Atlantic Canada is proving a popular real estate investing market for investors from other provinces. But where are the best opportunities? Join Realtor and Real Estate Investor Richard Payne as he shares insights and market trends for the Halifax Regional Municipality (HRM) and what to look for in 2022.
Daniel: I could give you a bio of Richard that would sound something like he's been doing business as a realtor for 10 years in Halifax, an investor building a multi unit portfolio.
He knows the market inside out, and he's going to share that with us tonight. That's not what you need to know about Richard. The only thing you need to know about Richard is, he cares about real estate. He cares about the profession of realtor. He cares about his clients. The reason I do business with Richard and the business I refer people to Richard is very simple, he cares. Good evening, Richard.
Richard: Good evening, Daniel.
Daniel: What's happening in Halifax these days? Market-wise, realty wise.
Richard: We can't keep up. It's been an absolute wild 2021 and 2022 is starting off just as tough especially if you're on the buyer side. It's one thing we've seen everything change last year in 2021. I think it felt like very much what we've never experienced in Halifax, but from everybody who's in Ontario. When we talk about no conditions going over asking price 15 to 30 offers, that is what started in the Halifax area.
HRM, Halifax, Dartmouth, Bedford, all of the areas. We've never experienced that before. From the little old Halifax side, we were like, whoa, what's this? How do we deal with it? What do you mean there's no listing? Why am I like one of 30 offers on houses? What would be watching closely is that it was 2021. How is our food this month? January gone. It's actually been tougher than last year, and this is usually January quiet time usually.
Daniel: What's causing that? We know here, and in most of Canada, it's immigration coming in lack of inventory, what's causing that in Nova Scotia or Halifax?
Richard: It's basically into migration. It's other provinces coming into Nova Scotia and the people in Nova Scotia. RCMP, job promotions, relocations with army, air force, navy. None of that is happening. People are just saying I can get that promotion. And in theory, move the job to Toronto, but I can stay here in Nova Scotia so I can earn the Ontario salary while staying in Nova Scotia.
We don't have to relocate. We stay here. Therefore I'm not selling my house. Normally, that would be like 20% to 25% of our market every year is people moving out to the province to somewhere else. Now, nobody's moving and I would say, it feels like most of Canada is moving to Nova Scotia, like particularly Ontario and BC.
Those are like the biggest factors in terms of moving, who are coming into Nova Scotia because it's not they're getting their regular jobs. Some of them are getting promoted and having to relocate to Nova Scotia because we seem to be getting a lot more jobs here, but also a lot of people are doing well, working from home.
Let's ditch the $1.5 million to $2 million place. That's 900 square feet in GTA and let's go and get 4,000 square feet on the water for half price for a million dollars. Why wouldn't we do that?
Daniel: I was going to ask you the question, why are people moving to Halifax, but you pretty much answered it there. Is there also a ration from outside?
Richard: We've always had a really strong pool from my neck of the woods, the UK, because it's not that far, it's only four hour of difference. It's six, I was on a plane but now we're really still getting shipbuilding, still bringing people in from the UK. We've got four families in the next two months that are moving here from the UK, fast track immigration. Here's your work visa, permanent residency. As soon as you get here, we need you to come and work for the shipbuilding program. We're still bringing those over and then the other interesting side of it is GPs.
Nova Scotia actually instigated three years ago, a plan to go and recruit doctors, GPs specifically from Britain and bring them to Nova Scotia. We've got three, two last year and three this year, who are all GP doctors that are coming here and they've all got practices in the HRM area. In that kind of downtown, the nucleus of where all the people live in the Halifax area and they're moving here and again, same thing. Government started to put up a little bit of money, giving them fast tracks. Make them qualify. Instead of having to requalify, they're just swapping the GP qualification UK for GP Nova Scotia, joining the practice, off you go.
Daniel: I know we have put together a little presentation for us about the market, but I still have two questions I want to ask you before you move to that. Number one is anybody building anything there to address the shortage of infantry?
Richard: It feels no, there's talking to three big developers and builders here. There's a kind of underground feeling that the builders don't want to build because they're a little bit uncertain as to their costs coming in.
