All Forum Posts by: Kevin McGuire

@Alex Carpio Np! As mentioned, QBO is a steep learning curve but does have the advantage of being so prevalent which means there's a community of content. For example, I found this video series helpful and the "dude" to be responsive to questions:

@Alex Carpio glad it was of help! Yes it's a personal credit card. I got a second card for my property manager to make all that go easier but yeah they're just plain ol' personal credit cards. Btw, an additional benefit of using QBO is that it's quite standard for accountants and bookkeepers, and your accountant can pull your data at tax time.

Best of luck and congrats on starting on your journey!
Kevin

Alex, I own a number of rental properties in Ontario and to echo what others have advised, here's what I do:

1: I opened a personal (non business) chequing account at local trust. All transactions flow through that account.

2: I also opened a savings account which is helpful to earmark money set aside as a reserve, outside of my monthly revenue and expenses.

3: I got a dedicated credit card from the bank that's only used for the real estate.

4: I happen to use QuickBooks Online which is set up to automatically pull transactions from all three of the chequing, savings, and credit card. That's where I sort out revenue and expenses per property. QBO isn't an easy thing to learn and I'm sure there's simpler solutions out there that work with Canadian banks.

5: I track the deposits in QBO, I don't keep them in a separate account. It's a liability which you hold in trust but where you do that is up to you.

6: I track when I move my own money into the real estate account or out. In QBO it shows up as "owner's equity" which you either deposit or withdraw. That happens infrequently though since I've designed the business to be self sufficient. Keeping those transfers to a minimum avoids confusion at tax time ("Was that revenue I need to declare or my own money I put in?").

7: I use a property manager because (1) I don't live nearby and (2) I wouldn't take that job so why do it for free for myself (time best spent elsewhere). That being said, if you're just starting out doing your own property management is a good way to learn the day to day.

FWIW I looked into setting up a corporation for the rental business but through discussions with my accountant the conclusion I came to was that it wasn't worth the effort. You may decide otherwise.

Hope that helps,

Kevin

Thanks Austin for taking the time to write up this valuable feedback 

I think the idea was that it added legitimacy and context to who is posting, a feature that was requested. I’ve seen similar in other forums. But it’s a good point that the information density needs to be increased and maybe too much content is being sacrificed to deliver that poster context. 

Hey Jeremy, I took a quick look at that site but it’s sufficiently different that I wasn’t sure how to map pros/cons of these new forums. Can you provide  specific suggestions of how these new forums would benefit?

 Austin, do you have specific usability feedback on the new forums?

My views on cashflow versus appreciation have changed over the years. I now see leveraged appreciation as where the real money is, with cash flow being the mechanism that allows you to hold onto the property. 

I personally would not bank on future rent increases turning a negative cash flow to positive because it relies on a set of variables I can’t control. Negative cash flow properties increase risk. The risk is that you’re constantly having to transfer your personal income to support the property, all the while being unable to build reserves for repairs and vacancy. That puts your personal finance at risk. You’d effectively need to know how much you need to fund your property until it cash flows and set aside that amount, adding it to the effective purchase price (because it’s money you needed to transfer to the business). My model is that the business needs to sustain itself because I don’t want it to increase my personal risk. 

I have a different view than a previous poster, and that’s that rents and property values are only loosely correlated. On the demand side, ability to pay rent is a function of a renter’s income, while as home prices are a function of interest rate and income (people buy the most expensive house for which they can afford the mortgage payments). I personally don’t want to build a business model that only works if rents increase faster than costs because I can’t predict macro economic factors that contribute to ability to pay rent.

@Luke Boff I have a fourplex with cinderblock foundation that was leaking. I had to excavate to have it sealed and wrapped, $40k.

@Mark Seery You’re welcome!

Syndications are great, I invest in one (Wellings Capital). Two benefits are that they can give you exposure to segments that otherwise would be difficult to access (in this case mobile home parks and self storage), and are great for passive investing (you need to decide if you’re ok with being a landlord or not).

If you go the route of buying your own rentals, my advice is that if you’re going to own one you should own three (or more). As others here have said, it spreads your risk. Buying the first property is hard, you do most of your learning on that one, but once you’ve done that the next are easier. You can of course pace yourself with the speed of acquisition so that it doesn’t distrust your life which is you know the whole point of all this: a good life!