All Forum Posts by: Eagle Yeh

Please take my opinion with a grain of salt as I am no expert.

It sounds like there are two questions:

1. Should you sell the land right now or not?

2. If you sell, should you pay off the home mortgage or invest in other properties

Should you sell the land or not

This depends on if your land is generating passive income or not. You don't really gain much by selling a hard asset to acquire another hard asset in the same market. I would suggest finding ways to turn your land into cash flow property or refinance to lock in low-interest-rate before the upcoming rate hike.

Another consideration is your tax impact if you just sell your land. 

Pay off mortgage or invest?

Is 2.75% fixed for the rest of the term on your house? If so, it's a good debt to have considering the upcoming rate hike. If you have not refinanced your home, that's another way to get your funding for the down payment in your rental properties. 

Bottom line, as someone mentioned earlier. Everyone's risk tolerance is different. What matters the most is the peace of mind for your family. Understanding your retirement goal, where do you get the cash flow, and how tax impacts all these is key to that "peace of mind". You don't want to sleep well in the first five years just to realize you might have a hard time in the next 20 years. Keep in mind, when inflation is high, you lose money by putting them in the bank.

Dear Canadian BP community,

I am exploring more markets to invest in remotely. Based on what I read in this report, Saskatoon still seems to have great potential as the landing city for new immigrants: https://www.saskatoon.ca/sites...

A few questions for those who invest there or live there:

1. Crime rate: Although the crime rate is dropping year-over-year (pg.13), the severity rate is actually above Calgary, Edmonton, and Regina. What is the good neighborhood do you recommend where this is much of a lesser concern? (ex. https://blog.remax.ca/best-pla...)

2. Cash flow: Do SFH still cash flow with 20% down?

3. Interprovincial move: There are more and more people leaving the province. My guess is new immigrants are leaving the province once they meet the required stay after landing. If this is true, it puts Saskatoon heavily dependent on immigration demand. I like to find markets with the capability to retain the population long term. Do you see another aspect of Saskatoon that meets this criterion?

Thank you!

@Nicholas Montevecchi, I will PM you to find a date and time!

Hi BP Canadian community,

I am thinking to start a workgroup to review each other's property analysis as a learning process. If you are like me, there are often more questions than answers when trying to analyze a deal. Another pair of eyes could be very helpful.

The main target participants are new investors like myself. For experienced investors, it could be a good networking and giving opportunity if the time works out for you. Coming from a software engineering background, making sure your design is reviewed by your peers is an important part of learning and building successful software.

Please message me or reply to the post if you are interested. We can start as small as 2 members. Below is a draft of the workflow:

Main objective: Improve our ability to analyze a deal

General rules and info:

1. Each participating member has to bring at least one analysis to share

2. At the presenter's discretion, the property address should be removed to avoid any conflict of interest

3. Meeting is 30 minutes in weekly format to start with, up to 6 total participants (keeping it small)

Agenda:

Below process repeats for each participant

1. Review the presented analysis in silence - 2 minutes

2. Discuss what looks right and what looks wrong in the analysis - 3 minutes

3. Repeat for the next analysis

Tentative Day and Time:

This is just a proposal to get the discussion going. I am fairly flexible.

Monday weekday night at 9:00/9:30pm/10:00pm EST

Let me know!

Hi Canadian BP community,

When finding an investor-friendly agent (IFA), what are your typical criteria and expectation? I just listened to the BP podcast: "Retired as a 'Digital Nomad Landlord' with 15 Rentals" with Sarah Weaver on 26-Jan, 2022. One thing I find very challenging is knowing what to expect from your IFA.

These are my criteria and expectations in different priorities. I would love to hear from you if anything here is "too much to expect", or I am expecting too little.

Top Priority: The Must-Have/Do

1. The IFA owns investment properties in similar markets

I find this critical because I want the IFA to have experience in the investment property industry. I am personally not experienced. Even though I am educating myself as much as I could, I need to trust the people on the ground.

2. Find deals that meet my criteria on and off-market: a) location, b) budget, c) type of housing (single-family, duplex, multiplex, etc.), d) age of the building

This is another must-do because what's on MLS today is public to everyone after posting. Finding off-market deals that meet the criteria differentiates an IFA from residential agents in my opinion. Good ones find more than the others, but I am not sure how to baseline this since we typically don't work with multiple agents in the same city/market.

3. Provide housing details not available publically

One challenge I find when analyzing a deal is not knowing what is the property tax, insurance, expected rents, vacancies, and sale price for similar houses. Some of these are available depending on where you live (HouseSigma provides sold and leased prices in BC and ON). Another thing is being the eyes on the properties physically to spot anything that could potentially break the deal.

