REIN’s Property Goldmine Scorecard REIN’s Property Goldmine Scorecard is a REIN exclusive methodology and tool designed to give you a simple and easy checklist to follow. It is adapted from the books: “Real Estate Investing in Canada” and “Secrets of the Canadian Real Estate Cycle” and from REIN’s Long-Term Real Estate Success Formula. To be most effective, make sure you understand all the key drivers and market influencers as detailed in the books. For examples, check out REIN’s Economic Fundamentals Reports. Create a REIN Property Goldmine Scorecard for each property you’re considering. If you’ve already completed a current Scorecard for the region, you can easily transfer that information onto your next REIN Property Goldmine Scorecard if the property is located in the same area. Then you can complete the property specific questions. Keep these completed cards in your property file and make it a part of your sophisticated investor binder. PETERBOROUGH, ONTARIO Property Address: _______________________________________________ Peterborough ON City/Town: __________________________ Prov: _______ Peterborough Neighbourhood: __________________________________ September 2019 Date of Analysis: _________________________________________________ Key Drivers Key drivers are market factors that propel the real estate market through the real estate cycle. They directly affect supply and demand. Gross Domestic Product (GDP) Yes No Is the area’s GDP growing faster than the provincial/national average? Employment Is the area creating jobs faster than the provincial/national average? TOP 10 EMPLOYERS: 1. Peterborough Regional Health Centre - 2,000 2. City of Peterborough - 1,257 3. KPR District School Board -1,250 4. General Motors (Oshawa) -1,000 5. Fleming College - 987 6. GE Canada - 950 7. Trent University - 946 8. Ministry of Natural Resources - 865 9. Central East Community Access Centre - 803 10. AON Inc. - 734 Yes ✔ Does the area have more than one major industry? ✔ Yes Are there more first-time home buyers than the provincial/national average? Housing Market Are real estate prices increasing? Peterborough’s median income is $64,437 at 3.3 per cent growth rate. The provincial median income at $74,286 which rose at 5.2 per cent growth rate. The median household income in Canada is at $70,336 The largest employment in Peterborough is the health care and social assistance sector followed by the retail trade sector. Here are its top 10 major employers: TOP 10 EMPLOYERS: 1. Peterborough Regional Health Centre - 2,000 2. City of Peterborough - 1,257 3. KPR District School Board -1,250 4. General Motors (Oshawa) -1,000 5. Fleming College - 987 6. GE Canada - 950 7. Trent University - 946 8. Ministry of Natural Resources - 865 9. Central East Community Access Centre 803 10. AON Inc. - 734 The largest employment in Peterborough is the health care and social assistance sector followed by the retail trade sector. No Notes: Statistics Canada says Peterborough had such a population surge from 2017 to 2018 that it’s now the fastest-growing CMA in Canada. According to July 2018 data released on March 2019, Peterborough saw a 3.1 per cent increase in its population between 2017 and 2018 thereby outpacing the national rate’s 1.4 per cent (at record high and double that of US growth rates), and Ontario’s 1.8 per cent. ✔ Is the area’s population younger (median age) than the provincial/national average? Notes: Peterborough’s employment rate increased to 67.1 per cent from 61.4 per cent a year ago. The local rate remains higher than the national rate at 65.5 per cent. ✔ Does the area have more than one major employer? Is the area’s population growing faster than the provincial/national average? No ✔ Is the area’s average income increasing faster than provincial/national average? Population Notes: ✔ Peterborough’s median age is 47 which is 5 years greater compared to Ontario’s median of 41 and 7 years older compared to the national median of 40.8 . Nonetheless, the statistics confirm that 18-34-year-olds are the fastest growing cohort in Peterborough. Not enough data Yes No Notes: The average price of homes sold in August 2019 was a record $469,313, jumping 11.6% from August 2018. The more comprehensive year-to-date average price was $453,344, up 6.6% from the first eight months of 2018. ✔ Are real estate listings decreasing? ✔ Sales activity is still running below-average levels, but is definitely on an improving short-term trend. Jan 2019 data shows that active listings were at 362 at the end of January which is up by 20.7 per cent compared to last year but still below average . Are real estate sales volumes increasing? ✔ There were 395 new listings in July, down 4.1 per cent on a year-over-year