One of the major changes over the last two years has been that builders have introduced a clause on all of their buildings that said, here's your price? If the price goes up by more than 5% from a material cost coming in, we reserve the right to pass that directly onto the end buyer, at which stage you can say yes, carry on or no walk away.
We've had a lot of flexibility in moving input prices. The builders have all said, given that's still too fluid and we've got a backlog of buildings, we're going to build. Two of the big builders have basically said, we're not listing anything for sale until the end of it before. The builders basically said we need to pump the brakes and whether we have lots available or not, we're not building till the end of April.
What happened is, this is retirement planning, not done well. Halifax regional planning and development basically let almost all of their senior developers and planners retire last year. All of the new people coming in are a bit like I would've just asked Bob, but Bob's now, what do I do? The planning and development process is taking a lot longer as well. We've shot ourselves in the foot twice.
Daniel: Everything that you've said over the last seven or eight minutes, about Halifax is that general for Nova Scotia, or is it just Halifax and how is the rest of the province work?
Richard: The province, residents probably from a development is doing better than inside of the Halifax area. In particular it seems to drag their heels. Whereas a lot of you start going outside a little bit and start looking at Windsor inputting in Truro. You start going even just East Hants, which is just outside of the Halifax area, just North of the airport. Even those guys are getting their development permits pushed out quickly.
I think the one thing we're going to start seeing, there's a lot of density inside of HRM, which also adds a lot of pressure on infrastructure and housing issues. I think we're going to start seeing, and there's a couple of new developments coming up just outside the HRM area, and they're getting approved quicker and I think they're going to start seeing people just the urban spread as we've had further.
Daniel: I'm guessing that this is not, and I know you don't have a crystal ball, but I'm guessing that this is not going to solve the shortage. This is not going to bring you a balanced market anytime soon.
Richard: No, definitely not. 2022 is going to feel fast and furious like more.
Daniel: Can you show us what it is that you have prepared?
Richard: Exactly, we'll do a little bit of screen-sharing. What we have here is basically a graph, just focusing on the Halifax Dartmouth area, but it's looking at the actual sales numbers. How many sales have we actually done now? You can see there's a bump like in almost every year. The difficulty we have is this book here in 2019 was the next big bump in May, June, July last year.
Our big firm was brought forward into April, but look how quickly the drop-off is all the way down to the number of sales. It wasn't December, just the Halifax stuff, Ontario, which was 332. That shows that we're almost getting a compression of the actual bumps that we're getting. The first one back in 2018, like it's quite wide, then it gets a little bit sharper, then it goes wide again, but we're back into a really quick drop-off and that matches the same thing here.
When you look at the number of homes for sale that tells you the story. That's our key issue is this is back in January, 2018, and you can just see it's been a downward trend over the last three years until we get the number of homes for sale in December was only down to 236 in a population of just over half a million inside that Halifax Dartmouth area. That's what's causing our problem.
When you start looking at the closed price this is the time we should have all bought everything we possibly could like January 18, average price, 265. Get to December average price of $443,000. That's roughly just the doubling of price in four years, three years. That's our key issue. When we start looking at what's really going on with the pricing, we've just gone up and you can see, this is roughly what March is. April, March, this is the start of when kind of COVID restrictions really came into play and that's when all of a sudden our housing inventory dropped.
You can see the prices are just going up and then, this was November, that was December, 2020, and then look at the spike all the way up to March 2021. We've bounced around that 400, 450 mark. Now, we're down at 443 for December. When we look at what's really going on, just look at it, the average price and the amount of homes for sale that shows the problem that we've got is the prices are going up because demand is going up, but supply is going down and it's going down pretty good.
Daniel: Let me interrupt you here before you go to other slides Richard. As an investor, this is scary to see that multiple offers over asking, et cetera. However, it appears I can buy a house in Halifax for around 450 average price, where in the GTA, or it's probably more than 975. Can I still buy a house or whatever in Halifax and rent it and get a cash flow?
