All Forum Posts by: Cody Hill

Hello there bigger pockets,

I found a pretty under valued house just south of Edmonton, Alberta. Now what makes this a little more interesting is the odd addition someone added to this house. The house is on the market for 290k, but was assessed for 412k. The surrounding houses are a little larger but went for $425k and $456k. The house doesn't make for a very great single family rental as the rent rates for a 3bdrm are around 1800. If a person could add a basement suite then it would make sense. 

The other option would be to remove the addition. Interior the house needs some new flooring but looks really good still. 

Any ideas? Worth looking more into? According to the real estate agent the permits were pulled (although expired) and the city is willing to work with the buyer to finish the space. 

Reno it doing big impact for low dollar items or if your handy do some of the work yourself to get the most you can.

Could look into new tenants when your lease is up and try to do a lease option or rent to own.

@Alexandre Cournoyer

Welcome Alexandre! House hacking is a great plan! When we bought our first place it had a basement suite in it. We ended up living down there and renting the top out. That was enough to cover the mortgage and start saving for the next. Short term sacrifices pay off big later on.

@Zaher Muhareb

Hello there!

Great to see some other investors here in my home province of Alberta!

Do you currently have any experience with investing?

What kind of investing do you plan to do?

Do you have an area in mind?

I am also in the Edmonton area and have properties throughout the Province. My bread and butter at the moment is sfh where I can add a basement suite. My next ideal property would be a brrr deal with a legal suite.

@Scott Galloway

Hi Scott, right now I do manage all my properties but with that being said I have built in property management into my numbers. I am also a millwright and an apprentice electrician so I am sort of handy to take care of a lot of the issues that come up.

Sounds like you need to niche down a bit and decide exactly what kind of properties you want to do. After you get that decided drive around and find an area you want to invest in. There are deals to be found everywhere and so many ways to invest, it can really make it hard to focus on just one! Trust me I know I was there myself lol (not saying I have it mastered by any means)

I have done it both ways, doing the work myself and hiring out.

It's really hard for me to say without seeing the property and how much work needs to be done, things like roof's, furnaces, windows can all be big expenses if they need to be done. If the property has water issues or foundation issues your prices could be astronomical. Older homes usually need new windows put into the basement for egress as well which can cost a bit. From an empty shell basement I have been around 30-50k. This all depends on the size and finishes.

Strictly judging by the price of the property and location of it I'm going to assume it needs a decent amount of work. If you are hiring out the work 100k is probably not a far stretch. Having a contractor you trust come quote the project is your best bet, then after get a couple more quotes.

Doing the work yourself can save you a ton but man that can be a nightmare! Working all day and then coming home to work more really sucks. With that being said, a guys gotta do what a guys gotta do to get ahead. I was able to do a 1300sqft bungalow (had an in law suite) and turn it into a rental with a legal basement suite for about 35k. That was very hands on and contracted out a few jobs I was not comfortable with.

Has been a good rental though, got all in for $325k and rent the top out for $1650 and basement at $1250.

I see you mentioned a new build which is exactly what I did in leduc this winter. I bought a new build, got a basement suite put in for 400k. No one was buying any houses at the time as it was those few weeks of -30C. So I was able to get a pretty good deal at the time. I did all the landscaping myself which didnt cost that much besides a lot of manual labor but have re-appraised the house recently for 500k. Not bad for having a brand new rental with warranty still. Wont get my landscaping costs back out (about 6k) but I should be able to get my down payment back.

@Scott Galloway

I do like the area and do see a lot of investors doing infills around there. Is pretty pricey although you do have the university close and a lot of people wanting to be in that area. I would be a little concerned with the quality of renters you would find in that area. More short term renters I would think typically younger and less settled down. May expect higher turn over rates although it shouldn't be too hard to find tenants.

I have wanted to try Airbnb and was tempted to try it with my one basement suite as the house is 7 min away from the airport. I would check the area that you wanna buy in for Airbnb and see just how booked up they are. Will kind of give you an idea what people are getting rent wise and how many nights they are booking up for. Will also need to factor in cleaning costs and someone to service the place I would imagine, since you dont want to be doing that everytime someone leaves.

Getting all your money out would be huge but even if you get stuck with 10k in the deal for a cash flowing asset, your laughing. Biggest first step is action, you can learn how to perfect the process along the way.

@Scott Galloway

What is the size of the house? How many beds and baths? Great area for a rental and should expect to see prices climb a bit in the next couple years. I am also looking for someone with more experience in flipping places as I would like to brrrr my next property.

What are you doing for a loan to complete the Reno?

@Kris Mcfarlane

Yikes that is a hefty interest bill, what did they change about the rules? Do you need a longer seasoning time?

A monoline lender is a lender who only deals with mortgages. Get pretty good rates and lower penalties. They also used more of my rental income then any other conventional banks.

@Jesse Graham

I was also having a hard time finding deals to work without basement suites at 5%. With the suite it cuts down your living expenses big time, my fiance and I were able to live in our last place for $400 a month between us. Makes it easier to save and less capital tied up in the deal.

It really depends on the lender and what percentage of your rental income they count for. While searching for a lender on my last property it seemed like the majority were around 60%.

I was able to find a monoline lender who claimed they could cancel out my monthly debt service. This was only if I could provide evidence that my lease agreements were at minimum $1 above the debt service on the property. Needless to say they did fund my deal and I would for sure try them again in a future deal.

Financial freedom is definitely the goal, or at minimum replacement of my w2 earnings in cashflow. Ideally I would like to try a brrrr for my next deal and recycle the money. I am a little worried about the re-finance portion and if I can get on a conventional mortgage with my current dti ratio. Hate to get stuck with a hard money loan longer then I need to.

@Jesse Graham

Not a problem at all! I just enjoy talking real estate with like minded people.

So far most of my properties have been purchased using my own cash, I do have one jv property towards Calgary. I paid my dues working out of town in the trades for some time and living way below my means in hopes of creating something more stable.

House hacking has been a huge help for me as well, it sure makes it a lot easier to save money when you aren't giving it all to the lender.

While first getting started I purchased the properties as a personal residence. This only required me to put down the 5% and while living in the property I would Reno and fix anything that needed to be done.

I am finding it a little harder to get conventional financing now so I have been searching for more creative ways to get into my next property. It raises your debt to income ratio pretty quickly when the average house price is around 300k +.

On a side note, thank you for your service as a paramedic! At one time I was planning on going that route too.