All Forum Posts by: Kellan P.

Hey guys, 

Does anybody have a process they follow to gather specific income/expense numbers when searching for an investment property? I need proof of the utility bills and previous rental income, otherwise I'm just taking the owner's word for it and running numbers that could give me inaccurate cash flow.

The duplex I'm looking at in London, Ontario is currently vacant, but he says that it was getting $1000/month income per unit. 

He also said that the Heat/Hydro were $350/month, but I don't know if that's just during the warmer the summer months, etc. 

I appreciate the help.

Thank you - I might bug you for that connection when I'm looking for my second property. My current realtor has been quick to reply and set up appointments, but not an expert on rental properties. I can't switch realtors mid-search, after all the time/help she has dedicated so far :)

Agreed, I can see $200/door being quite possible. Looking back on the properties that I've analyzed so far, only a few of them meet that criteria (but missed some other criteria, mainly location). 

@Matt Geerts Thanks for the comment (and sorry for the late response). Good point about adjusting for the age of the building and other factors. And good to know that 1% of property seems to align well for repairs + CapEx.

When you say $200/door, do you mean at least $400 for a duplex, $600 for a triplex, etc? 

Also, re: crushing it off-market, any suggestions for finding properties off-market in London? I'm looking for buy and hold at this point, maybe with some minor renovations, but I can imagine the numbers would be much better if I found a place with an ARV much higher than the purchase price + repairs.

This community has been great so far. I've been making my way through the podcasts/forums/other resources, and have been learning a lot. I have a few questions for the guys in London, Ontario about the 2% rule, as well as some other questions about estimating maintenance costs that would apply anywhere.

The 2% rule (more like 1% in London, Ontario?)

I've been scanning local listings, in a fairly specific area within 3km of Victoria Park, for multi-family properties to buy and hold. So far, it seems like the 2% rule seems relatively unattainable in our market. Is 1% a more realistic rule of thumb, or is there a number that you guys tend to use?

For example, a duplex listed for $250,000 often seems to rent for around $2000-$2500, which is between 0.8% and 1%. In fact, there are many properties being listed that barely cash flow as far as I can tell, depending on the accuracy of the utilities/insurance/maintenance/tax estimates I'm using.

I've analyzed around 25 properties so far (after filtering through many more) and ones worth considering usually cash flow between $150-$600. Am I way off, or does this seem about right? It looks like triplexes often cash flow a bit better, but they're more rare, especially in the price range I'm considering (between $200-$300k)

Estimating Maintenance Costs (Repairs + CapEx?)

I'm using 1% of the property value to estimate maintenance costs (repairs + CapEx), but I'm assuming there's a better way to calculate this. I've seen 5-10% of rent used to estimate repair costs, but CapEx is usually calculated separately.

When running the numbers on properties and calculating potential cash flow, do you include capital expenditures, or just smaller repairs? I assume it's important to include CapEx, otherwise it's not true cash flow because it's just money going back into the property.

Again, thanks for the help, and looking forward to our meetup soon!

Kellan

Thanks for getting this set up! I'll be there. Looking forward to meeting you guys and learn a thing or two.

This will be my first time attending the LPMA Tradeshow. More than 60 exhibitors, free food!? I'm in. Has anyone attended in the past? What can you expect to see/learn?