Investing outside your backyard with Calvin Hexter & Patrick Francey
Calvin: Hello, I am here with Patrick Franci, the CEO of the Real Estate Investor Network. Hello, Patrick. How are you?
Patrick: I’m fantastic. I’m here in Edmonton, and it’s a warm day.
Calvin: It is very warm. It is very, very warm. Good to have you. Patrick, we get this question all the time. There’s a lot of real estate investors, and back in the day, the norm was to invest in your own backyard, in your own neighborhood that you’re familiar with. And more than ever, it seems like investors are venturing out of their backyard, even venturing outside their province. And I want to know, what are some of the economics that you would look for when it comes to investing outside of your area into somewhere that’s maybe less familiar?
Patrick: So there’s a couple of fundamentals around what you just said. So first off, you know, as investors, our job is to make our money work harder for us than we work for our money. So we want to be investing in regions where we see an economic future, as opposed to an economic past, or our backyard, which we think is really comfortable.
Ultimately, we want to put our money to work in the right areas. So when we’re looking at, and if I was investing, I happen to be born and raised in Edmonton, so I know it very well. But if I didn’t know Edmonton, I would be looking at it in a couple of different ways.
First off, where is it going economically? So I would look at gross domestic product, GDP growth. Are they, in fact, growing? Is their job growth happening? Are people moving to the province because there’s jobs happening? Because when people are working, it means they’re making money, it means that they can pay rent. And when you have a strong economy, people are moving into the region. And oh, by the way, Edmonton’s population is growing, which means that there’s a rental demand. As a rental housing provider, and if I’m treating my real estate investing like a business, what do I want to know? Well, I want to know that I’ve got a lineup, a steady lineup of clients that I can serve that will come to me to rent the properties that I’m investing in.
So when we look at an economic future, and we look specifically at Alberta, then even more specifically at Edmonton, as an example, we say, well, gosh, you know, there’s good jobs, it’s strong economically, we have people moving into the region, we’ve got affordability that is, bar none, one of the best in the country.
So if I’m looking at an investment point of view, or looking at real estate as an investment, and I look into the future of Edmonton, I see strong growth. And that includes appreciation, which is not happening really anywhere else in Canada right now, per se. Calgary, they’ve been through their lift. I think there’s still some more in Calgary, by the way, and surrounding areas of Calgary and Alberta in general. But Edmonton right now, traditionally and historically follows Calgary’s lead for a number of reasons. And I don’t see a reason that won’t continue to follow that lead.
So right now, when I look at Edmonton, again, I see GDP, I see population growth, I see job growth, which means I see demand on rental properties, which eventually turns into appreciation on real estate overall.
That’s the formula.
