All Forum Posts by: Derek Merdzik

Hi everyone, I am looking to expand from condo investing to houses. I am interested in single/duplex to triplex+ conversions. I have been looking at the Peterborough market and am looking to connect with investors who are currently doing business in Peterborough.

@Steven Choi, I'm not sure I fully understand. If you deduct only the interest portion, then you have even higher income than from just positive cash flow. For example:

2000 rent

- 1200 mortgage (550 principal, 650 interest)

- 400 condo fee

- 20 insurance

- 130 property tax

=250 positive cash flow (I wish!)

But from the CRA perspective you made 800 (250 cash flow + 550 mortgage principal paid).

As others have said, you can depreciate the property to offset this income and defer the taxes until you sell the property.

@Paolo Pascual, can you assign the contract? If so, you may have some additional costs you have not considered, builder assignment fee, legal, perhaps a realtor if you need one to find a buyer. When selling on assignment you usually cannot list the sale on MLS or other market places, you have to find a buyer otherwise. Any good agent that deals with new build condos will be able to get you a buyer easily.

 Thanks Lien.  That's a good idea.  A flat fee makes a lot of sense.

Thanks Jay.  This makes a lot of sense.  This is partially why I am wondering how the transaction works.  I want to run my own comps, but to do that I need a real estate agent.  The online resources such as Zillow, do not provide the level of filtering and breakdown that I would like.

Could someone help me understand working with a wholesaler and real estate agent at the same time works?  If I find a deal through a wholesaler and am working with a real estate agent, does the real estate agent represent me in the transaction still?  If working directly with a wholesaler do I need a real estate agent?

Thanks for brutally honest feedback.  I read a few extreme examples, looked at a few properties, and got a bit excited and confused.  Thanks for the reality check, I'll wear my dunce hat tomorrow.

Hey everyone, I am looking to get into SFH/Duplex rentals in the US, I have experience in Canada. I have am trying to fully understand the aspects and trade-offs of low value property buying and renting vs a higher value house that you can get a mortgage for.

For example a $20k house in Cleveland, OH that cash flows strongly, but will not appreciate in value and will likely depreciate.  Versus a $100k house in Columbus, OH that has weaker cash flow, but might appreciate or at least keep it's value and I can get a mortgage for. 

At these prices, the out of pocket cash is close to the same, so it's a cash flow vs capital appreciation question.  However once a Cleveland property gets a bit more expensive, say $35k with justifiably stronger cash flow, more cash is tied up.

I have two questions:

1. Are there ways to free up any portion of that cash tied up in a cheaper property for reuse?
2. What are your thoughts on cash flow vs capital appreciation, how do you factor each in?

 Thanks David.  I will definitely listen to it.

@AJ Smith, I am looking to invest in the US from Canada, so I have spent time looking into these exact two questions also.  From talking to a number of Financial Institutions I have learned:

1) To build you credit you need three active trade lines (credit card, mortgage, line of credit, etc..) for a minimum of 120 days.  That just gets you going for a score.  Takes about 2 years of regular use for a legit score.

2) As a non-US permanent resident/citizen, I was looking at Foreign National loans.  Such loans don't rely on a credit score, they are non-conforming loan (not Fannie Mae); they have higher fees and interest.  Any FI that offers such loans will most likely also offer you a loan, however most FI's won't do them.  I reached out to 50+ and found 5 that do.  The FI's that offer such loans are smaller and will lend if I am buying in their local market, where they are familiar with the real estate.  Reach out to every lender you can find in the area you are buying and see what they can do.  

Good luck!

Derek