Edmonton Real Estate Investing - Investment Property Edmonton

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So many have reached out asking where to find cash flow. And, we get it – Vancouver is not an easy city when it comes to making the numbers work day 1. But there are markets where cash flow is still king.

Calvin Hexter sits down with Matt & Adam to discuss why  investment property Edmonton is becoming a major search term (hint: mega cash flow opportunities may be a driver). How can Edmonton help you diversify your real estate portfolio? What should you buy based on your budget? And which neighbourhoods offer the perfect mix of high quality tenants, future potential, and big yields?

This is one for the real estate investors looking to up their income. Know what you own, and know why you own it!

Updated by Matt Scalena PREC December 11, 2023

Calvin Hexter breaks down the Edmonton real estate market for us. Why are investors excited about owning investment property Edmonton? Where are they finding Edmonton Real Estate Investing deals? And how can you get mega cash flow in Alberta?

Who is Calvin Hexter?

Calvin Hextor is an Edmonton real estate pro & Edmonton Real Estate Investing-focused Realtor. He works out of Edmonton, Alberta and has lived there his entire life. He started in investment real estate in 2013 when a friend called me up and told him he had bought his second house. He explained how he would rent it out to make a profit and Calvin decided to follow in his footsteps. He did a terrible BRRRR (Buy, Rehab, Rent, Refinance, Repeat) in 2013 but was able to learn from his early mistakes.

Calvin Hextor works with clients looking to do fix and flips, BRRRRs, turn-key Edmonton investment properties, creative deals and small-scale multi family.

He has continued to grow his own portfolio, doing lots of private lending in the last few years. Calvin is currently at 15 doors, primarily in residential investment property Edmonton. He also has capital in a fund with a local investor who have 450 doors in multi-family.

Can you tell us about your first BRRRR property?

With my first BRRRR, I was 21 years old and didn’t know what I was doing. I was so eager to get into the investment property edmonton market that I bought my neighbour’s house without doing any market evaluation or consulting a realtor. I ended up overpaying by about $15,000. I did a full renovation and did most of it myself. The plan was to legalize the basement suite.

The project should’ve taken 3-4 months but ended up taking eight. I overspent on most of the items, not realizing I wouldn’t get a better return. I renovated the house to my liking instead of purchasing items that would be good value and tenant-proof. You don’t want to buy the best but rather items that are “good enough” for the investment property Edmonton.

The project should’ve cost $110,000 in renovations but ended up costing $150,000, even doing most of the work myself. It would’ve been cheaper for me to hire a general contractor and get it done faster. I didn’t even rent out the main suite until the basement suite was ready, even though the main floor was ready to go.

I learned so much from that first project. I actually still have that property in my portfolio and it is cash flowing now. But the numbers did not look good at first. The second BRRRR I did about six months later went slightly better. And I continued to improve from there.

If your goal is to invest in real estate, your realtor should have experience in investing in real estate too. They shouldn’t be afraid to tell you their war stories.

That way, they can prevent you from going down the same path and they can help you learn from their mistakes.

What was the takeaway from your first investment property Edmonton?

Taking action is always the most important & that has to do with mindset. If you give yourself a reason not to take action, you never will. Action is something we did well. But I should’ve done more research and I should’ve aligned with people who had done this before. The team is everything.

If you’re an investor, the team that surrounds you is going to support you and make your life easier. They can help find your blind spots and prevent you from going down a terrible road. Having that team in place is essential.

How is the Edmonton real estate market & is now a good time to buy an Investment Property Edmonton?

As of today, the Edmonton real estate market is busy. But in the last quarter of 2022, it was quiet. A lot of buyers were benching themselves, waiting and watching what was happening with interest rates and what other people were doing. Inventory was not getting consumed.

But as soon as January hit, my phone was going crazy. People were tired of sitting on the sidelines. Transactions ramped up extremely fast. We have now hit a more balanced market, whereas Edmonton is usually a buyers’ market. We’re seeing multiple offers and a lack of inventory. Sellers are enjoying that and buyers are having to get more creative to find good deals.

In one multiple offer situation, I had a family send me a video, which has never happened before. People are thinking outside of the box and it’s making a difference. This offer with the video was below the other offers on the table with just okay conditions. But the video explained how badly the family wanted to live in the house. It pulled on every heartstring and the seller ended up going with them.

How is the Edmonton market different now from early 2022?

The market is busy now but early 2022 was insane. I think we hit a historical high for prices in early 2022. Prices climbed fast but then they dropped. Right now we’re about 11% lower than prices were last year at this time. But last year was definitely an exception.

Why are you experiencing low inventory in Edmonton?

It’s a few different factors that are contributing to low inventory in Edmonton. Seller confidence is a huge one. Sellers didn’t want to put their homes up for sale when no one was purchasing. Once the activity in the market makes the news, that will boost confidence and more homes will be put up for sale.

Another factor is out of province investors. Not only are we seeing a lot of local buyers jumping in but they’re now competing against people coming back to Edmonton, people moving to Edmonton for a lower cost of living, people trying to build equity, etc. The consumption rate is so high right now.

