All Forum Posts by: Layton Gilbraith

My first recommendation is to familiarise yourself with the Ontario standard lease agreement and landlord/tenant rights.

The laws in Ontario heavily favour tenants and the Landlord Tenant Board (LTB) unfortunately has major backlogs. 

Other than that, the fundamentals/financials are pretty similar.

You have to either pick a market, and then find the strategy that works there OR pick a strategy and then find the market you can use it. Not all strategies work in all markets.

Keep listening to as many of the podcasts as you can. I was probably in "learning" mode for over a year before I decided to jump in.

As you can see from the low rent you are currently benefitting from and the sky high prices, rent to price ratio is much too low in BC to be workable. The only strategies that really work in the BC market right now are flips (too risky for a newbie!!) And densification (building hig rises or turning a sfh into multiple unit dwellings.

Anthony is also right. 5% returns can be easily achieved in the stock market without any of the liabilities

Yeah, unfortunately the only strategy I currently see working in BC is through densification, and you need some serious reserves to be doing that at B.C. prices. If you are able to get it cashflowing, the ROI on the cash you need to put in just isn't worth it. There might be plays in the commercial space right now with the effects of the pandemic, but I know little to nothing about that world right now.

That's why i'm personally investing out of province (despite desperately wishing I could stay local)

Main question. What do you expect that $3000 per year to give you?

Theres an endless stream of free content out there that can teach you everything there is to know about real estate. This site alone is proof of that.

At a minimum look up some real estate books and make a smaller investment first (i.e. $20 - $100) by absorbing those.

Whatever you think is holding you back from getting started I promise you paying $3k isn't going to fix it. There might come a time where $3k is worth it. But right now I doubt it.

That said,. Your money, your choice. I hope this has been helpful.

Thanks for your insights folks. It sounds like at some point a move to commercial lenders becomes essential. I'm in Canada, so LLCs aren't really a thing here and the benefits of incorporating in Canada to my knowledge have mostly been nerfed.

This gives me a good idea of what kind of questions and people I need to be talking to next to continue growing. 
Many thanks all!

Layton 

So I'm pretty clear on my general buy and hold portfolio strategy in single and small multi family (at least for now). What is not yet clear to me is how I continue to grow after the first few deals.

The main obstacle I haven't worked out yet is that once I get beyond my first few deals and A and B lenders start saying my debt to income ratio is too high or total debt is too high, how do I keep adding to my portfolio?

Even if I was doing perfect BRRRRs and have the cash to purchase available, how do I refinance out? Is there something I am missing so that I can keep putting mortgages onto new properties and keep growing?

thanks in advance for your insights folks!

I'm currently doing something very similar but I'm on literally the opposite coast to my property. Let me tell you, if you can go to site it will be much better, but it can be done remotely.

In my current experience it comes down to
a. How much you trust your contractor

b. How much you keep them accountable and its on you to over communicate

For our contractor, he sends before and after photos of everything he does and we set milestones in the contract for payments.

Set communication expectations early and be a stickler. make sure the contractor knows what he's in for and us up to the challenge.
If you're frustrated with something talk to them about it early and ask them if there's anything frustrating them. Explain WHY you want the things you want and how they benefit you both. Most relationships with good contractors fall apart here over silly things that a good adult conversation can nip in the bud.

Ok let's see if this helps

You buy a property cash for 100k, and you need say 20K in rehab, Let's say you use a HELOC @ say 6.5%

If you're making interest only payments on that 120K thats ~$21.36 per day that the balance sits at 120k,
which is ~$650 per month in interest

So add that number into your cashflow numbers i.e. lets say rent + expense (taxes, utilities whatever) comes to $1000
you're potentially cashflowing ~$250 before you start paying anything back

Now here's the important part for the Refi, (which you should work backwards from this number rather than starting with the purchase price)
If you're 120K into the deal, what is the property worth now that you've renovated it?
If after renovations the property is only worth 120k, then BRRRing isn't really possible/smart, since you could have just bought it conventionally.

If it's now worth $150k. 150k * 20% = $30k
You'd be able to get a loan from the bank for $120k, leaving $30k in equity in the house (through forced appreciation).
30 year amortization at 3% is ~$505pm and you get your $120k back in cash.
Now plug that number into your expenses again. We were paying $650pm in interest before, we're now paying $505
So cashflow went up $95 and you have all your capital back.

Keep in mind, I pulled all these numbers out of thin air, you need to work these out for your market.
Focus on an accurate ARV, and work backwards to find your purchase price. Ignore asking price when deciding what you "can" pay for the property.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $355,000
Cash invested: $100,000

Contributors:

Might as well do a complicated deal for your first one. Bought a Triplex with previous fire (but not structural) damage. 2 units previously renovated and rented out by flipper. 3rd unit in need of complete renovation (demo, electrical and rough in plumbing completed but needs insulation, drywall, the works).

Bought long distance during the 'Rona virus, list price was 400k, bought for 375k plus seller credit of 22,500 to put into repairs.
Estimated ARV of 450k when repairs complete.

What made you interested in investing in this type of deal?

The buy and hold numbers in Windsor are just so much strong for Duplex+ properties vs SFH. Was originally just shopping around for SFH deals and dipping my to in when this opportunity came along.

I love that 2 of the units are already cashflowing > the mortgage costs so reasonably safe while I do the renovations on the 3rd unit. Will give me a great environment to learn more about construction costs/budgeting while still cashflowing.

How did you find this deal and how did you negotiate it?

pre-MLS listing brought to our attention by our realtor.

How did you finance this deal?

20% down, conventional mortgage with plans to re-fi after renovations

Many A-lenders didn't want to touch it because of the fire damage, but eventually found one that did.

How did you add value to the deal?

Renovating the 3rd unit

Lessons learned? Challenges?

Who knew deals could be so complex. We had multiple things almost sink the deal including initally losing the deal to a buyer that fell through. Late into the night price negotiations and dealing with Corona virus limitations all while being 1000s of Kms away across the country.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Great realtor who really made this deal happen and has the same investing mindset as us. Scott Innocente for any looking in the Windsor, ON area

Thanks to all of you for your advice. I've let the seller know about the complaints and that they should be fixed before we can close. I have an added challenge that i'm doing this entire dance long distance :)

I'll give them the option of a seller credit, or fixing it themselves. I think generally going with the seller credit is better, because there's no guarantee they'll do it right/well as there's no real incentive.

I also feel bad for the tenant here however, as it's hitting close to 30C right as this AC unit went out, so I hope the seller has a conscience and will get that done for them ASAP.

Thanks again folks!