Your Fraser Valley Real Estate Market Update
  
Despite slight increases to both active and new inventory in the Valley, overall supply in February remained well below the ten-year average for the month historically.
Attached apartment inventory in particular has struggled to keep up with the shift in demand we saw prominently throughout last year. Without sufficient supply, it has become increasingly challenging for buyers looking to enter the market at that level.
Here is the summary of the market for February.
Total Sales Processed - 1,385
Total New Listings - 2,293
For the Fraser Valley region, the average number of days to sell an:
Apartment (Condos) - 13 Days
Townhomes - 16 Days
Single Family Detached - 38 Days
Of the total transactions Fraser Valley Real Estate Board processed:
336 were Townhouses
379 were Apartments (Condos)
670 were Single Family Detached
Total Active Inventory last month - 4,430 listings
New listings received in February - 2,293
HPI Benchmark Price Activity
Apartments/Condos
Benchmark Price - $422,300
Price increased 4.5% compared to January 2018
Price increased 46.7% compared to February 2017
Townhomes
Benchmark Price - $531,000
Price increased 2.2% compared to January 2018
Price increased 25.4% compared to February 2017
Single Family Detached
Benchmark Price - $992,100
Price increased 1% compared to January 2018
Price increased 46.7% compared to February 2017
For the most updated market information on what is happening in your neighborhood, give me a call at 604 308 6404 or e mail at RealtorNischal@gmail.com.
The support of a real estate expert goes a long way when navigating a busy market in the Fraser Valley..
Annual Thanksgiving - Surrey Basket Brigade 2018 - Feeding 100 Families locally
We will be having our 3rd Annual Thanksgiving Day Basket Brigade Food Drive Weekend in October of this year. Our team of volunteers at Surrey Basket Brigade will be delivering the Thanksgiving Food Baskets to the families in the Lower Mainland. We helped 80 families last year. Our target this year is to help feed 100 Families. With the help of our Volunteers and generous donors, our group is certain we will be meeting our goals.
City of Surrey stepped in to help us last year financially and sent staff to help with putting the baskets together. They also helped in delivering them to the families as well.
If you are able to help in any way, please contact me directly and I will add you to our list of several volunteers who had huge life changing moments delivering the food baskets last year to the deserving families.
These families would not have much, if anything, to eat or feel grateful that there are strangers out there in the world that care about them. Your generous donation of your time or monetary donation will definitely make a difference in these families lives for Thanksgiving.
Here is a link to the Surrey Basket Brigades Facebook page for more information.
The Top 5 Real Estate Calculations Every Investor Should Memorize
Despite what many of us math-allergic folk would prefer, real estate does involve some math. Luckily, most of the formulas are simple and straight-forward. In fact, if you can master the calculations below, you should be just fine.
1. CAP RATE
Net Operating Income / Total Price of Property
This calculation is mostly used for valuing apartment complexes and larger commercial buildings. It can be used for houses and small multifamily too, but operating expenses are erratic with houses (because you don’t know how often and how bad your turnovers will be).
You want to have a cap rate that is at least as good, preferably better, than comparable buildings in the area. I almost always want to be at an 8 cap rate or better, although in some areas like Vancouver or Toronto, that’s not really possible. And always be sure to use real numbers or your own estimates when calculating this. Do not simply use what’s on the seller-provided pro forma.
2. RENT / COST
Monthly Rent / Total Price of Property
This is a great calculation for houses and sometimes small multifamily apartments. That being said, it should only be used when comparing the rental value of like properties. Do not compare the rent/cost of a property in a war zone to that in a gated community. A roof costs the same, square foot for square foot, in both areas. And vacancy and delinquency will be higher in a bad area, so rent/cost won’t tell you what your actual cash flow will be. The the old 2% rule can lead investors astray, and they shouldn’t use it. But when comparing like properties in similar areas, rent/cost is a very helpful tool.
For cash flow properties, you definitely want to be above 1%. We usually aim for around 1.5%, depending on the area. And yes, I would recommend having a target rent/cost percentage for any given area.
3. GROSS YIELD
Annual Rent / Total Price of Property
This is basically the same calculation as above but flipped around. It’s used more often when valuing large portfolios from what I’ve seen, but overall, it serves the same purpose as rent/cost.
4. DEBT SERVICE RATIO
Net Operating Income / Debt Service
This is the most important number that banks look at and is critical for getting financing. Generally, a bank will look at both the property’s debt service ratio and your “global” debt service ratio (i.e. the debt service ratio of your entire company or portfolio).
Anything under 1.0 means that you will lose money each month. Banks don’t like that (and you shouldn’t either). Generally, banks will want to see a 1.2 ratio or higher. In that way, you have a little cushion to afford the payments in case things get worse.
5. CASH ON CASH
Cash Flow / Cash In Deal
In the end, this is the most important number. It tells you what kind of return you are getting on your money.
This is a critical calculation not only when it comes to valuing a property, but also when it comes to evaluating what kind of debt or equity structure to use when purchasing it.
The math isn’t that bad. No rocket science here luckily. Instead, there are just a few handy calculations and rules to evaluate properties before purchase and analyze their performance afterward. Memorize these, and you should be fine.
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