Richard: Yes, because our rents have actually gone up quite substantially. That brings us into the next thing, which is the level of tenancy board introduced through the government. A bit of a rent freeze that they were saying was just down to COVID restriction. What they've done now is in a similar way. They've introduced rent control all the way to December, 2023. Now, we can't increase any of our rents by more than 2% a year.
What we're seeing now is people are moving more towards single family homes as a rental option, because at least in a single family home, if somebody's selling it, they're moving out. When you buy a duplex, potentially there's a tenant already in there. The rent is already fixed. You can't go by more than 2%. We're seeing a lot of those duplexes and triplexes are actually being bought by people who want to live in and then just use the other one as a rental opportunity. They're just like, I just want a house to live in. We've got the rent freeze, but also we still have pretty high rents like I've seen single family homes being snapped up at about $3,200 a month.
Daniel: In other words, even though you start by scaring the pants off us there with the scarcity and all that, and prices and peaks and things like that, there is still a way for somebody to buy a house in our bikes with a realtor like you, who knows what about real estate investing and possibly cashflow on that property. Plus see their property and their equity go through the roof for the next 2, 3, 4, 5 years because of the appreciation.
Richard: Exactly, I was saying we're seeing quite a few conversions, so people buying split entry homes or homes that are easily converted into being two apartments. We're seeing people get more and more into those as well because our restrictions with regards to zoning versus legality of a duplex have changed a lot as well. They've relaxed the rules a lot. If you have the ability to make a duplex out of a single family home, we're going to let you do it without requiring anything extra in terms of permits or developments.
Daniel: There's business to be done here in Halifax. That's good news.
Richard: The only other real one that we do want to look at really is the same thing that happened when it was like the number of houses for sale. As you can see, this gives you another example of yet a nice balanced market going back to June, 2018, sixth. No, what's that six and a half months of supply? Whereas now you'll look at, cause we've got no homes for sale. We're down to no 0.4 of a month.
If we stopped listing new houses and sold in the same way in December, in half a month, we'll have no houses for sale. Our concern at the moment is we just need more houses on the market to make things easier on buyers and hopefully relieve a little bit of pressure on that sales price. That's what's going on. That's the story between Halifax and Dartmouth.
Daniel: One more question about the Landlord Tenant Board. What if you want to let your tenants go after you buy your house, what are we talking about? Two years to get their hearing or what's happening with the board there?
Richard: The good news is that all of the landlord hearings now are all virtual. They're all on a telephone company. And it makes things actually a little bit quicker. There's still a little bit in favor of the tenant more than the actual landlord, but the one thing I've always found with tenancy. If you're trying to go through any kind of a process where you, as the landlord need to win, whatever it may be. Whether it's an issue because they need to be evicted, whether it's, you just need a judgment hearing because something went wrong.
We've actually found that the process has actually got quicker just because Russia has telephones instead of turning up and actually meeting people in person. It's a much easier process because there is no emotion, like it's me versus them in front of each other. It's literally just you stating the facts on the phone and then I've always found that so long as you stay relatively quiet, the tenants usually back themselves into a corner and say something that they shouldn't really say.
Daniel: Here's what I heard this evening. There is definitely a shortage of house prices going up, but there's business to be made there. There's ways to buy houses and cashflow, and then appreciation will add a lot of equity to your house. If you want to do any kind of business in Halifax, you call Richard.
Richard: Deal.
Daniel: Richard, thank you. We'll see you around again probably about 40 minutes when we go networking in case some people have some questions.
I guess our technical person, who's going to switch everybody over to the networking event. And that means that everybody can raise their hand and ask the question. Francois, are you going to go to the chat and see?
Richard: I'll answer the questions first and then we'll move people over.
Francois: If I can, I'll answer the questions I see. Sheila, she mentioned we've been looking at Moncton, but I have a hard time finding decent, affordable property managers. That is one big issue. I did share earlier tonight in the chat. If you look up there's unique property management. They're doing a good job personally. I don't use them. I self-manage, but I know other investors use their services and they've had great reviews. Otherwise, be very careful.
