All Forum Posts by: Joe Doucette

@Tim Delaney Hi Tim, Thanks for the feedback. Frustratingly I realized this AM I have not included property insurance for this 4-plex which would further cut into profits. I need the details of the listing (hopefully getting them today) to call the insurance company to figure out this piece. I could see it costing upwards of 2K per year for insurance. Our rates just went way up in this area. 

The realtor states the rents are under market value. If I could get rents up it would really help. And I agree with you, shifting the utilities over to the tenants is my preferred way to go. Otherwise tenants are prone to leave windows open in the winter months and cost you a small fortune in heating costs. 

Is it always the case that a multiplex of some form will have a lower return that a single family home? I see some run down triplex's on the market currently listed for between 85K and 120K and I am wondering if it would be easier to pull equity out of them after some renovation and then trying to increase rents?

I keep hearing people talk about taking ownership of a property and they want it empty or full. I find this confusing because I believe in Nova Scotia Canada when you buy a building you also "buy" the existing leases. So I'm not sure how someone could take possession of a building as fully vacant (which essentially means all the tenants are being evicted)?

Is that something that is allowed in Canada or the USA?

Thanks!

Hello BP community! This is my first time posting so I apologize if I leave anything out. I have only owned 2 single family income homes. I have never bought a 4-plex so I am really feeling out of my element. Also, I am in Canada. So some of the requirements will be different than USA. I will try to give as much detail as possible. I will be managing this property myself. I have noticed the net cap rate is usually lower on multiplexes vs single family homes when I run the numbers. So I am also looking for your perspective regarding this as seen below (question #2). Thanks!

Could the community please give me advise about:

1. Is this a good deal? 

2. If you own multiplexes, Do you prefer them? And why? 

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4 plex fully rented (I will not be living in it)

listed for 229k

20% down payment = $45,800

Gross rental income $33,120/year

Down Payment from LOC at 6.01% on $45,800 = $2,793.84/year

Oil expense $6,800/year

Electricity Expense $1,500/year

Water expense $1,216/year

Land tax $3,183/year

Mortgage payment $9,300/year 

Mortgage details: I can buy this as a retail mortgage in Canada at 1.94% for a 25 year amortization because it is 4 units or less. 

Total yearly expenses = $24,792.84

Gross rental income $33,120 - $24,792.84 = $8,327.16/year or 693/month.

net ROI: 693 net rent per month x 12 = 8,316/45,800 = 0.18

Time to get invested LOC loan money back out = $45,800/693 = 66.08 months/12 = 5.5 years

For comparison, I just purchased a single family income house for 61k, rented for 1000 plus all utilities and it clears 350/month. Years to get invested money out of this house is about 3.3 years. 

Thanks!

@Ryan Rush Hi Ryan. I've been in yhe vice before, I can relate. The 2 options that come to mind are: 1. Locating more money by refinancing something or selling something to pay for the reno. Or 2. Do the work yourself to make it as cheap as possible. Are the steps concrete or wood? Both are easy to repair IMO. I have repaired both myself. What type of roof is it? Pitched or flat? If its pitched maybe you could take the measurements, order a metal roof, rent a high boom or scaffolding, and convince a couple friends to help.

It sounds like your a bit worn down from a 4 month struggle. But you're close to the finish line. Remember your greatest asset is the ability to find solutions. Even though they may not be immediatly apparent. In a years time your will look back at this and think "boy was that a struggle, but I made it and learned from the experience". Hang in there, you got this.