All Forum Posts by: Luc Boiron

Interesting. I'm not sure how commercial loans are treated at the end of the term.

In Canada, 5 year terms are the norm for residential mortgages. At the end of 5 years, you can decide to change lenders, in which case you need to apply to other lenders, or your existing lender (as long as you have been making regular payments) will offer to continue your loan into a new term with the existing amortization continuing. They basically just send you some documents with different rate options (ie: 6 month open mortgage, 2 year term, 4 year, 5 year, and rarely a 7 or 10 year option). You tick off the option you want, sign and send back the paperwork, and your loan continues at the new rates for the new term. Easy.

I don't know how commercial loans are treated at the end of the term though, so I hope someone else can chime in.

I'm curious as well.

An experienced realtor in your area would be able to tell you what cap rates would be for the type of proerpty you are looking at. The cap rate owuld vary a little depending on the condition of the property, and whether rents are below market and can be raised easily.

Yes.

If you had just bought the property and were going to rent it out, could you expense the replacement of carpets?

Treat it as if you bought it as of the day you move out and it becomes a rental.

@Dave ReevesIt should be interesting when you come up to Markham. I grew up in Thornhill, which is technically part of Markham. That area has had a huge influx of Chinese (mostly mainland) immigrants in the past 10-20 years, and the population is almost 50% of Chinese ethnic descent. Not to mention people from other countries and cultures.

Some say Markham is the best place in the world to eat Chinese food outside of China, and I would agree!

Also the immigrants have bee n bringing in foreign money and buying up property, which has increased housing prices here like crazy. Homes in many areas of Markham are over $1,000,000 now, and this is the suburbs! Some tear down lots are selling for $1.5 million in Thornhill. Crazy times. Enjoy the trip!

I'm not sure what opportunities are like in your market, but this sounds pretty good to me. What are you expecting expenses to be like? Are those rents + utilities? How much are you expecting to cash flow?

Is the loan from the family member secured against the property, or would you be able to get a first on this one once it's done (and the other one) and keep doing this?

@Dave ReevesNot all tenants are geniuses, but most aren't stupid. If a tenant is looking at comparable rental units, but one they will need to pay the heat, and the other not, they will discount the unit where they need to pay heat.
If the unit with heat included would rent for $1,000, and it will cost $100/month in hydro to heat, the tenant would normally be willing to pay $900/month or less.

If the gas is costing you $1,400/year now, it will likely cost $2,000+ per year in hydro to heat. You will pay for a significant portion of that expense through reduced rents you can demand from tenants, as your property will be less attractive. So you might save $1,400, and lose over $2,000 in lower rents. Sounds like a bad deal to me.

At least where I am, gas costs 1/3 of electricity to heat with. The existing rents for the units might already reflect heat being included. You might get lower rents without it.

I have found tenants much more willing to pay for heat when the heat comes from gas, because they know it will cost them much less.

If you are worried about the tenants wasting heat because they aren't paying for it, then sure, prorate the gas to the tenants. But don't change to electric!

Sounds like you're doing things right.

I gave up my "fun" years in univeristy, renovating property and managing tenants. I don't regret it.

A lot of people spend money to look good in other people's eyes. People spend more money than they make so that people they don't like with think more highly of them. It makes no sense.

Keep up it, and you can relax on the beach later in life while these people are struggling to pay their credit cards.

Good luck!

@Alex FranksI'll send you a pm.

A lot of this will depend on how much you are making now, and how much MF properties cost in your target area. If you're making a lot of money now and are frugal, you will have a lot left over to invest.

If you're not able to save a lot per year, it's going to take a lot longer to save up to buy property.

Good luck!

I don't know any ways around this. From what I have seen, if it's part commercial, you loan will need to be commercial. It could be different in your market though.