Can You Cashflow With BC Real Estate In This Hot Market?

Dated: May 14 2021

Views: 225

The big question today in this hot British Columbia, Fraser Valley Real Estate Market:

Is Real Estate Still A Good Investment?

Fraser Valley Home or Investment Property

 

Let’s break down this question, and go over a few basic characteristics that make the Fraser Valley desirable, before we dive deep into a financial analysis. First of all, The Fraser Valley, and Lower Mainland area of BC, Canada will always be desired. This is because of the following: great climate, great job market, great schools, and great recreational opportunities. There is also limited development space due to; US border, Mountains, ALR farmland, the Pacific Ocean, and Fraser River. So, you have an area that is highly desired, but limited for development potential.

Now let’s break down a property and see if the fundamentals are still in place to make a case for a solid cash flowing investment. Let’s take my latest listing 35445 Delair Rd in Abbotsford BC, and analyze the numbers.

 

Let’s say you get it for the list price of $1,099,000.00 with a 20% down payment. $219,800 DP. + Property Purchase tax 19,980 = $239,780. Cash outlay plus legal /closing costs.

 

Now the mortgage details for this property as of May 13, 2021 with 20% down are as follows. With a mortgage of $879,200.00 from Dominion Lending Centres: 25 year ammortization. 1.25% variable rate. $3414/monthly payment.

Mortgage calculation on investment real estate

Now let's look at the 2020 property taxes from the listing and get a monthly cost. $357.87/monthly.

And let's estimate utilities for this property at $100/month for Fortis natural gass, $100/month City Of Abbotsford water, $150/month for BC Hydro electricity. I am not saying that these are the numbers for this property, I am just estimating here. 

Let's also include an estimated $150/month for a maintenance cost on this property. Our total estimated monthly commitment for owning this property would be around $4171.87 / month.

Now let's take a look at what you could rent this house out for. As it is has a 2 Bedroom legal suite, I would look at renting the top and bottom of this house seperately. First let's take a look at some 2 Bedroom legal suites in East Abbotsford to see what market rate is on Craigslist. After looking at 10- 2 Bedroom basement suites in the area it looks like the range $1200/month on the low end to $1900/month on the high end. The current renters have been paying $1400/month for a few years, so I would think market rent could reasonably be $1500-$1600/month, conservatively. Let's use $1500 /month for a conservative estimate in our example.

Basement suite market rents in Abbotsford

For the top 2 floors, let's look at other 3 bedroom + den / office homes, or top floor homes in the area in order to get an idea of  what the market rent would be.

Abbotsford rental home market

The top right, Sandy Hill 3 Bedroom is the closest comparable. Let's use a more conservative number of $3000 /month for the top 2 stories of our Detached 2 Story Home, at 35445 Delair Road Abbotsford.

Now our total estimated monthly rent is:      $4500 / month.

Our total estimated monthly expenses are: $4171.87 / month.

That leaves us with a positive cashflowing realestate investment of $328.13 / per month.

In conclusion, it is possible to find a cashflowing real estate investment in the Fraser Valley of BC, during this hot market. 

$328/month would equate to $3937.56 annual cashflow, on top of whatever capital appreciation could happen with the Abbotsford property.  Of course these numbers are just estimates, based on what is happening in the market now. To view this property while it is still on the market, give me a call at 604-832-2045 or email: Justin.Ott@eXpRealty.com

Blog author image

Justin Ott

Born and raised in Abbotsford, I am deeply connected to the land, people, and community in the Fraser Valley. I decided to pursue my passion in Real Estate, after I realized how much I enjoyed the pro....

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