An update (shameless bragging): closed my first rental unit! Some details:
3+1 bd, 2.5 bath, free hold townhouse in Edmonton AB. This is BRAND NEW and in a brand new neighborhood. I looked at a number of markets across Canada and found Edmonton perfect. They are in a buyers market, have a number of good areas in the city to choose from (that are affordable), and offer both appreciation as well as cash flow at the same time. I flew over a few times after making contact with an agent and had some back and forth. Checked out a number of areas and refined my search after realizing i wanted LOW HEADACHE and if that means less a couple hundred a month in cashflow, so be it.
Some lessons learned: banks are annoying with lending options when the unit is brand new and has never been rented/lived in. In order to quality for the 2.8% mortgage i needed to put 35% down. Otherwise would be locked into a 5 year fixed at 3.8% = no bueno. Ended up going for the 2.8% variable as the cash flow is now even better (though im using less leverage). 30 year amortize, paid monthly = ~900$ mortgage. Because i live in Vancouver, i went with a property manager. I interviewed 3 different managers for ~30 minutes each (my own custom questionnaire is available if anyone wants a place to start with finding a PM). Found someone who seems to have their 'stuff' together and liked the systems they had in place, as well as their contract. Flexibility in their contracts was also huge, as the 10% on the first unit was negotiable with the addition of another house in the future as well as further negotiability with 5+ houses for ALL contracts, not just new ones. Since my plan is to scale and have 5+ units this was a no-brainer - also good cancellation policy! Refining my expectations and really digging into what i valued most (cash flow at all cost of 'headaches'? appreciation risk? high quality tenants? a fix and flip? something turn-key?) is something i should have done before i went out initially but something i quickly realized i needed to do in order to not spin my wheels.
Its currently up for rent at $1800, and the math tells me it should cash flow for ~$400. Since it is brand new and in a desirable area, i suspect vacancy will be exceptionally small (jinx?) and with the 1/5/7 year warranty that comes with the house, the maintenance is expected to be null for the near future. I plan to just stack this income in its respective account and add it to a re-fi after a few years depending on market texture. Hoping to add a second unit in the next 12-18 months, so this could possibly be re-used for the third or fourth property. With the eventual goal(s) to go to increasingly-larger size multi family, i still like Edmonton and what i am starting with this first place.
Now my goal is supporting the PM in finding a quality tenant and finely maintaining my expense reporting for my accountant - this seems like it will save me significant money come submission time.
