Does BRRR work in Canada?

Question

Hi BP Calgary and Edmonton members,

I am a new member and really curious to learn some real life examples that people successfully pull this off.

It would be great if some real numbers are shared.

Will the property appreciate? not just a value quoted on MLS.  Something that the gov (property tax assessment) or bank will quote b/w after renovation.  It is kinda of important as it will impact the refinance value (net investment).

Thank you all!

Roy N. · Answer

@Steve R.

Most residential real estate agents are not going to be out scouting for ugly houses ... if one is dropped in their lap, they may bring it to you - or to an agent in their office who is willing to deal with it.

You have a far bigger chance of finding your own: read the local classifieds and your provinces version of the Royal Gazette for foreclosure/mortgage/tax sale announcements; lace-up your runners and get in a morning 5-miler around the neighbourhoods of interest; talk to the postal carriers, etc.

Account Closed · Answer

Get aligned with REA's in the area that find ugly houses that aren't candidates to be listed to the retail MLS market audience. Fix them up, add a rental unit, rent them out, pull out the equity and do it all over again. Once the market is better than when you got in--sell.

Thomas S. · Answer

"knowing the next 25 years intrest would be very beneficial"

That may be the case for conservative investors however, as pointed out, variable has historically proven to be more cost effective. Short term hold may benefit from the security of fixed but for long term the bottom live is always a priority long term in my opinion. I have never had anything except variable.

Granted todays unpresented rock bottom rates would be worth locking in for 25 years but in Canada with term mortgages variable is the most cost effective.

Steve R. · Answer

good idea on

"

Get aligned with REA's in the area that find ugly houses that aren't candidates to be listed to the retail MLS market audience"

but how do you find them?  all that I have ever come across just use MLS and do not look around

Get aligned with REA's in the area that find ugly houses that aren't candidates to be listed to the retail MLS market audience

Yue ChunKit · Answer

Hey Carlos,

How do you find good wholesale deals in Edmonton? I am originally from Calgary, and my brother is now living in Edmonton.  I used to think Calgary's investment numbers out perform Edmonton's, (sorry for a super general statement) but I just learnt that I am quite wrong in all these years (happy to be wrong :))

I am now open minded to both Cities, actually I will actually put EDM a little above CAL these days.

Yue ChunKit · Answer

Hey Jaarno,

Thanks for sharing the numbers.  Your duplex value goes up by 92% after rehab.  That is quite a lot in my opinion!

Couple of questions if you don't mind :)

- Is that normal to expand that much value increase? Is there a norm value to expect?

- What are some of the major items done with the rehab?

- Notice the refinance is roughly equal to the original price + rehab, is that a max amount set by the bank?

Thank you!!

Jaarno V. · Answer

Roy;

you have made an excellent point!

I would say your comment is correct, however in real estate investing... knowing the next 25 years intrest would be very beneficial in a buy and hold strategy; would you not agree?

Roy N. · Answer

Perhaps in the present interest environment and that of the very recent past, but in general, I do not think it to be advantageous.

Historically, in this country (Canada) variable rate financing comes out ahead of fixed rate over an amortization of 25 years.

Jaarno V. · Answer

Sorry about that Roy,

Your first thought is right! The term is a 5 year fixed on that one.

Our BP freinds  in the U.S.A. are very fortunate to have the option of locking in the interest rate for the complete amortization period.

Roy N. · Answer

@Jaarno V. wrote:

Jaarno:

Should I read that as you refinanced at 2.59% on a 25-yr amortization, but your term is 5-years or less (depending if it is fixed or variable financing)?

Your above statement could be read to indicate you had financed for 25yrs at 2.59% ...  a plausible statement to the U.S.A. members of BP.

Does BRRR work in Canada?

Most Popular Reply