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Chilliwack Apartment Buildings Analysis Q3 2016

5.77% Average Cap Rate (2013 – 2016)

$87,773 Average Price Per Unit (2016)

2.7% Vacancy Rate (Oct 2015)

77,936 Chilliwack Population (2011)

100,000 Projected Population by 2021

40.3% of Tenants are Aged 25 – 44

$1.32 Per SF Average Rent (2016)

Chilliwack apartment buildings remain a strong investment in Fraser Valley. Healthy population growth and employment create a solid base of tenants. Housing supply is balanced and slowly growing. Rising rents may make purpose-built rentals more feasible.

Price per unit is on a solid upward trend while average cap rates vary due to differing ages of buildings sold and a small number of sales each year. Dollar volume of sales is on track to reach highs previously seen in 2013.

Click to jump directly to Population, Employment, Housing Supply and Investment Demand.

Population

The City of Chilliwack has a population of 77,936, with a year-over-year growth rate of 12.6% (2011 Census). This is greater than the growth rate of the region (8%) and neighbouring communities (Abbotsford: 7%, Mission: 5.6%; Hope: -3.5%).

Considering continued steady growth, the city’s projected population is expected to surpass 100,000 by 2021.

chilliwack apartment buildings population

The median age in the City of Chilliwack is 39.8, with almost 80% of people under the age of 59. Chilliwack also has a significantly higher percentage of children up to 19 years at 26.5% compared to 22% in BC. The City of Chilliwack’s population of seniors aged 65+ is comparable to the BC average at 16%.

chilliwack apartment buildings population age

Age of tenants closely mirrors age of residents in Chilliwack. People who are most likely to rent are between the ages of 25-44 years old, making up over 40% of all renters in town.

chilliwack age of tenants

Employment

Employment in Chilliwack remains strong with unemployment rate of just 6.7%. This is slightly less than the provincial average of 7.8% (2011 Census). More recently, unemployment estimates have improved to 5.6% for the region as of January 2015.

Full-time employment is most common, with 79% employed full- time. About 13% of full-time workers are self-employed. The Labour Market outlook for the next decade shows that about 40% of new jobs will be attributed to new growth, while about 60% will be attributed to the replacement of retiring workers. (Source: WorkBC.ca).

Compared to provincial averages, Chilliwack has more people working in trades (18.8%) and manufacturing (3.9%). Management occupations make up 10.6% of the workforce. There is also a notable number of management occupations making up 10.6% of the workforce, as well as workers in business, finance, and administration making up 13% of the workforce.

chilliwack employment by sector

Average household income in Chilliwack is $79,891 (Source: City of Chilliwack).

As a result of the strong employment base, landlords have a diverse base of tenants to choose from. No single industry, sector or employer is weighted too heavily, lowering multifamily investor market risk. Chilliwack apartment buildings tenants come from a range of backgrounds, many with strong income potential.

Bottom line: Chilliwack multifamily investment is underpinned with strong growth and tenant demographics.

Rental Housing Supply

Housing Starts

While Chilliwack continues to grow cyclically, building permit growth averages about 12% per year over the last 30 years. Residential development averages $75 million per year with about 750 housing starts per year.

As much as 60% of Chilliwack’s growth has occurred in the residential sector. In the last ten years, Chilliwack saw nearly $1 billion in residential investment.chilliwack housing starts apartment buildings

Current rental development projects include Alder Park, a 49 unit rental building in Sardis expected to receive occupancy permits this fall. Another 56 unit building is currently under construction in Sardis. According to the zoning and development permits, half the units are “micro-suites” with sizes around 600 square feet or less.

Rezoning of the old Safeway site downtown may lead to a substantial project in the downtown core.

All told, Chilliwack is home to about 7,690 rented dwellings. Of these, 3,810 are rental apartment building units. Buildings with at least 10 units worth $1 million or more are divided by size as shown in the following graph.

chilliwack apartment buildings unit count

Average Rent

Average monthly rent for Chilliwack apartment buildings is $856 per month compared to $1,089 in Vancouver. Rents are rising rapidly with a severe lack of available rental units and low vacancy.

