Oceanfront Duplex, Campbell River, BC, Canada

[Shaidah K.]

This is my first post to the forums.  Here is some quick background:

I live in Richmond BC. We bought our house in '05 for $420k, and had it recently appraised and it came in at $910k. We did the appaisal so we could get a HELOC in order to use as downpayment for multiple properties. In '10, we bought a townhouse (~$200k) in Surrey with a partner that makes about $100/month. At the time, hubby and I thought we would try to buy a property every 5 years.

Now 2015... we have saved some money for a downpayment but not enough for what we want to buy, hence the HELOC. After researching through BiggerPockets, and listening to podcasts (I am in the 40's and promise that I will go to itunes and give the 5 star review this week!), we want to buy more real estate. We don't want to wait 5 years between properties.

Here, it is next to impossible to find anything where the rent is 2% of the purchase price, even 1%.  Even up to several hours away... and if I wouldn't want to live there, or even go there, then why invest there.  I hope this background gives you some idea of the market here.  

We spent a week fishing in Campbell River on Vancouver Island.  Salmon capital of the world, Dam/energy station construction and a new hospital coming soon.  We thought we would check into some property in this growing city.

Ocean front Duplex, asking $549:

http://www.realtor.ca/Residential/Single-Family/15...

• Rent is ~$1200/month for each side, =2400, currently rented to tenants who want to stay
• Property tax is $4400/year

Assuming purchase price of $500k:

• closing costs of approx. $20k (including ~$10k of property transfer tax)
• Min Downpayment of 20%, $100k 
• Downpayment + closing = $120K, $100k from our heloc
• min. heloc payment of $266/month, interest only.  
• Variable mortgage rate of prime (currently 2.7%) minus 0.5 = 2.2%

Anyways, without getting into way TOO much detail, we would make about $100/month and have the HELOC paid back in 35 years from just the rental income. We would definitely pay back the HELOC sooner from our primary income, but wanted to run the numbers so the property would sustain itself.

Yesterday, we made the offer of $500k.  They countered at $542.  We could go to $505k but then we are really stretching ourselves thin.  

Unfortunately, we are going to have to walk away from this one and continue our search.  

Thanks for reading!

[Adrian Stamer]

hey

There are some other issues with this deal. You aren't accounting for maintenance/repairs, possible vacancies, and also what about property management?

I do realize Vancouver is a hellishly pricey market, but with returns like that you could just loan your $120k out at 8%+ or even more traditional investments like stocks and get a better return. Just because there isn't much available doesn't mean the few options that are still will provide an acceptable return