All Forum Posts by: Cloud Renji

@Guillaume I understand that. I'm not asking for a 25% down payment purchase, I want to know why these similar properties have different downs (35%, 48%, 48%). They are all renting rooms, and two of them are offering the same number of rooms (20). 

The only thing that would make sense is that the values listed are incorrect, or that the economic values vastly differ despite the similarities. What would you say is the correct economic value for the two properties with 20 rooms? Thanks.

I guess my question is, how much money would the bank lend me for each of these properties and how much down would I need? Are the values indicated there somewhat accurate or not at all? My confusion stems from the fact that there are 20 units and perhaps the down payment required is higher than the standard 25% of a 4plex-8plex. Thanks.

I have found 3 very similar properties all in Montreal. I just can't figure out why the down payments indicated are so different for each one.

Costs 950 000$ and requires a 454 000$ down (47.789%)

https://patricemenard.com/en/3kl3xi/

Costs 1 100 000$ and requires a 525 000$ down (47.772%)

https://patricemenard.com/en/34vigw/

Costs 970 000$ and requires a 339 000$ down (34.948%)

https://patricemenard.com/en/afm569/

Very confused. Thanks.

Thanks for your reply. According to my calculations, the DSCR for my current plex will be 1.48 and the new plex will be 1.31

I don't quite understand what you meant by this: "meaning you'll have to give an extra 130k in cash down (320k + 130k = 450K)."

The down payment needed for the new 8plex is 320k (25% of 1 280 000$) + acquisition fees. Basically, I don't understand the 450k, 450k is 25% of 1.8 million. I would understand if you said the the bank will loan me 25% of $1 150 000 so basically 287.5k and then I would have to add an extra 32.5k to reach 320k (25% down). Once they finance me 320k (or 287.5k +32.5k from my own pockets), I would have the 25% required to buy the new plex at the price of 1 280 000. Perhaps I'm misunderstanding or missing something.

Hello. My current 8plex is also in Montreal. The revenues should actually be 61k but app#1 in the basement is not for rent because it requires major renovations, therefore the income is 53k. It's located in one of the worst neighborhoods in Montreal (unfortunately). There was a murder/crime slightly after I acquired it in this neighborhood which is very rare here. When the price was 1 400 000$ my real estate agent told me that I would need about 350k down. Perhaps because the municipal valuation is pretty much equal to my current purchasing price. 

I actually just read an article to inform myself and it seems that banks use more than 1 method to determine the value of a property such as this one.

1) They compare to other similar buildings
2) They calculate how much it would cost to build an identical building
3) They use the revenus and expenses (this method gives the lowest result)

Perhaps my real estate agent was considering some of the other methods and took into account it's amazing location and the actual municipal valuation. If I were to buy this property and then sell it right away, I don't see it sell for any less than what I'm paying for it and so the value is right. Perhaps he was mistaken (and me), it's entirely possible as I'm not an expert regarding this -- which is also why I'm really thankful for your reply & will try to inform myself regarding this.

Edit: The actual revenu is 92-93k, the revenu I used in the calculator was considering ~5% or so vacancy/non payment.

I bought my first property in 2005. It was an 8plex that I purchased for 400k. The 2015 valuation is 610k but I believe it would sell easily for 750k, or 800k (fair price) just by comparing to similar properties. In 2010 I bought a 2plex that I currently live in and rent one unit. This one pays off the mortgage but no other expenses which cost about ~4000$ per year (because I live in it). The 2plex is worth 315k and I've paid about 50% of the mortgage. The mortgage of the 8plex is 170k. I'm thinking of buying a new 8plex which is quite expensive. It was for sale for 1 425 000$ but I negotiated the price down to 1 280 000$. I did some quick calculations and I'm very interested but at the same time I'm very hesitant. I should add that I live in Canada, Montreal and 95% of the properties seem to have close to ZERO cash flow (often negative). To buy this new 8plex I would have to refinance my current 8plex and increase the mortgage from 170k to 510k (170k+320k for new 8plex+20k for acquisition fees or other things)

• This is my current property (8plex)
• This is my current property after refinancing (8plex)
• This will be my new 8plex

I should also add the the new property is in very good shape. The municipal valuation is 1 227 000$, it has very good location (decent neighborhood) but most importantly less than a minute walk from the subway station. Looking forward to hearing from you guys, any advice is welcome!