A Multifamily Real Estate Services survey in June 2016 showed that newer rental buildings (built 2008 to 2015) are renting for an average of $1.32 per square foot.

Vacancy Rate

Chilliwack apartment buildings vacancy rates have plummeted over the past few years.  The last CMHC Rental Market Report put vacancy at 2.7%.  This is comparable to neighbouring communities including Abbotsford.

Vacancy rates have dropped an average of 21.5% per year for each of the past three years.  As a result, Multifamily Real Estate Services forecasts vacancy rates of around 2.0% (or less) in the next CMHC Rental Market Report coming Q4 2016.

chilliwack vacancy rate

Investment Demand

Investment Volume

Given that Chilliwack is a smaller market, the year-by-year investment in multifamily properties varies widely. As you’ll see in the following graph, both number of sales and dollar volumes are variable and may not necessarily reflect a trend in the market. Trend can be determined by looking at regional statistics for Fraser Valley.

Here is a graph of Chilliwack apartment building sales over the past few years.  You’ll see dollar volume and number of sales.

screen-shot-2016-09-11-at-11-08-57-am

2016 is on track to be an excellent year for investment in Chilliwack. In addition to six sales so far this year, two new rental buildings are under construction.  One 49 unit building is ready for occupancy this fall.  The other, a 56 unit rental/condo building, is likely set for spring 2017 completion.

Price Per Unit

Price per unit trend for Chilliwack apartment buildings is undoubtedly up.  Price have rose from an average or $81,217 per unit in 2013 to $87,774 per unit in 2016 (year-to-date).

chilliwack apartment building prices

Cap Rate

Chilliwack apartment buildings cap rates have not followed the price-per-unit trend, bouncing up and down over the past few years. The small number of transactions make individual deals have a large influence on averages. Age of building, above or below market rents and a host of other expense-related variable affect cap rate’s accuracy as a primary investment metric.

To smooth out those bumps, here are the most important Chilliwack Cap Rates:

6.22% Average Cap Rate YTD 2016

5.77% Average Cap Rate from 2013 to 2016

Gross Rent Multiplier

Gross rent multiplier (GRM) is another important market indicator, comparing the ratio of rental income to sale price.  GRM is an excellent comparison for local investment buildings (not as much for inter-city or regional). GRM doesn’t include additional income (laundry, parking, etc) and shows the relationship between rents and sale prices.

GRM is relatively stable over the past 4 years with only a slight downward trend. Downward trend means higher sales price in relation to rent. Most important GRM metrics:

10.99 Average GRM in 2016

11.21 Average GRM from 2013 to 2016

Chilliwack Apartment Buildings For Sale

Browse Fraser Valley multifamily sites and apartment buildings for sale
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Top 3 Reasons to Invest in Fort St James

What do a senior, a single mom and a five-year old kid have in common?

How does vacancy in a town of 5,000 people reach less than 1%?

And, what’s the old-fashioned real estate fundamental that we’ve forgotten about in Vancouver?

Well, read on to find the top three reasons to invest in the puzzling town of Fort St James, British Columbia.

History

The first perplexing fact I’d like to share is that Fort St James is the oldest continuously-inhabited community in British Columbia.  Yup, that’s right it’s not Vancouver or New Westminster or Victoria.  It’s Fort St James.

Steeped in history, this thriving little town lies 40 minutes north of the booming metropolis of Vanderhoof.  I’m sure you’re all familiar with Vanderhoof.  No?!!

Ok, Prince George.  Now there’s a town you’ve heard of.  Fort St James is an hour and forty-five minutes north and west of Prince George.  Sounds remote, right?!

So what’s going on in this classic town and why should we care?

Allow me introduce a unique opportunity to invest in two apartment buildings for sale on the shores of Stuart Lake in Fort St James: Birch Villa and Lakeview Apartments.  Details are available at www.multifamily.ca and at the bottom of this article.

But for now, back to our riddles….

