All Forum Posts by: Dylan Earl

 Thanks Hai. You got it! Problem is I also already own 2 other properties so I have to turn to private lending I think. Any input on how I should give the lender a piece of the deal? Give them portion of cash flow equitable to their contribution to down payment OR give them ownership % with a buyout opportunity at the end of the term OR provide a guaranteed return? 

 Haha - might just be my own wording! We are approved for 400k 20% down so it would be 320k mortgage. Not 400k as I would hope. 

ROI: Equity in: 90k (well, I don't have full 90k so I'd have to borrow some and add interest)
Revenue/Year: 4200
Year 1 Return: 4.6%

ARV in 5 years should be: 625-650k (based on 5% appreciation per year)

Hey everyone - I wanted to ask about a property I am looking at and how you would go about piecing out the deal.

Listed at: 479k 4br with unfinished basement (could fit 2) very very good location, close to university and bus routes. 

Comps: $550-600k  .... it's outdated, located on a busy Main Street and in a student area where families aren't keen to be. Perfect investment prop for students. I don't think it's going to last long on the market. 

My analysis: Offer $490k - we would have to do 20% down. Expected profit per mo: $350. (Based on expected rents of $3200 (2000 up and 1200 basement) and expenses $2850). However, my wife and I were only qualified for 400k so the difference of 90k makes it difficult to determine how to "piece out" the deal

Example: I could request 90k as an interest only loan but the term and interest rate (ie. 3 years at 8%) cost still exceeds the potential revenue of $350/mo. So it seems like I have to offer them an equity trade. I guess it would be based on who pays how much of the down payment...? Curious to know how you would go about structuring this type of purchase!

 Talk about tough to make these type of things work!!

To add the unit you will most likely need to achieve proper fire rating between shared walls/floors/ceilings and have interconnected smoke detectors. Egress will be required and depending on your municipality you may need rental license or permit. At the end of the day, as long as you have the zoning you just need to go talk to your city planning/building department and tell them what you want to do. They will let you know the steps. 

I don't think amalgamation is your answer... what's the difference between 4 lots priced at ie. $250k ea and 1 bigger lot priced at 1m? 

It sounds like the original developer/builder had a bigger lot and subdivided to get more money per lot... not other way around :P Not sure if your plan will work out for the best here! 

Hey man - in simple terms it's called a VTB (Vendor Take Back) Mortgage:

House listed at 400k

Bank approves you for 350k

Seller lets you buy at 350k but you owe them the 50k difference in a set of terms you agree upon. (Ie. Term, Interest Rate, Payment frequency etc) As some other bp'ers mentioned above, they take a 'secondary' position in the event of non-payment. So if you default, your bank gets your money first therefore it's risky to the seller. 

These VTB situations work best when it's someone you know or when the seller is super motivated to offload. 

Edit: Oh - I should add! There's lots of creative financing opportunities, you just have to identify what your main goal is. Are you after cashflow? appreciation? Sometimes people will partner with you for one or the other.. or both. Some people will do 50% of the downpayment in exchange for 100% cashflow for 3 years and then you split it ... whatever you gotta do! 

I think it really depends on market and geography. In my area industrial warehouse space is booming, you get such high rents for space it's crazy. Some people like using their land to build storage space too, easy to rent, maintenance is very minimal etc. Multi-family builds have good returns but require a lot of Mgmt and can have high maintenance costs. Duplexes and triplexes are good but the economies of scale don't compare to bigger multi-family or industrial properties. For the beginner investor any type of plex is usually good.

The more units you can fit into a building that only receives on tax bill and insurance the better! Especially if you can separately meter them to have tenants pay their own util.

Hi Meryl - I am responsible for building out our development pro forma for new projects. Budgeting and reconciling from acquisition through design, planning and permitting to servicing, hard construction and obtaining occupancy permit. Right now we have been basing all our costing for servicing and hard construction on a blend of sqf costs from previous projects AND quotes from 2-3 sub trades to compare... however, sometimes our builds are unique (ie. 3 storey apartment building with 12 units and exterior walkway/stairway) 

Any recommendations on how to refine our preliminary budgeting other than running around between sub trades for quotes? 

Here in Ontario, Canada we have a standard lease set out by the government. Feel free to search it online and see it's contents! (Ontario, Canada Standard lease)

Well the whole objective of the Wholesaler is to make quick money. Get the deal then sell the paper at a premium. They may not have the financing or interest to go through the process of flipping or holding & managing. That's why they have their own name all together! 

Think of it like Costco...or any "wholesaler" the whole reason they do things in Bulk is to make money quicker and liquidate their inventory, leaving the end user with the opportunity to try and make marginal profits. (ie. sell a box of x100 whatchamacallit's for $80... let the retailer sell each one for $2$ each)