Altyn Equities publishes Fall 2016 update
Welcome to the 3rd quarter update for Altyn Equities. We are continuing our year with our aggressive buying strategy combined with tight expense control. We closed on another great asset, Marsin Apartments, in Saskatoon Saskatchewan that will provide an excellent return on a 5-year hold. Generally, the markets in Saskatoon and Edmonton remain challenging. Rents are flat from a year ago, and are continuing downward pressure in which we had to be extra vigilant, minimize turnover, and provide incentives where necessary to preserve our bottom line. The best news is we are picking up quality assets based on these, temporary, low rents which will give us an excellent lift in the next few years.
Marsin Apartments 2440 Louise Street- 12 suites
We picked up this asset for an amazing price of $100,000 per unit in October 2016. The suite mix is 11, large 2 bedroom units, located in the premium Nutana neighborhood directly across the street from Market Mall. It is an older established neighborhood, however quite central on a good bus route. We had to fight off multiple offers to get this project, and am quite confident in a 100% investor ROI in 5 years or less.
Chaben Place 3609 Chaben Place Saskatoon – 24 suites
Our 24 suite asset we took over in March 2016 is also doing well. We had a couple of evictions, and have renovated one suite and currently sit with two vacancies (8.3%). We have preserved our cash, and dealt with some minor tenant issues however we are well suited for a 5 year hold with a low interest mortgage. The Saskatoon rental market seems somewhat stronger than Edmonton at this time, I anticipate a sale around 2020 at around $130,000 per unit doubling our investors ROI in the process.
Beaumont Place – 4902 50th Ave, Beaumont AB – 3 story concrete mixed res/commercial
At almost the two-year mark Beaumont continues to do well, despite a very challenging Alberta market. Our rents are still up dramatically since purchase, albeit not as aggressive as I would have hoped. We had some management issues, and had to fire our current property manager and replace him as too many mistakes were being made and we needed a change. The property taxes were not being paid and an ensuing dispute with the town emerged, however we came out on top, although the increase is too large in our estimation, so we will be appealing next year. We plan to install a sign package for about $50,000 before the end of the year to dramatically improve curb appeal and hopefully rents. The good news is the building is full as of October 1st, with the only major cost being the signs. All commercial tenants are in place until 2018 and the building is making $33,000 per month. The project is up for renewal or refinance in 2017 so we will make a decision soon on refinance vs. sale. We are already at our exit point of 100% ROI for investors, however may hold.
Plazaview Manor – 11835 103rd Street Edmonton, AB (NAIT building) 15 suites
After a challenging summer and a turnover of 7 units, and about $35,000 spent in repair and associated maintenance, the building is now finally leased. We have tried unsuccessfully to negotiate better insurance despite multiple quotes. Our onsite manager Tamari left us after 4 years as her family has purchased a home. Her replacement Svetlana, has lived in the building and has since taken over. We had some very high water bills, and a large challenge determining the source despite many tests, monitoring, and multiple inspections. We have since turned the corner and seem to have the expenses, and income stable heading into 2017. Project has performed very well in good times and bad, as we head into refinance or sale next year. Set to meet target of 100% ROI to investors.
Buildings targeted for acquisition
There is a not much for sale, with little motivation for vendors. Typically, since 80% of the profit is made on purchase date, and I like to buy buildings I can improve immediately, get the cash flow up and create substantial value very quickly. It is tougher to do in a declining rent market however I strongly believe in the fundamentals of Alberta and Saskatchewan both in the short and long term. It is still very doable to double investor return in 5 years or less if one is cautious and meticulous and ready to act.
I do have a lead on a very large project in Saskatoon of 100 units in 3 buildings. I will need to raise about $3,000,000 to purchase them but if the price is right we will go for it. I have viewed a few projects in Edmonton as well, but the deals right now are coming from Saskatchewan, which I believe has the right aptitude and political leadership to lead the recovery out of recession and into recovery. Our assets do fair well during recession, provided we can hang in there and ride the next wave.
In conclusion, I remain steadfast, patient, yet persistent in this hunt and it is a strategy that has worked well for me, and will continue to do so. I appreciate your time in reading this and I would love to hear from you if you require additional info on how I can assist you in reaching your goals. Whether you’re an active or passive investor, there remains tremendous opportunity to learn and grow, and generate excellent returns.
Have a great Halloween and happy investing!
Cory Sperle