Demographics

What do a senior, a single mom and a 5-year-old kid have in common?

Beyond the obvious, let’s get into a couple puzzling specifics. Fort St James is a thriving community with a resource and tech-oriented local economy. Population of the area is between 4,500 and 5,000 people, depending on who you ask. And, like many northern towns, the population changes quickly, up and down and up again.

More interesting than how many people live in town is who lives in town.  For example, 66% of residents have lived in the same address for the last 5 years, compared with provincial average of 53%.  The average age in town is 35 year old (compared with provincial average of 42) and the largest demographic group are kids aged 5-9.

A high number of those households with kids are single-parent families (33%).  In 2006, the local population had dropped nearly 30% from 2001, but at the same time school enrolment didn’t change.  Puzzled yet?

Seniors make up about 23% of the Fort St James population.  Since 90% of seniors say they want to stay in town, there’s not enough places for them to live.  Elderly folks are being wait-listed for rental housing.  There are more people than places to live.

Young town. Single parent families.  Seniors.  People want to stay in Fort St James.  Anyone else seeing the trend here??!

So, what do a senior, a single mom and a 5-year-old have in common?

They are all likely to be tenants.

Housing Supply

How does a town of 5,000 people hit 1% vacancy?

Fort St James housing supply in a word: Stagnant.  The supply of housing in Fort St James is changing at a glacial speed…you know, before global warming.

What this means is that there are very few places to rent.  In fact, only 25% of the housing in Fort St James would be classified as “multifamily” and even less classified as rental.  By itself, this isn’t a very exciting statistic, until you look again at the demographics of the town.

Hmmm, lots of young people.  Lots of kids.  Lots of single parent households.  Lots of seniors.  Theses are people who need a convenient, low-cost, low-maintenance place to live.  The median house price in the region is $195k so a lot of these folks don’t buy homes.

Holy crap!  These are all renters!!  And there are not a lot of places to live.

A more exciting statistic backs up my story: these two apartment buildings for sale have an actual vacancy rate 0.67% over the past 18 months.  No, that’s not a typo and you’re not hallucinating (are you?).

The vacancy rate for Birch Villa and Lakeview Apartments is comparable with vacancy downtown Vancouver!

The Forgotten Fundamental

And with that staggering bit of info, let me introduce the final and most important reason to invest in Fort St James.

A long time ago, in a land far far away, before Vancouver’s real estate insanity, was an investment real estate market based on (.….drum roll…..) cash flow!

Yes, you who’ve been in the game for a while remember.  Remember the days when you could actually live off your investment buildings.  When there was a discernible spread between mortgage interest rates and building returns.

Well, Fort St James is beckoning back to those fine days.  And, I’m talking real, hard numbers from past years.

 

Conclusion

To sum it all up, you’ve got high demand, short supply and phenomenal cash flow.  It’s a lucky investor who snaps this one up before their competitors.

Check out the specs and information for the following sold apartment buildings in Fort St James:

752 & 772 Stuart Ave, Fort St James

174 W 2nd Ave, Fort St James

 

 

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3 Ways to Find Your Best Apartment Deal Ever

Your next investment could be your best apartment deal ever…if you find the right one.

In a red hot real estate market, finding good deals can be challenging.  Listing inventories are low and what’s available sells quickly.  But, even in a competitive market, opportunities abound for those who know how to find them.

Read on to find three essentials ways to find investment properties in any market, anywhere, anytime.

1. Multiple Listing Service®

“Wait a minute,” you may think.  “MLS®??!  Tell me something I don’t know.”

The fact remains, the multiple listing service is the single largest collection of investment real estate listings, no contest.  More than 20,000 real estate agents and 11 real estate boards in British Columbia all push their listings to the MLS® system.

The best ways to search public listings are through www.realtor.ca or private websites with an MLS® portal. Custom-built portals on private websites allow searches with detailed criteria and user-friendly map searches.

MLS® listings span multiple markets and allow better comparison than any other source.  Buyers can save searches, get automatic updates of new listings, and view only the most relevant properties.