There is one company. I'm not sure if I can mention it, but I would stay away. They actually have multiple lawsuits against them. Anyway, it's like a special kit. If you know what that means, you'll know what it means. Unfortunately, yeah, self-managing is a great way to do it. If you are able Sheila to go to Moncton, when things are reopened, what I did is I did some networking.
There's some great local groups and I found some people there. I have a handyman and there's a lady who does some housekeeping in the hallways and things, and we pay them by commission or hourly. It saves me a ton of money. Jennifer Russells seems to have a similar question. Do you use a property manager and what percentage?
No, but typically in Moncton, it's 7% to 10% property managers. You will find some cheaper ones, but then they nickel and dime you on everything. Watch out for added fees and stolen damaged deposits and other things. Diana, I love it. Elvis, yes, I should have him on, actually I'm coaching him to become an investor.
I love teaching my tenants to become investors and leave my apartments, which is not a good idea, but I like helping people. Elvis is done. Look him up. He's awesome, he does look like Elvis and I had Elvis living in my basement. That was Roger, I think from Ottawa as well, Hershey, at being new to real estate investing, who can I connect to find off market deals across New Brunswick?
There's Martin and Lynn in, I'm not sure if they're in on our Facebook group, but our wholesalers are out there and there's a Moncton house buyer. His name is Sean. Sean Gunter is actually a great wholesaler. Look him up. Rob, right? Sorry, Richard. I'm monopolizing the speech, but Rob is asking what is the average rent in Moncton? So, three beds, two beds, one bed, a two bedroom. I have lots of them. I'd see, as the sweet spot, that's the best thing to rent out. I'd say you can rent for around 1,300 a month, maybe 1400, depending on the condition.
That's exclusive of rent. Three beds will be more in side-by-side duplexes. Now, you can look at 1,500, 1,600 a month, which is quite good. One that is between 700 to 1,100. I have some in John's like for 1,100 and they're one bedroom units. Allie, do you still think the market will stay the same in New Brunswick? New Brunswick is a weaker economy. I do apologize if there's anybody tuning in, but New Brunswick and Nova Scotia and all of the Maritimes, the economy is not as strong.
Yes, it's getting better, but it's not GTA. It's not Ottawa. That's why I say to be careful, stay closer to the bigger centers. That's my personal opinion. But stay like in Halifax or Moncton or St. John, if you go to smaller towns like Jack chats or Northern New Brunswick, that is weaker, there's fewer employers. It's not as diversified.
I think if there is a correction, those smaller places will be affected before the bigger centers. Was there anything else? Details about PEI. I'm not sure. Richard, did you mention something about Prince Edward island? No. Tonight, we're focusing on New Brunswick and Nova Scotia. It was already answered. Anything in Alberta, that's going to be another night. That's a new project of mine.
My new acquisition closes tomorrow morning. There you go. I'm just trying to see if there's any other questions, property manager yet. Another question, so you need property management. I've heard he's good and do you do short-term rentals in the Maritimes? I don't have a market, it's quite popular. There's a great company. It's Sarah who does short-term rentals, she'll come and dress up your place and tell you how much you could rent it for.
I do find the rents are lower. You're looking at about a hundred dollars a night. Once you pay all utilities, internet and things. I haven't found that great, in my opinion. It depends on the acquisition costs, but there are no rules. It's not like Toronto.
Daniel: You're talking about Moncton now.
Francois: Yes, is there anything in Halifax, Richard?89oi
Richard: It's been a really popular rebound because a lot of people, especially when they're coming here, often have to go with the closing date that the seller wants to have. Often, they come here and they're here early. I was in the short term rental market like the vacancies are pretty low now was pretty bad, like a year and a half ago, but now everybody is basically getting into short term Airbnbs cause you can make a lot more rent short-term Airbnb plus finding people are looking at the cottage ones on the lake ongoing.
I now own a cottage on the lake for myself. I'll reserve six weeks a year for me and then you can rent it out pretty much a year round. You're talking at least $150 a night for short term Airbnbs especially if there are cottages.