basis. Active residential listings numbered 703 units at the end of July, up 2.9 per cent from the end of July 2017. The long-term average of the year is 1,500 listings. Part of why home prices jumped up in Peterborough in the last decades is because of low supply of homes and it is still on its way to recovery Is the number of days to sell real estate trending downward? Are the area’s average rents higher than the provincial/national averages? Is the area’s vacancy rate lower than the provincial/national average? Median number of days on market was 17 Q2 of 2019, up from 15 days in Q2 of 2018. ✔ ✔ Peterborough’s vacancy rate is at 1.5 per cent compared to 1.1 per cent a year ago. The current rate is well below the national vacancy rate of 2.4 per cent and even the Ontario rate of 1.8 per cent. ✔ Is the area’s Affordability Index in the Hot Zone? Is the housing construction start number lower than the historic average? Is the area’s gross Return on Investment (ROI) higher than the provincial/national average? Average rental rates in Peterborough based on September 2019 data is at $1,226 which is lower compared to the national average at $1,910 while provincial rate for Ontario is at $2,279 – the highest rental rate in Canada for June 2019 Not enough data ✔ Housing starts for the City of Peterborough in 2017 is at 486 (556 for county), which is higher than its 10-year average of 431 . Data from MoneySense indicate that the 10-year annual ROI for Peterborough is at 4.62 per cent. Market Influencers Market influencers are factors that affect the perception of an impending change in the real estate cycle. They have a temporary impact on the market, so it is necessary to be aware of them, but not necessary to add them into your calculations. Macro Is financing readily available? What is the current mortgage interest rate? What is the inflation rate? Yes No Notes: Peterborough Social Services provides loans to help people with housing needs. There’s also the Housing Stability Fund as well as a provincial Affordable Housing Program . ✔ Current rate for 5-year mortgage interest rates range from 2.37-2.64 per cent . No available data for Peterborough, ON Are foreign investors influencing the real estate market? Not enough data Are alternative investments giving poorer returns than the real estate investment markets? Not enough data Is public confidence in the real estate market favourable? Micro Is the area’s infrastructure being built to handle the expected growth? (Local town planning department. Look for expansion of water treatment, sewers, commercial and industrial space, hospitals, and schools) Is there a major transportation improvement occurring nearby? (Local town planning department, trains, planes and automobiles. Will the region become substantially more accessible with the transportation improvements? Don’t say YES until you see construction beginning) Has the political leadership created a growth atmosphere? (On-line or city hall. Read the minutes of council meetings; speak with mayor or councilors to see whether the leadership is focused on bringing new jobs and growth to the area) Is the area’s Economic Development Office helpful? (This is a key question. If the E.D.O. is difficult for you to deal with, you can often assume that they will be the same for potential employers looking to move into the region) Are property taxes lower than the provincial/national average? Is the licensing of rental properties pro-investor? Are there rent controls? Is it an area of revitalization or gentrification? (City Planning Department – Area Redevelopment Plan. Articles in media about taking back the neighbourhood, and increased pride of ownership) Is it in an area that is going to benefit from a Boom’s Ripple Effect? (Visit surrounding towns and regions. Is a real estate boom occurring in the surrounding region outside where you’re looking? If yes, this is a sign of a potential boom in your target area) ✔ Yes No Some residents are discouraged after home prices went up due to lack of supply. Market is still on its way to recovery, definitely some improvement in volumes of sales but still everything is running below average. Notes: ✔ The city has a 10-year housing and homelessness plan review which aims to provide more homes for the people. Other upcoming city projects include the construction of new municipal parks and open spaces, major sport and event centres, among others . ✔ A major transit upgrade is coming up for Peterborough. The $4.7 million project is set to install an ‘intelligent transit system’ in the coming years ✔ The previous conservative leadership has been losing steam since 2014 which finally paved the way for the victory of Liberal Mayor Diane Therrien in the October