, the under $400K starter market remains hot with well under the overall 2.31 months of supply that we finished off  with in June overall.  The combination of high rents and low interest rates appears to be allowing this segment to maintain its strength.

Last year a lot of “stuck” homeowners from the previous downturn saw their houses re-float, and cashed them out (reducing the rental pool, which raised rents).

Rents and Vacancies Stable

We have seen demand remain strong through the first six months of the year, and turnover rates that are similar to previous years.  Vacancies are essentially non-existent for us.

At the time of writing this article, we were seeing strong response to a rental ad for a four-bedroom up, 2200 square foot two storey double attached garage house at $2,395 per month, plus monthly pet fees as applicable.

Townhouse rents have softened slightly, but remain strong overall, with newer builds with single garage still achieving $1500-1600 per month figures.

Folks with basement suites have reported a drop, which is possibly more related to the launch of a plethora of privately held multi-family apartments in the city’s southwest.

Secondary Suite Update

Amidst all of this positive news, there is one small fly in the ointment.

A source at Airdrie’s City Hall has advised that crackdowns on non-conforming secondary suites are on the horizon, which will reportedly lead to actual shutdowns.  There has been a long-standing tendency to look the other way with enforcement over the years that has allowed for both a decent volume of affordable rental options, as well as a solid ROI and cash flow for landlords.

In the 2015 Airdrie Business Satisfaction Survey, affordable housing was identified as one of the challenges facing Airdrie businesses.  One can only hope that this trend is temporary, and the paradigm shift that happened years ago in Edmonton and Red Deer eventually makes its way here and allows for legalization of suites.

The Future

We continue to watch and monitor both the actual housing market as well as the supporting economic indicators.  We remain ready to add properties that represent good value to our portfolio, with two currently AFS deals that will close this summer, two MLS-based offers, and a commercial property purchase that will close in August (which also happens to be our daughter’s wedding month, leading to, ahem, perhaps a brief respite from being focused on real estate).

In summary, with a good reputation as a place to raise a family, along with the continued above average population growth seen, Airdrie has long ranked in REIN’s annual Top Alberta Investment Towns.  We agree wholeheartedly and remain committed to this city as it relates to our future. 

Lynda and Neill Taniguchi are full time property investors in Airdrie, AB.  They cut the cord to their jobs in stages: Lynda left her teaching job in 2010, and Neill’s transition from sales manager began with a leave of absence from Calgary BMW that became a permanent departure in 2014. They enjoy spending their re-allocated time with family and friends, and have also traveled on extended trips to Mexico, Central America, and via RV to the Yukon and Alaska.

Sources:

Airdrie historical population: http://www.airdrie.ca/index.cfm?serviceID=485

2015 Census results: https://www.airdrie.ca/index.cfm?serviceID=1090&ID=374

Mike Fotiou’s June 2015 Airdrie blog post: http://calgaryrealestatereview.com/2015/07/05/airdrie-real-estate-market-report-june-2015/

2015 Business Satisfaction Survey: http://www.airdrie.ca/index.cfm?serviceID=1090&ID=367

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