All Forum Posts by: Chris Baxter

@Alex Kovalenko  You've already asked this question and got lots of answers.  You aren't going to cash flow $300 on a $250k property with $2k rent without putting a significant down payment.  You can do much better by leveraging the same downpayment on a larger property in a different market. I've seen you ask a ton of really simple questions hoping that someone will validate your ideas.  Those of us that have investing experience are here to help, but you do have to be willing to listen and learn from what we share.

As far as analyzing properties is concerned, BP has a free property analyzer tool.  I personally use Landlord's Cashflow Analyzer software (the Canadian version) for more detailed analysis.  BP has lots of videos on how to analyze properties as well.  Take some time to review these materials, and then put targeted questions out to the forums. You'll get a much better response.

One last thing "we buy a house, do a reno, then rent it out" is only part of one strategy (BRRRR) for REI. If the reno doesn't add value (increase NOI), then doing it is simply throwing money away.

@Cameron Tope ... we don't have 'Freddy/Fannie' loans in Canada.

@Simon K. Investing as a company does not make a difference and would make it harder to secure a loan since the company doesn't have a credit history. The reason you run up against the 'debt wall' as we call it is because lenders typically only allow 50% of your rental income to be counted against 100% of the property expenses. This effectively treats cash flowing properties as cash draining properties and puts your DCR upside down after 2-3 properties. Strategies to overcome include:

1) Invest in larger properties (MF 6+ units) as these are secured with commercial mortgages that have different lending criteria. Here, a corporation is useful

2) Work with a mortgage broker as they can identify lenders that may consider a higher portion of renter income

3) Partner / JV with others; you can be the deal finder and they can be the money partner

Regardless, don't let the above stop you from going after your first property.

@Chris Habets  while those are interesting observations, that doesn't mean the area presents a good investment opportunity.

@Chris Habets  stand out in which way?  Low per door price and lots of properties for sale... drivers? demographics?

@Account Closed every building has its defects, and there is no reason to get particularly worried here IMHO... Every problem has a solution, and you can leverage visible "scary" defects into a better deal.  Did your inspector tell you "there is a crack" (obvious, useless information) or did they identify something structural that can be the root cause?  Do you have access to a contractor / structural engineer that can assess the severity and provide a remediation assessment / cost? I use quotes /estimates from professionals to drive price reductions when closing. 

@K Shoe Commercial mortgages are a LTV (typically ~75%) against the value of the building. Value is NOI/cap rate. Very systematic. To qualify, many lenders want to see a net worth > 25% of the mortgage + the down payment

@K Shoe  when qualifying for residential mortgages, banks will typically allow only 50% of income against 100% of expenses. This means after 2-3 properties you will have issues qualifying for additional mortgages.

We've converted to commercial mortgages (MF, 6 units and up) which do not have the same treatment.

@Alex Kovalenko if you have a $200k downpayment, you can leverage that into much more than  $400k house.  You can buy an $800k+ property. Smart use of leverage is key to investing. 

 @Alex Kovalenko   you've got to be missing something in your analysis.  You keep mentioning positive cash flow, but this entire forum is telling you that it isn't there.  For most investors, cash flow is what's left after paying all expenses AND debt servicing (mortgage). As an example (guestimates on a 400K property in Hamilton based on past investing in Kitchener):

Income (rent): $2,000

Expenses (per month): $740

• Property tax: $200
• Insurance: $150
• Property management: $100 (5% of gross rent, this would be very good)
• Water tax: $40
• Maintenance: $100
• Capital improvements $100
• Landscaping / snow removal: $50

NOI (Income - Expenses): $1260

Debt service (Mortgage), assuming 80% LTV, 3%: $~1,500

Cash flow = $-240/month (and that's being generous; I haven't allowed for vacancy). For a condo, drop the landscaping and capital improvements but add your condo fees; likely gets worse

@Stephanie Blouin  I own 2 MF in Moncton (6 and 22 units).  We use Ground Floor PM; their going rate is 5% on gross rents. Insurance costs are all over the map, but have seen an increase in the last year. Happy to chat about other expenses... feel free to connect