election. Her platform is to satisfy the demands of communities who voted for her. The decline in the city’s industrial heritage continues despite smaller industrial investments. This forced the city council to arrive at consensus in a visionary economic strategy that “rises above boilerplate and convention.” ✔ They do provide economic data readily available on their website but not that comprehensive compared to others. ✔ Peterborough’s property tax rates are at 1.410 per cent. Provincial tax rates are at 1.789394 per cent. ✔ Unlike other territories, Peterborough has a very simple licensing process. The requirement for landlords is working under the principle of providing “safe rental units.” There is a By-Law governing licensing practices for landlord, but it is generally simple and does not demand much from prospective investors. ✔ There is an existing By-Law but not much about zoning, only safety inspections and landlord requirements… ✔ Ongoing Charlotte-Bethune Mega-project which is a major overhaul of the downtown area. There's also the Brealey Drive Project, a plan for the construction of an Arena & Aquatics Complex Project, Charlotte Street Renewal, Chemong Road Reconstruction, Cleantech Commons, Crawford Drive and Harper Road Extension and Reconstruction, Curtis Creek Culvert Replacements at Tivey Street and Euclid Ave., among many others. ✔ Peterborough is just 90 minutes (140 kms) northeast of Toronto accessible via hiway and rail links. Neighbourhood Specific Information Finding the answers to neighbourhood specific questions will often require an on-site visit. Never simply believe the person who is selling you a property to answer these important questions. Dig Deep. Yes Is the zoning of the neighbourhood poised to change? No ✔ There is the Official Plan which was just amended in March 2019 and will most likely be in effect by 2020 - rezoning of properties, land use, city structure, roadway network, bikeway network, flood plains, development areas, residential density, etc. ✔ Peterborough is just 90 minutes (140 kms) northeast of Toronto accessible via hiway and rail links. ✔ There is some speculation - banking on area's increased population, its proximity to other city centers and how quickly prices are appreciating in the neighbourhood especially in Peterborough Central (in the city). (City Planning Department – Area Redevelopment Plan) Will the property value benefit from a new development nearby? (Visit surrounding neighbourhoods. Look for new or redevelopment projects) Is there a lot of speculative investment in the area? (Has a major announcement driven values upwards, is there an increased amount of investment money pouring in?) Are there amenities in the region that would attract your exit target buyer? (Before you buy, always think of who you will be selling to, to make sure the property will attract that person) Are there currently sales over list price in the area? ✔ ✔ Sale to list rate is currently at 105.73% based on zolo.ca ✔ Current listings (supply) is higher compared to demand (sold). (mls.ca or your realtor) Is the area experiencing a buyer’s market? Are there more active listings than the five-year average? Notes: ✔ Active residential listings numbered 786 units at the end of August, an increase of 16.1% from the end of August 2018. Notwithstanding that increase, overall supply remains at extremely low levels from a historical perspective. What is the tenant profile? General observations of the neighbourhood and tenant profile. (Keep these notes as they will provide information for your final instinct check. Remember, you don’t have to live there, your target tenant does) the housing market in Peterborough is performing below average. There is improvement in terms of increase in volume and supply (short-term trend), but everything's still at below-average pace. Home prices are way higher due to low supply and the public is not loving it... One thing to note though, there is a huge population boost in Peterborough in 2017 making it "one of the fastest growing cities" in Canada. And then there's a visionary economic regeneration plan plus major transportation overhaul coming so there's a lot of promise there (also, Liberal Mayor won October election). Conclusion Remember, REIN’s Property Goldmine Scorecard is just the beginning of your market research and due diligence. It is designed to give you a very good overview of the property’s potential. It is critical that you complete the remainder of your REIN’s ACRE system, REIN’s Property Ladder, REIN’s Property Analyzer, and REIN’s Diligence Checklist BEFORE you remove all your conditions on the purchase of an investment property. Never skip a step and always do the extra 10% others aren’t willing to do.
