All Forum Posts by: Jacob Perez

@Maja D. 

These are always tough situations, but this is veryyyy common in Hamilton especially if you bought in Central / East Hamilton down the mountain which I'm guessing based on the description.

There's 2 options here:

1. Continue to rent as is & hope for the best  or 2. Get the property legally changed to a fourplex.

Here's my approach with similar properties: I buy or renovate property that could pass the zoning process should they need to be changed due to neighbours complaining about the property or city inspections. But I don't actually apply for the conversion unless I have to. Priority one is always making sure your tenants are safe with appropriate fire escapes, electrical, etc. Sounds like your property is pretty well put together if each unit has 2 exits. Have your realtor determine what is required for a legal conversion & how this property lines up, from there you'll be in a position to best determine whether the risk is worth it. As with most real estate purchases there's always some layer of risk.

Hope that helps & shoot me a DM if you want more info as I'm local & happy to help.

Hey @Joanne Boudreault, 

Congrats on getting started - I bought a 4plex about a year ago in a similar circumstance & performed some evictions, there are a lot of caveats to evicting tenants. Would have to ask a lot more Qs to determine what eviction strategy makes sense & would be legal in your case.

Feel free to DM & we can discuss further.

@Nav Anand - The key to the everything with pulling off a BRRR is finding the property that fits the formula.

The simple formula is this: Purchase Price + Renovation Cost = 80% of the after repair value.

That's a perfect BRRR. So if you can find a property for $350,000 that would be worth $500,000 with only $50,000 of renovation.

Purchase $350,000 + $50,000 Renovation = $400,000 all-in. If you can refinance & get it appraised at $500,000 that means you can borrow 80% of the value in a mortgage, the bank lends you $400,000, you pay off your original mortgage & pay yourself back for your renovation.

Now some people are happy to get just their renovation money back, some people want renovation funds + some or all of the downpayment. That's for you to determine your individual wants & needs.

@Ryan Cavasin - Good question. Banks underwrite based on ratios, but their are a lot of sophisticated tweaks to make sure are in place with your original mortgage to ensure you're flexible & in the best position to continue to buy property.

Would be happy to discuss further over DM.

@Roy Cleeves is bang-on, if you're looking at a property 4-units or less, you'll be personally guaranteeing the property with your personal income should the corp have no history. 

In this event it will show up on your personal credit bureau & impact your personal borrowing.

@Sam Hanaa Hope you're well - I'm still regularly buying & finding value in Hamilton. I'm still buying on MLS although trying to find Private deals simultaneously.

Would be happy to share numbers - Shoot me a DM

Hey @Dan Andrade - welcome to the forum. Not being a pest at all lol. Everyone here is happy to help.

I've never really had any tenant issues 20+ tenants later. Happy to share my process for screening. Feel free to hit my DM & we can set up a time to chat in detail.

Hey @Chris Grebeldinger - books are great but to get started in investing, my best recommendation is the following:

1. Determine your purchasing power (mortgage approval, down payment, etc.)

2. Based on that upper limit, I would determine which markets make the most sense for you.

3. From there, find investors in those markets & learn what strategies they're having success with & mimic from there.

Jacob

@Joel Senko - Where are you located? I'm not sure if the tax think you heard is correct. Tax rates are generally based off your personal income vs how many assets you own.

How many properties are you currently at? 

@Jim Noseworthy It's about determining your strategy & what you're trying to optimize. If your goal is to retire off the cash flow, maybe 1% rule is your minimum. Maybe your investment has a lifestyle perk (airbnb in a vacation area, etc.). I don't think the 1% rule is everything but it's a good metric in general.

I'm a big believer that cash flow is the most important part of an investment, but with that said, I still make judgements deal to deal. Some examples:

• I'm willing to take a smaller cashflow number if I'm BRRR'ing the property & getting my full downpayment back.
• My cash flow appetite for a single family might be lower than for a multi-family property that can only be re-sold to an investor (not that I buy single family but hypothetically).

If your goal is maximum cash flow, you'll want to move to the smaller markets. If you have a location limit where you're investing I would be finding the best strategy in those markets.

I just BRRR'd a single family to duplex conversion in Hamilton for example, after the refinance with appraisal value it would be a 0.6% rule. But I received all my reno & down payment back & it makes over $700 per month. I call that a win & it's not close to the 1% rule.