All Forum Posts by: Matt Blake

Greetings,

*disclaimer.. we are Canadian*

My wife and I are typically SFD types.  Buy Improve Hold Rent types.  We've recently been able to realize some capital out of a couple of a couple properties, and are expanding our horizons to include commercial properties.  Currently, the multi family comercial in our area, just doesnt exist.  If it does, its a very low cap <5.5%, and older buildings, and not great areas at that.  So we've expanded to commercial or commercial retail

We seem to be allergic to selling any of our 6 rentals, , so instead, we somewhat cannibalized our current cashflow, to get some capital out, to apply to our primary residence(in Canada our primary residence interest is not deductible)

We've paid off all but $75k of our $550k primary residence and have a $355k HELOC at our disposal(which if we use for investing, becomes deductible interest).

We've found 2 individual neighboring properties.  

for simplicity we will look at property A

Asking $860 000 CAD
4240 sq ft.
Taxes $14, 170(bore by landlord but paid by tenant)

$13.50/sq ft.

NOI $51, 560

Least to provincial government that it was built for.  Roof was replaced in 2018.

Schedule in place that outlines the tenant is responsible for everything.  

3 years remaining on lease(that has been there 20+ years) and has a 5 year renewal option.

So, using my thought process on this.

$51,560/12 = $4296/mo

$860 000*0.25 = $251k down
$645 000 mortgage 5 year term, 25year amort at 4% = $3400/mo($1261 amort $2139 interest)

$4296-$3400X12= $10 800 Cash on cash return 
$1251(amort) X 12 = $15 132 Amortization in year one

Total $25 932/year

Now in order to purchase this we'd have to take $251k from our HELOC. Which would cost approximately $937/mo at 4.45% interest only

$937/mo or $11 244/year 


$896/mo net cash flow - $937/mo interest on heloc = -$41/mo(-$492 year)
$25 932 -$11 244 = $14 688 'net income' including amort


Is there something I'm missing here?  Because based on this, no commercial property under a 6% cap rate would ever cash flow unless you had the downpayment in Cash.  Granted, this is our cash... in effect.  But we're just currently enjoying little to no debt on our personal residence.

Am I looking at this the wrong way?


THANKS in advance!

@Nathan G.

Hmmm property management isn’t an issue. Might accumulate 5 hours a month on average.

A good General would be fantastic but we have a massive shortage in that dept here, which new company was created to fill.

@Jaysen Medhurst

We’re definitely interested in Multifamily. 100% and we probably could pull it together, just haven’t found anything that would meet our requirements. Locally must have really low caps <6% and are OLD with pending serious capital upgrades.

By serial entrepreneur( and no offence taken) I’ve always been self employed, did some consulting, was in the family business and bought it 6 years ago, had a small tech adventure that didn’t pan out. Etc. Just recently closed our 12 year mostly profitable retail store Feb 19. Because ... you know .... retail.

My low income during retail years was somewhat due to that the business supported the majority of our families expenses. Which add up. Cell phones, travel, internet, vehicles, household misc. etc. Which is what one should do within

@Michele Wax

Your totally right. I guess the rub is, it seems we come to a resolution(ie going casual, using lots of her banked sick time) and also on our goals, we both are all in on relocating somewhere sunny, and soon.

Regarding the GC, it’s almost not possible. Well, I won’t say not, but very challenging. Most are so booked solid, they are already booking into October.

Following forums, and discussions in BP regarding GCs, it simply isn’t what goes on here.

Cost of labor and materials is through the roof, and as are house prices.

Quick about us:

Canadians

I'm 41 .. serial entrepreneur with a myriad of experience, and now full real estate doing "property services" including repairs maintenance, full rennos on our own properties and BRRR when it comes avail. And basically not saying no to whatever opportunity comes along.

She’s 33 - nurse. Basically has provided the income banks like, is a great saver and is into real estate but....

Our schedules are awful. With a 1 and 3 year old with 4 day a week 8-4 daycare her 12 hour rotating shifts means she barely sees the girls sometimes and on days she works I can rarely get a full 8 hour day in between dropping off and picking up. Truth be told I’d rather work 12 hour days 6 days a week for a month than half that over 2 but I digress

We have 6 SFHs with secondary suites. They cashflow fairly well. We finally just refinanced equity out of 2 of them, and our primary and will have about 380k in a Heloc as needed. Acquired most in the last 5-6 years

Have our first True BRRRR project starting July 19th, in addition to another Renno I'm doing for another BRRRR guy and I have a full basement to do as well.

Going from zero employees to ... who knows how many to get these all done. Some subs but employing ppl to do the floor trim paint demo etc. Who I hope to keep on if I can keep the ball rolling as a true company along the way

She loves her job but causes deep stresses between her lack of family time and feeling she’s missing out. Also doesn’t cope all that well with stress on occasions

I’d also love to have her help out with bookkeeping, design, and stuff but also just lower the stress around the house.

We talk about her going PT but it’s union and if she gives up her FT she may never get back to her unit.

I mean reality is I’m asking her to work less in a job that she likes, makes good money, for me who has never really made good money on paper, and this whole real estate thing.

With July 1 looming and starting a whole new thing the stress is building. She also can’t take holidays July-Sept to speak if because of seniority challenges.

Question: has anyone been in a situation where it seems crazy to ask the breadwinner essentially to stop working so much so the other can pursue RE? We’ve done well with RE thus far, and she knows we have(just pulled $300k out) and have had cashflow but it’s not the same as a paycheque. If you know what I mean

Greetings, 

I'm writing up the subjects for a BRRR purchase. One major issue are the current tenants. They're awful, and the place is trashed, but price reflects that. I'm ok with it. The owner gave them notice, and a 'deal'. 2 month notice essentially. They pay MAY, get JUNE free, and once once they are out, they get a cheque for $1000 if moved before June 30th.

Our deal is set to close JULY 19th.

He obviously doesnt want to have subjects on there for 6 weeks, and the deal go south if on July 1st, the tenants decide to tell him to GFY when June 30th rolls around.  Dealing with some real winners, as you can imagine.  I say theres at least a 25% chance that this happens.  Regardless of the cash bonus, I doubt they have the capacity to make it happen.

I dont want this deal to go south, but to remove tenants is very difficult in my province, and he doesnt have a lease agreement with these tenants.  They've been there for 10 years.  

My thought is that if tenants have not gotten out by July 10th, that "$5000 cash back to buyer at close" would provide me with the cash to get rid of them.

How would I word this in the contract?