Altyn Equities Q4 2024 Multifamily Update

December 1st, 2024 – Rents drop in pricey cities while more affordable markets see sharp increases

For the first time in a long time, Canadian rents seem to have peaked, at least for the time being.  Markets like Vancouver, Toronto, and Calgary saw rent reductions as the year rolled on.  There are many reasons for this from reduced demand to increased construction of new rentals.  In Kelowna where I live, rents have been trending down for several months in a row.

In my markets of Saskatoon and Edmonton, two of the most affordable markets in the country, rents continued to rise and from surveys done in November rents increased about 20% in Saskatoon and about 10% in Edmonton, however these rents are still well below the national averages (Zumper and Rentals dot ca). I anticipate the 2025 rental market will continue to taper down, with the affordable markets continuing to play catchup.

Why are rent surveys critical? In the spring I learned that Avenue Living had raised their rents by almost $400 near one of my buildings and I decided to act. After a survey I learned that our units in Saskatoon were 30% under market rent and were able to raise them 20% with one rent increase, creating massive value instantly in these buildings, with almost no renovations. I shared this ‘gift’ with others whom surprisingly, did not seem interested to raise their rents.

This enabled us to sell Mansard Terrace in Saskatoon for a $500,000 higher price.

As a landlord why would you leave that much money on the table?

Fear of turnovers, or of a changing market?  As owners who are relentlessly at the mercy of the media, and society in general, we must be vigilant in keeping our rents at market and well maintained.  Chaben Place also got a 20% rent increase and has plenty of upside left as the building is listed for sale.

Edmonton also had a strong year, with large rent increases and low vacancy, We raised rents in Leduc by almost 12% with modest turnover, and a little over 5% in Fort Saskatchewan.  Our flagship Beaumont asset got a large lift in residential rents, with the commercial leases being finalized in mid 2025.  All buildings in the portfolio had a record year with more to come.

I expect 2025 to be a year of modest rent increases of approximately 10% in Saskatoon and 5% in Edmonton, making conditions ideal for purchases in those markets.  Interest rates will most likely come down over the next year, both on BCO and CMB bond yields and fixed rates, as well as the prime overnight rate.  The strong demand for rentals in combination with tapering rates will continue to drive demand for prairie multifamily assets over the next year.

Remember, when in doubt Survey survey survey!

Glenridge Apartments – Fort Saskatchewan AB

Purchased May 2023              $2,250,000

Appraised March 2024           $3,350,000

Rent Roll Jan 2024                  $23,350

Rent Roll Nov 2024                  $24,600 (+5.35%)

CMHC Lending Value (Spring 2024)  $3,350,000

Key Highlights

  • Continued to raise rents throughout the year and renovate where required.
  • Rented 2-story two bedroom until for $1525.
  • Issued rent increases October on 11 units from $1350 to $1525 (13%) to take effect in February 2025. This will add $420,000 in value.
  • Refinanced with CMHC – $2,424,000 for 5-year term, 40-year amortization.

Adam Apartments – Leduc, AB

Purchased Nov 2021              $1,462,000

Rent Roll Jan 2024                  $19,900

Rent Roll Nov 2024                 $22,200 (+11.56%)

Current Value  $3,000,000

Key Highlights January 2024

  • Rents increased 12% in 2024 to add $400,000 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.
  • More rent increases to be handed out in February and May during our rental cycles.
  • Work needs to be done to the roof and landscaping but building operating well.

Mansard Terrace Apartments – Saskatoon SK

Purchased 2017                      $1,470,000

Cash invested                          $630,000

Rent Roll Jan 2024                  $15,075

Rent Roll Nov 2024                 $18,050 (+19.73%)

SOLD Value                $2,170,000 (155/door)

Key Highlights

  • Sold the project in November 2024 for $2,170,000 for a substantial gain.
  • Raised rents by almost 20% with almost no turnover or renovations required.
  • Caps off a very successful 7-year joint venture through some very challenging rental markets, the pandemic, and a 20% vacancy rate in 2017.

Chaben Place – Saskatoon, SK

Purchased 2016                      $2,710,000

Cash invested                          $840,000

Rent Roll Jan 2024                 $26,025

Rent Roll Nov 2024                 $31,425 (+20.75%)

Approximate 2023 Value        $4,200,000 (175k/door)

Key Highlights 

  • Rents increased 20.75% in 2024 to add almost $1.2M in value!
  • .. did not have the easy transition like Mansard terrace, major renovations were required to several units, and we had up to 5 vacancies at one time in the fall.
  • Flash flood in the summer again flooded unit 7 and discovered tree root issues contributing to the problem so rectified once and for all.
  • Currently pricing out the building for sale, will be very attractive to buyers to assume 1.85% mortgage and a large VTB will most likely be offered.

Beaumont Place –Beaumont AB – 3 story concrete mixed res/commercial

Purchased 2014                      $2,900,000

Cash invested                          $900,000

Rent Roll Jan 2024                $34,197

Rent Roll Nov 2024                 $36,783 (+7.56%)

Approx Value                          $5,000,000

Key Highlights

  • Increased all residential units to $1500 – an 11% lift from 2023.
  • Planning another $150 increase in 2025 to $1650.
  • Successfully negotiated new lease rates of $35/$40 psf. 4 leases up for renewal in 2025.
  • In the summer of 2025, we will get the building appraised and offer options to our investors including renewal, refinance, or selling the building.
  • Building continues to perform very well with years of upside to come.

Final Thoughts – Steadfast into 2025

Looking back, 2023 and 2024 were fantastic years to be an investor. The stock market, gold, silver, bitcoin, have all reached record levels.  Real estate has become an afterthought in many markets in Ontario and BC. I think we will see rents drop an additional 10% or more in the most expensive markets, with modest increases to the more affordable ones.

Remember there is never a bad time to buy, but having the ability to hold with positive cash flow to get to the future is key. As long as you buy at a decent price and manage impeccably with sufficient reserves, it is tough to lose money in this business.

The same cannot be said for bitcoin, marijuana stocks, meme coins etc. Stick to what you believe in and hang on long term. You will be glad that you did.

Happy investing in 2025!

Cory Sperle