One disadvantage to MLS® is information inaccuracy. A listing is only as good as the agent behind it and not all real estate agents understand investment buildings.  When dealing with MLS®, be sure to complete some due diligence before writing an offer.

Another disadvantage is competition.  MLS® listings get a lot of exposure.  Everyone gets equal access to MLS®, from literally anywhere in the world.  The newest listings and the oldest listings are often the best opportunities.  Approach new listings if you can get in fast.  Old listings may have a tired seller who wants to finally sell.

Bottom Line:
Fantastic deals happen every day on MLS®….don’t let anyone tell you otherwise.  Public listings are best for efficient research and comparison.  MLS® should be a cornerstone of almost every property search strategy.

2. Exclusive Listings

Exclusive listings are listing agreements made with brokerages and individual real estate agents that do not involve MLS®.  A licensed real estate brokerage can market any property without putting it on the Multiple Listing System®.  Exclusive listings can be publicly marketed or privately shared with select investors.

Prospective buyers can search exclusive listings by browsing company websites, signing up for e-mail newsletters or talking with real estate agents.  For best results, find agents who focus on your property type and geographical area.

One advantage to exclusive listings is less competition for deals.  Available deals are shown to a smaller audience which may result in only the most motivated or qualified people being aware.  If you’re on the right list, you may see something before your competitors.

The biggest disadvantage to exclusive listings is accessing information.  Many agents and brokerages restrict who receives access to a deal.  Financial information, even list prices, can be hard to find.  Other agents only take listings to their favourite buyers and may not share them with the larger investment community.

In extreme cases, it can be difficult to discern whether a property is listed for sale or not.  Exclusive listings on Loopnet.com, for example, can show as “Active” months after they have been sold or expired.  Other company sites force you to complete an online form or call the agent to see any details.  Sold prices are virtually never displayed on agent websites.  Properties marked “sold” usually display the listing price.

Bottom Line:
Exclusive listings are best for qualified buyers who understand the market and are ready to make a purchase.  It can be difficult to confirm information using the internet alone.  Speaking to an agent will usually clear up any missing details.  Exclusive listings can be used to monitor the market, but MLS® is better for researching/comparing.

3. Seller Direct

Buying an investment property directly from the seller involves unlisted or “off-market” properties.  An off-market deal is usually arranged in one of two ways:  either the buyer and seller know each other or the buyer is represented by a specialist real estate agent.

One version of a seller direct strategy involves having your agent target unlisted buildings in a particular market.  If you know how many suites you want (and how much you can afford) a real estate broker with access to inventory can approach owners on your behalf.

The biggest advantage to buying seller direct is no competition.  If done right, you should have exclusive access to a particular opportunity at a particular time.

On the downside, buying seller direct takes patience…sometimes, a lot of patience!  You must be willing to wait for the right opportunity.  Anyone is a seller if they can get 25% over market value, but to source the best deals takes time.

Pricing an off-market building can be challenging.  There is no absolute value to any investment property.  A building is worth whatever someone is willing to pay for it.  You need to know what it’s worth to you.

Another challenge is seller motivation.  If you approach someone directly, they may not be motivated to sell at a reasonable price.  You have to be ready to walk away or be more flexible with price and terms.

Seller direct offers some unique hurdles that can be well-worth the effort.  The deal you can end up with is often better than what the market is offering.

Bottom Line:
Seller direct is best for focused buyers who know what they want.  You must have excellent market knowledge and be able to substantiate any offer you bring.  You must be flexible.  Seller direct works best for investors who know the market and who can trust their brokers and advisors.

What to Remember

MLS® is still the biggest and best source of listing inventory and market research.  Be aware of information quality issues and fast moving competition.

Exclusive listings can take some work to find and access.  But, if you’re serious about acquiring something, talk to agents, get on mailing lists and regularly check company websites.

Consider seller direct if you have the focus and patience required.  You can access buildings that no one else can…and you may just leave your friends wondering how you got the best apartment deal ever in such a hot market.