Altyn Equities 2024 January Update – The year of the ‘Steadfast Investor’
January 4th, 2024
Happy 2024. Wow, what a year 2023 was. Volatility in the markets (real estate and stocks), a housing boom followed by a correction, and even rents tapering off in Ontario and BC in December. For me it was full steam ahead on the prairies with rental increases and falling vacancy rates, in fact I had my best year in 24 years as a real estate investment operator.
Rents rose by 13% across 5 buildings for a value increase of almost $3,000,000. The assets have been surveyed for their market rent, which will increase by another 9.24% for an additional lift of $2,400,000 by mid 2024. Vacancy is hovering around 3% and falling, with increased pressure on rents for at least the next 2 years.
Regionally rents were up about 4% in Saskatoon with another 12% in increases handed out near the end of the year due to record low vacancy. In Edmonton vacancy was slightly higher, but much higher18% increase in rents, with another 8% increase on the way in 2024.
In migration to Alberta has accelerated, along with out migration from BC and Ontario to the more affordable prairie markets. This, combined with an estimated 500,000 (or more) immigrants calling Canada home in 2024, will put even more pressure on housing and rents.
We took over our latest acquisition, Glenridge Apartments in Fort Saskatchewan in May, and have successfully raised rents 39% in only 8 months, adding almost $1.5M in value!
Last year the motto this for real estate investors was the year of the experienced operator, and capital seeks competence due to the expected volatility. I was able to successfully lean on my experience to navigate the choppy waters from 2015 to 2023 and have implemented an aggressive plan to take full advantage of the strong market to increase rents and purchase many more apartment buildings.
2024 will be the year of the Steadfast Investor – and with more predictable, stable, and growth markets it’s time to get out there and invest, relentlessly with confidence.
P.S. I am looking for new investors for my new deals in 2024 – if you want stellar returns with no work, please fill out the survey and I will reach out to you!
Please fill out the investor interest form HERE. https://www.surveymonkey.com/r/NBP9YB9
Below is an update on all projects – Please enjoy the update!
Glenridge Apartments – Fort Saskatchewan AB
Purchased May 2023 $2,250,000
Cash Required $750,000
Rent Roll Purchase $17,250
Rent Roll Jan 2024 $23,950 (+38.4%)
Target: $25,146 (+5%)
CMHC Lending Value (Spring 2024) $3,000,000
Key Highlights January 2024
- Took over the project in May with a $1.8M private 1st
- Aggressively raising rents, whilst doing modest upgrades, currently renting 2-bedroom units for $1350 and likely higher towards the end of the year.
- Rents rose dramatically since purchase – adding $1,461,818 in value.
- Target rent of $25,146 will add another $260,945 in value.
- The plan is to refinance with CMHC in 2024 for a long-term hold.
- Massive industrial projects on the way (or started) in the area.
Adam Apartments – Leduc, AB
Purchased Nov 2021 $1,462,000
Cash invested $550,000
Rent Roll Jan 2023 $17,885
Rent Roll Jan 2024 $19,975 (+11.69%)
Target: $21,825 (+9.26%)
Current Value $2,800,000
Key Highlights January 2024
- Converted storage room to bachelor suite and rented for $950, turning the 17-suite building into an 18 suiter.
- Rents increased 12% in 2023 to add $456,000 in value.
- Target rent to increase another 9% to add another $403,636 in value in 2024.
- Very strong rental market – and virtually no vacancy in Leduc.
- Renovated a few units, with about 7 left in the building to do.
- Plan to do some landscaping, and a potential roof replacement in 2024.
Mansard Terrace Apartments – Saskatoon SK
Purchased 2017 $1,470,000
Cash invested $630,000
Rent Roll Jan 2023 $14,625
Rent Roll Jan 2024 $15,075 (+3.1%)
Target: $16,900 (+12.1%)
2023 Value $2,030,000 (145/door)
Key Highlights January 2024
- Saskatoon market had a slower pace of rent increases, but a rapid drop in vacancy rates hence very high rent increases have been issued for mid 2024.
- Rents increased 3.1% in 2023 to add $100,000 in value.
- Target rent to increase another 12.1% to add another $398,182 in value in 2024.
- Estimated Value January 2024 based on comparable sales = $2,030,000. (145K/door).
- Mostly likely will sell for a HIGH ROI in October of 2024. 7 -year hold. As mortgage matures potential to add another 3 years to the venture depending on market strength.
Chaben Place – Saskatoon, SK
Purchased 2016 $2,710,000
Cash invested $840,000
Rent Roll Jan 2023 $24,825
Rent Roll Jan 2024 $26,025 (+4.8%)
Target: $29,25 (+12.4%)
2023 Value $3,480,000 (145k/door)
Key Highlights January 2024
- Rents increased 4.8% in 2023 to add $262,000 in value.
- Target rent to increase another 12.4% to add another $704,000 in value in 2024.
- Estimated Value January 2024 based on comparable sales = $3,480,000. (145K/door).
- Building operating very well and is the nicest on the block. Very little turnover and a strong rental market in Saskatoon. Great upside in the next 3 years.
- Plan to sell the project in 2026 with a HIGH ROI due to premium location, and massively improved condition, with low expenses for a building of this size.
- Very good mortgage of only 1.85% until 2026 makes selling earlier a possibility if the market turns speculative, as what is happening in New Brunswick.
Beaumont Place –Beaumont AB – 3 story concrete mixed res/commercial
Purchased 2014 $2,900,000
Cash invested $900,000
Rent Roll Jan 2023 $30,932
Rent Roll Jan 2024 $34,197 (10.56%)
Target: $37,117 (+8.52%)
Approx. Value $4,500,000
Key Highlights January 2024
- Renovated 3 units and gave massive rent increases to all residential units.
- Currently doing a high-end renovation for a test rent of $1695.
- 2 Commercial spaces up for lease in 2024, the rest in 2025 – Negotiating now.
- Rents increased 10.6% in 2023 to add $712,364 in value.
- Target rent to increase another 8.5% to add another $637,091 in value in 2024.
- Estimated Value January 2024 = $4,500,000.
Final Thoughts – Steadfast into 2025
Edmonton, Alberta led the way in rent increases in Canada in 2023 at 12% and overtook Calgary as the leader in rent growth amongst Canada’s largest markets however average rents are still only $1472 compared to Calgary at $2081 (rentals.ca).
I anticipate strong prairie rental growth for Edmonton and Saskatoon (possibly Calgary), however larger markets like Vancouver and Toronto are flat to falling as 2023 ended. I do not anticipate a sharp drop in rents in these markets however, simply inflationary increases as supply remains extremely tight with large cohorts of immigration to land in these centers.
My approach has not changed in over 20 years in this business. Invest in stable or value add projects for a long-term hold, maintain a healthy reserve fund, and not to take on too much debt. This approach has served me well over the past 2 decades and will continue to outperform most other investments this decade as well.
I firmly believe there is $300 to $400 in upside remaining in this market cycle before rent increases begin to taper off to the typical 3% per year inflation rate, so this will bode well for my existing investors as well as buildings that I acquire in 2024.
NEW DEAL – There is also a new opportunity to invest in a large Edmonton multifamily complex.
Details out soon – Click the link below to fill out the investor interest form and I will contact you.
https://www.surveymonkey.com/r/NBP9YB9
Happy 2024, health, wealth, and happiness!
Cory Sperle