Francois: The ocean, depending on location, the price is going to be very different, but I know in New Brunswick there's like the Kokang area, there's some very cheap cottages. Nova Scotia has gone up quite a bit though for those properties.
Richard: A lot of people that first with the ocean from once apart from the view, because I don't care. What month of the year in Asia not swimming in the ocean, off the coast of Nova Scotia.
Francois: Oh, wow. Okay. There you go.
Richard: Nice swims in the lakes around here.
Francois: The lakes are quite warm. What do you call it? Anyway, did some not surf? The inflatable paddleboard on this river was quite warm and nice. Then it's where the salt water meets the fresh water, which is really cool. There's more questions in the chat, Krista, how often can you do inspections?
In New Brunswick, as often as you want, as long as you give 24 hour notice I have my people inspect once a month, just check on fire alarms, fire extinguishers, and make sure exits are accessible. Especially as a mentor. Look at roofing. Richard, how is it in Nova Scotia? Are there restrictions on inspections?
Richard: Nope, same as New Brunswick. You just have to give at least 24 hours notice. Most people are set in the upstate and every two months, like almost, we'll give you two months notice and we're doing the next one on the same day, next month, two months, same thing,
Francois: Great practice that always has that for your insurance for everybody's sake.
Richard: This is a little trick. Try not to make it the same time because they'll tidy up and they'll make it look amazing and then the second year, darn it's back to not looking so great. We tend to say, oh, sorry, we need to bring it forward a week.
Francois: That is smart. I see a question from Katherine. What about property managers in Nova Scotia? You answered it in the chat, Richard.
Richard: I've got one that looks after my stuff and she's very under the radar. Unless, I can't give any amount cause she'd kill me. There's one of those things that you have to ask me for her details and then I email, introduce you and then she's oh, I'll take care of you. I think Daniel might already know her. I think I've already given Daniel her name and then there's another buddy as well called Jillian property management. She's pretty good as well.
Francois: The next question is from Cindy for Richard. Do you have any tips for finding off market deals in HRM?
Richard: Look for properties that don't look great. Look for properties that have got two or more power meters on the side of the house, that'll tell you it's a duplex or more and basically it just comes down to knocking on doors, or if it's a duplex, you need to find a way because we've got a system called property online, which is the land registry for all of Nova Scotia. You can go to the line registry office, play a fight fee for a certain amount of hours in the day.
You can do as many searches on who owns properties as you, you just need to go in there with the dresses. Once you've done a little bit of digging and found some addresses, then you can actually go and find who's the owner. If the mailing address for the owner doesn't match the property address. Guess what it is. It doesn't take a rocket scientist to work out. That's a rental property and then you've actually got the owner's address. We, as realtors, I'm not allowed to do any of that. That's called solicitation and we get slapped on the wrist, pretty hard for that, but nothing stops private individuals from going down that path and finding out ways to find off market deals, especially when you get to three units and above there's a lot more off market than on market deals.
Francois: It's so true. Maltese, it's more off market. It's really who you know, and who knows you. Question from Katherine, what about gardens suites, additional dwelling units in Nova Scotia? You mentioned it earlier. Richard, a lot of people are adding basement suites in New Brunswick. I'm not seeing that. It's not a lot of places already in Sweden, like the house I showed but we're not seeing too many bungalow conversions from what I've seen. Richard, do you have anything to add on that one?
Richard: No, it's become popular, the change, the restrictions around putting like what they call the backyard suites in place. Everybody was like, this is going to be great and I know zero people that have actually done it. I think the conversion for a split entry or a bungalow with a basement into a duplex makes a lot more sense than actually doing a brand new structure in the laneway houses, the backyard suites. It makes more sense to find a two Plex that you are a single family. You can turn into a duplex.
Francois: Exactly and you have to look at comparables. What does the market show? Like you said, nobody does it. We had another REITE club event, Daniel I don't know if you remember, I think you were in Edmonton or Calgary and they have garage suites. You have a garage, separate garage, but an apartment above, some people have done but very few and most tenants are not really interested in that. It's not like in their culture. You have to look at that. That's very important.
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