All Forum Posts by: Lionel Johnston

Hi Folks, 

We have a few homes and like to have good quality interiors and finishes where possible. I'm finding that we are constantly fixing and replacing appliances within 2-5 years in many cases. 

The appliances we're buying are around $900-1500 CAD so it's not like they are super low quality. 

Does anyone have tips on buying specific appliances that are more durable or is this just a state of the world we live in now? 

Thanks

Lionel

@Joe Villeneuve I made a mistake in my response to you. After the refinance we'd have only 20% equity (but I said 80% which clearly is very different.), but our cash flow would be much lower if we pull out say $75k. If I don't pull out as much cash as possible though, that still fits your comment about the equity losing value, I believe. 

@Joe Villeneuve Thank you for your detailed response.  

I agree with this comment, "When you have equity, and not cash flow, that's a reason to sell.", and where I was looking for insight is just that if I don't pull out the cash bringing me to 20% equity then it technically does have both equity and strong cash flow, meaning I wouldn't want to sell. 

You've given me more to think about on this. I appreciate it. 

@Joe Villeneuve Thank you for your detailed response.  

I agree with this comment, "When you have equity, and not cash flow, that's a reason to sell.", and where I was looking for insight is just that if I don't pull out the 80% equity then it technically does have both equity and strong cash flow, meaning I wouldn't want to sell. 

You've given me more to think about on this. I appreciate it. 

@Joseph Cacciapaglia Thanks for your response. Yes, this is exactly my plan (pull out cash, save a reserve, and invest in another property. I thought I'd ask here since at face value it doesn't look good based on CF but overall this puts us in a good position on this property. We just renewed the lease but will continue to bump it up each year. If I really wanted more CF I could pull out less, but I want to roll it into more deals. I agree on the very little downside comment, too. I appreciate your insight. 

Hi Folks, 

We have a SFH that we are refinancing with an appraised value of about $350,000. We will raise rents again in a year but our calculations currently show only $22 in monthly cash flow.

Notes:

- 5% Cap-Ex, 5% repairs and maintenance, 2% vacancy are factored in. 
- For various reasons, we cover the utilities for this property. 

So, my question is, if we didn't pull out $75,000-100,000 this property would cash flow about $400-500 per month. So, the deal looks worse than it is since it only cashflow $22/month but it's also covering the interest on the $75-100k that we can use to invest in more properties. 

Should I ignore the fact that it's only cash flowing $22, as it is actually good since it includes the equity pull-out? 

What is your opinion?

Here is a link to the calculation: LINK 

Thanks!

@Natalie Schanne Thank you for your insight. This is truly amazing and very helpful. You have given me a lot to consider, especially: 1. Competing with professional str companies with relationships. 2. Flex bookings with multiple properties is a great point as well. Those would both work against us here. 

Can you elaborate on the 'expenses are low in your model' comment? Does that mean I'm budgeting too low? Or, there is a bigger gap between the two models, etc.?

@Shantha Amarakoon Thanks for reading. I don't believe so...yet. I read articles that the city is looking to apply the 5% hotel tax. That is fair I think as it goes to the marketing of the city anyway. B&Bs apparently are not taxed here, so that is causing some confusion I believe. I have found nothing news or otherwise since May 2019. https://www.ronchan.ca/index.php/blog/post/68/airbnb-rules-winnipeg---will-tax-increase-impact-host-mortgages#:~:text=The%205%25%20Accommodation%20Tax%20Equals,they%20(Hilton%2C%20etc.)

@McCallum Ching You're right on. Exactly. Thanks for the tips. 
In terms of 'exec rental', that just means that it's a higher-end space with nice furnishings. If someone is renting out a higher-end fully furnished suite, what term is common in the community for that? I read another posting using the term 'Furnished Executive Rental'. Cheers. 

@Michael Baum Thanks again. I will do more due diligence. We actually have a rental near the university. We are inline with the city code but there are a lot of unsafe rental situations and illegal boarding houses in the area. 

For this opportunity though, there are other units in the building I'm looking at on Airbnb and apparently, the HOA is on board with that. I have not read their policies yet though. I'm basing that on the realtor for now. To be clear, I am not talking about a room. This post is about buying a 2b/2b loft condo, to rent as a str or a ltr.

I appreciate your time and insight on this. You'll have to visit here again. Lots of things have changed in 30 years. :)