All Forum Posts by: Evelina Neufeld

Hi Devin! I am in the exact same boat. Really wanting to buy a second investment property but have a line of credit and credit card to pay off. My husband is our money guy and his strategy is pretty simple! We take a look at which one requires the biggest minimum payment and then go out of our way to pay that one back first. We have also found that we are able to pay less interest on our credit card by making minimum payments and putting any extra cash into a savings account until we can pay the whole thing off in a lump sum. Once we have paid the big payment debt off, that gives us more money to put into a savings account which helps us pay off the rest of our debt faster. My husband calls it the snowball effect (that I'm pretty sure he got from Warren Buffet!). It does feel like we're spinning our heels a bit but the results for us are better than we predicted! Hope that helps!

Thanks Ram. Those are great questions and I'll be sure to double check. This seller is an older gentleman who is retiring/changing up his investments. He has no headaches at all with the property and from what I saw was a really well built and well thought out property. The layout, size and low maintenance of this duplex is really what caught my attention. It has all of the features that I would look for in an income unit except for price. I saw that it is high based on the second duplex for sale but I figured that was because he wanted to negotiate. His reason for selling was just that he had already paid out the property years ago and now wants to cash out and downsize. He was very forthcoming in the conversation we had so I'm sure he will have no issue with me asking for more information. I will also look into master leading and option to purchase. I haven't heard of either of those. I went to my financial advisor at my credit union and she looked at me like I was crazy when I asked about portfolio lending as if I'd just made it up so I'll definitely look into alternative financing. 

As far as my interest in the property/ motivation to buy, I am looking to purchase a solid, somewhat safe income property. I am approaching this wanting something that needs little upkeep and future work. I'd like it to be a long term property and based on the numbers we ran, we felt (and still feel) that this property would be cash flow positive based on some negotiating and our experience with the house we currently own. I'm not looking to house hack since we're already doing that so it seemed like a viable option. The more I hear other opinions the more cautious I've been getting however I do think that it would be a decent option based on my area if we could get it for the right price. 

Honestly I don't think that we will purchase this property based on everyone's warnings but I think I'd like to see how flexible the seller is and what exactly his terms would be. I definitely don't care if I miss out on this property since I know there will be more, the idea of a seller financed property just sped up our income property acquisition timeline. Looks like I'll be going back to my slower plan A, at least for now.

that makes sense. I think I'd like to feel out the waters a bit just to see what's do able and where he really stands. Either way I feel that I can still learn something from him. I won't be signing anything and now I have a better idea of just what I'd have to get the property for in order for it to be a smart investment. Is there a way to figure out how much extra people charge for average properties in a good location vs  average location? I've been looking for places similar to this and though it is a little high, the price isn't outrageous from what I can tell. There must be another variable in the market that I'm not seeing.

sorry that was a typo. It was 525,000. 

thanks Steve! That's what I was thinking. There aren't many seller financed options around here so I feel this one warrants some attention. It is an extremely low maintenance property which is why I feel the risk is less. 

Thanks Aaron for the breakdown. There are a few things there that I need to fill in clearly. The seller says that the tenants have always paid the utilities and there is no HOA with this property. He even went as far as to properly install a tin roof in order to have that as one less expense in the future. Also in my area the sewer, trash and water bills are all combined and approximately $100/mo. I definitely see your point though so I'll proceed with caution.

I haven't actually spoken with him about how much interest he is looking for or how he would like to see it structured. He doesn't care if it sells right now or not which I interpreted as him being open to negotiation. I feel that even if I don't go through with the purchase it would still be in my best interest to follow through with the questioning  if only for the experience.

well I think that it would be a marginal decrease of cash overall but I feel confident that it would still be a positive cash flow. The details haven't been discussed yet so there is a possibility that what the seller expects as a mortgage payment could positively affect the numbers. I'm looking for a place to negotiate from. Do you think that $500/mo in cash flow is worth the large investment as a buy and hold?

I see. So are there any red flags that you see that I might have missed? What's your overall impression? 

Are you familiar with Lethbridge?

Hey! I found the ad on Kijiji.

Hey everyone! Last week I called about a duplex for sale for the first time to practice talking to sellers. Turns out this sale is totally doable and now I'm wondering if I'm romanticizing the idea of jumping into rental property #2 or if it is actually a good deal. Here's the info I have on it.

Asking: $575,000     

Down: $10,000 via seller financing

Location: Lethbridge, Alberta excellent as far as neighborhoods (close to college, downtown and hospital)

Each unit has: 1100 sqft, 4 bed 2 bath, single car garage. Has potential to possibly be turned into a 4 suite building. 

Property Taxes: $5,100/yr

Not sure what kind of interest he's looking for but we did some number crunching and at a 3% rate we were able to figure that with $2000 payments to seller we could be making between $500-$600 not including minor repairs (obviously that depends on the actual condition of the house but these numbers are just a ballpark). 

Currently renting for $1,500 per suite with tenant paying utilities

Seller built the property here 40 years ago and has no loan on it. He is also in no rush to sell it but it sounds as if he is interested in working with me. The building is solid with no work needing to be done. Very low maintenance property. Still unsure about the vacancy rates but he says it has been very consistent and he currently has both units rented out with 1 yr leases (both running out end of this year) to great tenants. I know I shouldn't take his word for it so there is definitely some verification that I'm going to be doing. 

Exit Strategy: If we could manage the property payments for 5 years at these numbers and then sell it at the end of the 5 years we would be able to clear approx $118,000 (minus realtor costs, lawyers etc). I'm not sure if those numbers are good enough to be a safe backup plan but that's what we were able to come up with. 

As far as comparable rentals go, there is another slightly better property for sale for $225,000 with 3 units right across from the hospital (not far from the other duplex location). 2 legal suites and one illegal suite with potential to make another illegal suite. It looks slightly newer but it is being sold through a realtor and the seller is not interested in seller financing. 

The duplex is not being sold through a realtor which doesn't really bother me since it is how I bought my first property (which is going great so far) but I'd like some input. Bank financing is not an option for us since we only purchased our first rental last May. Initially our goal this year was to eliminate the last of our liability debts, establish an income (to count towards our bank credit) and save up for another down. Then I called about this duplex and all the signs seem to be pointing this way. I am hoping to negotiate a bit on the price but I'm unsure of what I could offer him that he would actually go for that would also help me out. The seller seemed very interested in sitting down and answering any of my questions and establishing a relationship which to me gives him some credibility and his years of experience would be an invaluable asset for me. My gut tells me that this may be a great opportunity and this is all the info we came up with so feel free to let me know if there's anything that raises red flags for you!