Western Canadian Properties Group has developed over 12,000 properties, primarily focused on appealing to investors with strict cash-flow goals throughout B.C., Alberta & the western United States. That’s a lot of doors and not always an easy offering! CEO Dave Steele joins Adam and Matt to dissect his deal process, his rise to developer status, and to offer his foolproof investing strategy for wannabes and seasoned investors. Trust us – Dave knows what he is doing and you will learn a lot!
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Episode Summary
About Dave:
Dave lives in North Vancouver and is CEO of Western Canadian Properties Group. For almost 30 years, he has been working with investors and investment properties in almost every Canadian province and most western US states. The company has helped investors buy close to $2 billion worth of real estate—many people look to own and rent out real estate to build passive income.
Dave got started in Calgary about 30 years ago buying old apartment buildings ($25,000 per suite!) and fixing them up, and over time found individual investors to participate. The markets were growing in areas where jobs were being created. Dave had a partner he bought properties with; they got started by driving around and learning about real estate. People he spoke to who invested explained how much properties had gone up in value over time; this is very typical in real estate. They may not have had the highest paying jobs, but their real estate portfolio allowed them to live great lifestyles.
Now, Dave isn’t as active in Calgary. They’ve been developing a lot in the states, the Lower Mainland, and on Vancouver Island. As well over the past few years, they’ve developed many investment residential properties in northeastern BC, such as Fort St. John and Dawson Creek.
On advice for aspiring real estate moguls:
Just do it. People analyze and analyze. Whether it’s borrowing money for a down payment or partnering with someone to buy a property, there are many creative solutions. Talk to people who have done it and walk through what worked for them.
On ideas for millennials trying to get into the market:
Especially in Vancouver, the city has been designed so it’s more affordable the further out you go. Places like Surrey and New Westminster are developing because the infrastructure and SkyTrain are being built to move people in and out of the city. Downtown Vancouver will not get any cheaper, so it’s about looking at high-growth areas to be developed and taking advantage of where you can get in that’s more affordable. This may be outside of what people’s comfort zone was five years ago.
There are two demographics: the young people wanting to buy condos, and those in their fifties who want to downsize into the condo market as well—this is why there’s so much pressure on that market. Some people are being pushed further out than they’d like. When many people see this, they won’t go to the next step of exploring those areas and will stay in the rental market.
On areas he’s really excited about:
Dave likes targeting areas where there’s job growth. Right now, this is in Langford (just outside of Victoria) and Surrey. Both markets offer high rental rates, and Dave thinks they will continue to rise over time as long as people keep moving to Vancouver. He looks for markets with enough affordability and demand for new product that people want to participate as homeowners and as investors.
In Greater Vancouver, Dave loves North Vancouver and believes it will see a lot of growth. He doesn’t understand the downtown market well. Markets like Burnaby, New West, Langley, and especially Surrey – where they’ve spent $10-12 billion on infrastructure (such as the SkyTrain, library, and city hall) and where 1,000 people are moving to each month – are very obviously high growth areas. Look at the stats, understand the metrics of the top-growth municipalities and where the trends will continue, and take advantage of this. Big employers and over 30% of Vancouver’s industrial land is in Surrey; people will continue to move there.
On metrics Dave looks for when investing, besides population growth and job creation:
A big one is affordability. When investors look to buy, most care about the cash flow and need to consider the relationship between what they can buy and what it will rent for. In the explosive growth areas, you’ll see significantly higher rents in a few years’ time than what you see today. With investment properties people bought throughout the Lower Mainland five years ago, without even considering what prices have done, look at how much rents have increased. This is an indicator of how significantly rental rates will continue to rise in the future.
A recent report says we’ll see $5 per square foot in downtown Vancouver. That means a 2,500 square-foot one-bedroom unit will rent for $2,500. A reputable commercial real estate firm believes this means the City and other municipalities aren’t approving projects at a fast enough rate to add enough product so housing prices improve based on the numbers of people moving to Vancouver.
On if he anticipated the explosion of interest in Greater Vancouver and the pace it’s been moving:
Nobody could have. It’s been back to a bit more normal in some markets. The challenge is if a number of projects on the books go on hold or slow down, it will make the housing crisis much harder to solve—the only solution is to add more product.
On how things are for developers right now:
Things take longer than you expect and prices are higher, but at the end of the day there is very high demand for product in the affordable markets. Many millennials are buying in the higher-growth exterior markets to get into the market but don’t want to live there and may continue renting where they’re currently living.
On what the balance of the 2018 market looks like for Vancouver and Greater Vancouver and what he anticipates for the next three to five years:
Dave can’t speak to the more expensive product, but for the good markets with affordable product there is a lot of demand and people looking to get in. There won’t be too much change in that market. What drives the market is the 35,000-40,000 people each year who migrate to Vancouver. This drives the same things in other parts of BC like Victoria and the Okanagan. There may be a few months where migration patterns stay the same and demand isn’t strong, but over the long-term that demand has to go somewhere. They’re not building enough rental or other product if these migration numbers continue, and most people Dave talks to and the stats he sees indicate the numbers won’t change significantly over the next several years.
Five-wire:
- Favourite neighbourhood: Edgemont Village
- Favorite bar or restaurant: Tap & Barrel (in Lonsdale)
- Downtown penthouse or west-side mansion: West-side mansion
- First place he’d take someone from out of town: Stanley Park
- Best recent purchase under $500 that’s had an impact on Dave’s life: Dave has become a minimalist; nothing jumps out.
To find out more about Western Canadian Properties Group:
Call 604-789-5524 or visit www.wcpg.ca.