All Forum Posts by: Stephen Fryer

Hey Daniel.

I live in Ottawa. Similar story for us there as well. Cap rates between 3-4%. Rents have not kept up with the rising prices, so everything is an equity play. That's why I invest in South Bend. The numbers make more sense for an old man like me looking for cash flow. You can still find value and above average returns.

@Hai Loc. Great example. If you own a 10 unit apartment and increase the rent by only $10/month for each unit, nobody is going to leave and you can drive crazy value improvements with such low cap rates. In a city like Toronto, where the vacancy rates are much lower, I would imagine that you can raise rents much more dramatically than that. 

Hey there Carter.

I live in Ottawa and invest in South Bend, IN. Like you guys we suffer with high prices and low CAP rates (3-4%). Making stuff cashflow is very difficult. Investing in some US markets just makes sense. Here's a link to a Roofstock article identifying the top 7 real estate investment friendly states to help you in your search.

 https://learn.roofstock.com/blog/landlord-friendly-states

Hi @Stephen Sokolow

I've purchased several properties from local wholesalers and have found that $5K is about right. I don't begrudge them making a profit, but find that the the bigger issue is whether they can actually add value with the $5K fee added on. I've seen too many houses advertised by wholesalers where the price makes perfectly good sense to them, but they have not left enough flesh on the bone to make it worth my while. 

For fix and flips, I try to focus on the first time home buyers. Houses in the $125-150K range. The sweet spot seems to be a purchase around $30-35K, $30-35K in rehab and a sale at $125-130K. There's some room there for the unexpected challenges that I'll find when I open up a wall during rehab and still be able to make a profit. 

Hey @Leandro Zhao.

The answer to your question depends to some extent on what you're trying to achieve. There are certainly asset protection benefits from buying in an LLC, but for a Canadian, there are tax implications.The CRA does not recognize an LLC as a flow through entity and you will therefore likely find yourself paying taxes twice. There's a lot of smart people on this site, but they can't replace good professional advice geared to your specific goals. Seek some tax advice from good cross border accountant for your options.

CAP rates in Ottawa are aprox 3-4 %. It's stupid. Can't make anything cash flow. Everything is an expensive equity play.

Hey there @Account Closed.

I live in Ottawa and invest in South Bend, IN. I'm in the SFR market and have acquired about 30 doors. Feel free to connect if you want to chat. I also PMd you with the contact information for Marc Dupuis, Simple Acquisitions. He lives in Ottawa as well and does syndications in the US in several markets. I'm confident that he can help you.

HI @Michal Shain ben harosh. 

I feel your pain. I am also an out of state investor. I live in Ottawa, Canada, and invest in South Bend. I have about 30 doors right now and have an excellent team that includes great contractors, but I have had the same experience with unethical contractors that did not deliver the work but took the cash. Unfortunately, the market is hot right now, so everyone with a pickup truck and a shovel is calling themselves a contractor. 

To mitigate this risk when doing a fix and flip, I have my contractor and broker walk the property together and we do a video conference call so that I can see what's going on. We will use this opportunity to decide what we want to do with the property. 

The contractor will then use this information to give me quote and I use that to create a project plan. I never pay him all the funds at one time. We break the project up into 3 draws and he gets paid once the work has been completed. I have him complete a video walk through each week so that I can see progress and measure against the plan. My broker will review his work and create a punch list of outstanding issues as she goes along. 

It's not perfect, but it helps to mitigate the risk and allow me to sleep at night. 

Happy to help in any way I can. I'll connect with you directly and we can discuss. 

Stephen

Hi @Jenner Birukow.  Nice to see a fellow Canadian taking the long distance leap into the US market. In my experience, success will be directly related to the team that you develop in your market. Third party oversight is critical. Trust but verify. 

HI @Sebastian Korak. 

Welcome to BP. I am a Canadian that invests in South Bend, IN. Whether you invest in the Canada or the US, many of the principles discussed here are applicable whatever market you are in. 

There are several active meetups in Montreal for Canadians that invest in the US. Feel free to PM me and I will be happy to share. 

Hey @Erik Pilon

Seems with all your questions, the answer is kinda self evident. I'll pm you with a couple of referrals for accountants with cross borer experience that you can speak with. As a Canadian, we have to pay taxes on all our earnings worldwide. If you want to avoid double taxation, you need to make certain that you have an entity recognized by the CRA as flow through.