So the three factors causing low inventory in Edmonton are:

1. Sellers lack of confidence in the market
2. Interprovincial migration to Edmonton for a lower cost of living
3. Out-of-province investors looking for opportunities with cash flow

Why are you excited about Edmonton?

Edmonton is expecting some major growth over the next decade and is preparing for it by building out infrastructure. We have light rail transit being developed, a new hospital, roads being converted to freeways, etc. The city is ramping up!

Why are investors excited about Edmonton?

A lot of investors interested in investment property Edmonton like it because of the landlord-tenant rules. They’re more balanced and it’s more favourable to the landlord here.

There are no land transfer taxes and no rental increase caps. After 365 days of tenancy, a landlord can increase the rent to whatever they want. Obviously if they go too far, it might be unaffordable. But we’re seeing that the market is able to absorb higher rents which is helping landlords offset high interest rates.

Affordability in Edmonton is a big pro for investors. If you wanted to buy a single family, detached home with a rental suite in the basement in a good area, that might be $430,000. You could live on the main floor and rent out the basement or rent out the whole thing.

Right now, you’re probably getting $100-200 in cash flow on a house like that. But when interest rates were at 3%, you’d be getting $500-600 in monthly cash flow. Once interest rates drop, those cash flow numbers will come back up.

Your money gets you more in Edmonton. You can put down less and still see positive cash flow. There’s a lot of excitement amongst investors who can take their equity from a market like Vancouver and get into a cash flowing market like Edmonton.

What does $800,000 get you in Edmonton?

With $800,000 you could buy a full duplex with rental suites in the basement. That would be four units, with 10% cash-on-cash return. That’s one of my favourite types of units to purchase because the returns are so good.

If you can weather the storm on interest rates, I’d look at a duplex. The returns are just so good. You can usually negotiate a property manager down from 10% to 6-8%.

With today’s interest rate, you’d be seeing $600-700 cash flow per month on the duplex. When interest rates were at 3%, you’d be seeing $1000-1200. That includes all of your holding costs (mortgage, property tax, insurance, maintenance, vacancy, property management).

And your tenants shovel the snow! It would be their responsibility to maintain the exterior which includes shoveling snow, raking leaves, etc. That would be in the lease and it’s expected here. You wouldn’t have to pay for snow removal unless you were looking at a commercial multi-family building with more than five units.

What are the blue chip areas in Edmonton?

If you’re looking to invest in the A or B areas, you typically won’t cash flow. But you’ll sustain property value, have better tenants and fewer vacancies. Every area has its benefits and drawbacks. It depends on the investor and what is important to them.

For blue chip areas, you could be looking at Crestwood, anything around Ottewell, and around the University of Alberta.

Any investor should be able to go to their realtor and give them their list of four variables in order of preference. Their realtor should then be able to place them in an area based on those preferences. The four variables are:

1. Cash flow
2. Tenant profile
3. Vacancy
4. Appreciation

What is your favourite C area in Edmonton?

My favourite C area in Edmonton is the west end. There’s a ton of development happening in this area, including the LRT. There’s a lot of government jobs here; we’re not as weighted on oil and gas as Calgary. It’s easy to move horizontally in this city from downtown to the west end. The affordability is there.

I would expect 4-5% vacancy in the west end of Edmonton. I haven’t seen recent reports but I usually hear from investors whether they have issues tenanting or not.

The tenant profile in the west end is more of a variation. There are a lot of manufacturing plants this way as well. There are a lot of young families and some professionals. In more affluent areas, you’d see more of the government workers. Many go into homeownership but some prefer to rent.

Is it easy to invest in Edmonton?

We try to make it easier to invest here in Edmonton than it would be in your backyard. I understand trades are difficult in Vancouver but we don’t really have those challenges here.

You want to get set up with a professional partnership. Without flying in, you could get 3-4 sets of eyes on a property – your realtor, property manager, inspector and contractor – giving you their professional opinion on whether you should invest in the asset.

The 5 Wire: Getting to Know Calvin Realty Team Lead & Edmonton Realtor, Calvin Hexter

Share a book recommendation with us

I’ll go with a classic that I try to read every year, Think and Grow Rich by Napoleon Hill. It always puts me in a great mindset. The only books I read outside of real estate ones are cartel books!

What new belief, behaviour or habit have you adopted recently?

The ability to say no. People don’t say no enough. If you take on too many “opportunities,” you’ll spread yourself too thin and not be able to specialize. Know that your time is valuable and use it in the direction you want to go. Understand your goals and see if the opportunity actually gets you closer to them.

What have you been binge watching lately?

I need to catch up on The Last of Us. I highly recommend it!

Favourite band?

I saw Mötley Crüe when they came to Edmonton last year. We were right on the floor! It kickstarts my heart when I listen to them.

What is something you’ve purchased for under $1500 that has had a positive impact on your life?

You want to start the day with a clean car. Having a membership to a car wash where they wash it for you is amazing. It only takes ten minutes, you save a lot of money with the membership, and it makes you feel so good.

• Calvin Realty