Least llivable place on earth | New member from Vancouver, Canada

[Tobin Cub]

Hi all,

I'm a new member to the forum, although I have been listening to the BP podcast for almost a year.

I live in Vancouver, BC, Canada. This is one of the least livable places in the world in terms of housing prices. In 2015 alone, price of detached houses have gone up by 20%, reaching to 1.2 million on average.

I am very interested in real estate and want to create passive income. However, I cannot find any cash-flow properties in the local market. Maybe I am missing something that can make things work. I would love to hear from you how to invest.

[Peter Crisp]

Hi Tobin,

I'm an investor in Surrey. We have a handful of income properties and I've gone outside the Lower Mainland for some of them to diversify, but also to get properties with better prospects of generating positive cashflow.

A few things I've learned (and am still learning). First, I'm also on another (Canadian) forum and one experienced person answered a similar question succinctly by indicating that if you pay cash, you can find lots of properties that cashflow like crazy, even in the Lower Mainland. So one way is to put more money down. The second answer is that you have to look at the price to rent ratios in an area to see if they make sense. Third, you have to do your numbers for the specific property you are looking at, based on verified (not pro forma) rental records, comps in the area etc. and then carefully calculate all your expenses based on as much information as you can get. The BiggerPockets calculator is very good that way. Fourth, don't expect gushers of cashflow immediately. It can happen but it's not the norm, particularly right now. It might be 3 years or even 10 before you see a big payoff. I'm just starting to see this payoff and I'm 5 years in with my first income property. Finally, don't buy cheap (Detroit $1 houses being the extreme example, but there are lots of properties around). There are certain costs which are pretty much fixed - furnaces, roofs etc. being examples. I have a 5-plex that I frankly messed up on - I overestimated the rent by $25/month and underestimated expenses, including vacancies and non-payers, and I'm trying to decide now to hang on to it or sell it right now. I thought I was smarter than the previous owner, and I was perhaps, but not enough to really make it work (yet). I'm tempted to keep it as a constant reminder to myself to be humble. Hope that helps!