Second Priority: The Good to Have

1. Rolodex

I am not sure if this is more on IFA or property management company(PMC). Being a remote investor, it's critical to know who to call for different jobs (?). I haven't studied into PMC yet, so I am not sure if this is typically managed by PMC, or I need to provide vendors when needed. I have met IFAs when they have their own Rolodex, and I have also met the ones that don't. This is something I definitely need to educate myself more on what to expect.

2. Preliminary analysis

I am not sure if it is due to bad definitions in searching criteria. Sometimes I would get deals that don't make much sense (ex. rent-to-price ratio below 0.2%). I don't think agents should run analysis when they send deals to clients (liability and time limitation), but making sure deals that just don't make sense are filtered out would be nice.

Extra Questions

Sarah in the podcast mentioned that investors should do their own due diligence, and I fully agree. What are the things you suggest a remote investor do independently? These are what I have in mind:

1. Understand the city and demography

The city's census data is available online. I research the city's GDP, population growth rate, crime rate, attractions, job market, etc. I use RentalHousingIndex to help me learn about the affordability, average rent, rent to income ratio, and other rent-related information. Although I find the information not quite update-to-date in some cities when the current rent is much higher than posted.

2. Cosmetic of the neighborhood

I walk around with Google Map in street view to take a look how the neighborhood feels like. This obviously isn't accurate but is what I can do independently without flying/driving there. 

3. Who else to call around?

This is a bit tricky. As mentioned earlier in the post, I am under the impression that I can only work with one agent in a market. I usually interview a few before choosing one but sometimes the first one would start sending deals before I sign anything. Other than an IFA and PMC, I am not sure who else I should be calling before an offer is signed. Connecting back to the "Rolodex" section, do I need to build my own vendor lists if a PMC is managing my property?

Thank you!

I understand your feeling. It's like looking at a menu with 200 choices when you really don't have a strong preference.

I am not experienced so take my words with a grain of salt. My current strategy is to 

1. Pick 5 places that you know personally or mentioned by people on the forum
2. Narrow down to 3 with research in the population growth, census data, price to rent ratio...etc.
3. Call a few real estate agents/brokers that you can find in those areas (you can find them in BP or just google) to learn about the investment market
4. Start analyzing deals :)

I personally think the worst you can do is to get stuck. Set a goal to connect with at least two new people a week in the next month. If the number makes sense, place an offer. Don't get too hung up on losing the bid when it happens, and just keep repeating.

The menu looks huge, but if you know you just want beef or salad, you can quickly narrow down your choices. The bottom line is you are likely not going to eat only once. If you picked something you didn't enjoy, pick something else next time :)

Hi @Chris Baxter, I suppose this is when investors have to get creative in creating new streams of income, i.e. laneway house, walk-out/separate entrance basement, garage rental, etc.

It would be interesting to see the spreadsheets for investors these days buying $1M+ properties...are people buying into the appreciations so much that they are willing to take negative cash flow?

Hi BP Canadian community,

I am researching my first property. I have been running analyses and looking at deals in Alberta and Ontario. I am mainly looking at SFR. There is one topic that truly puzzles me and I wonder what the experienced investors would say about the 1% rule. More specifically:

The purchase cost for A-class single home family is likely to be above $300k in today's market. 1% rule here requires 3k rent, which is not realistic unless we start to include a separate unit in the basement. Even then meeting 1% rule is still unlikely.

Do most Canadian investors forgo the 1% rule, put down 25%+ DP, and tweak operating costs to make positive cash flow?

Not sure if it's allowed to post property links here so I won't do that, but the cities I looked into so far are: Airdrie, Calgary, Edmonton, Cochrane, Saskatoon, London, Kitchener-Waterloo, Brantford,  GTA.

Thank you!

Thank you all for your wise suggestions @Wade Woo, @Chris Baxter, @Joshua Janus, @Roy Cleeves, @Theresa Harris. I am going to take the approach to find markets that make sense and learn the necessities to build a process to manage remotely through PM. Hope you also don't mind that I connect with you to learn more about RE.

I have a family member in Calgary, AB, so I am also interested in investing there. Do you have any connection recommendations for a motivated real estate investor agent?

Hi,

I have a newbie question on analyzing a deal. How do you process properties that look similar on paper when analyzing cash flow? I am practicing the suggested steps to analyze 5 deals a day from properties on MLS (I use Zillow and house sigma).

What I find was that there were often times that properties look similar on paper (similar sell price, similar rent, similar house condition, and age). They usually turn out similar on paper in cash flow. When it comes to this situation, do you just offer one to "bias for action"? Do good deals come in similar observation? or good deals are just not readily available on MLS usually.

Thanks,