All Forum Posts by: Tyler McKaig

Adam, I've yet to find the first property, however it comes down to basically two factors.  The owner allowing you to sublet, and the building itself allowing you to sublet.

Once you have an understanding with the owner, yes, you would just spell it out in the lease.  Depending on the building and it's administration, you will want to make sure it's kosher with them as well, in writing if possible.  It's fairly informal here though, and most business is done based on relationships.

I'm living in Medellin, and have been networking heavily with other real estate investors down here.  I know several guys who have built up a portfolio of 10+ apartments and are renting them out on either Airbnb or longer term, and the business model seems to work very well.

Get an unfurnished apartment under contract directly with the owner (avoiding all the headaches of real estate agents here), and renting them out by the room or entire apartment.  They have been able to work with trusted locals to manage the day to day needs of the tenants, as well as outsource the cleaning duties.  A typical example would be renting directly with owner for $1,200,000 pesos, furnishing the apartment, and renting it back out for $3,000,000 pesos.  More if you can maintain high occupancy rates with shorter term tenants (Airbnb).

Because of the low risk (Not owning the property or having to put out much cash), barrier to entry is small, and can be scaled up relatively quickly.  I am looking to get my feet wet with an apartment soon and see if I can grow the business up quickly.

If you're in town and want to grab a coffee or drink and discuss, let me know.

Regards,

Tyler

I'm assuming you don't own your own home.  My suggestion would be to work any job that allows you to save up enough for a down payment, then buy your first property.  

If becoming an agent gets you there faster, fine.  If you don't think you will enjoy being an agent, don't do it, you won't be successful.  Get a higher paying job than Starbucks, or spend less.

Depending on your location, putting a minimum down payment should not be that hard.  Your first "investment" should be to start building equity in your own home.  When you start to build credit and have equity, your options will open up.

@Dave Vogt Thanks for chiming in, and the insight on the financing strategies you use.

As for the MLS, what is your experience with finding deals before they reach the MLS? Is there a big sub-culture of "we buy houses for cash" in Ontario? Around my circles, I would say almost everyone would just seek a real estate agent to list on the MLS.. Do a lot of the "good deals" get taken before being listed?

Thanks Roy for the insight, I will look into different options to self-direct my RSP to use some of the cash to fund a deal, if I need it.

My mortgage is with one of the big 5.  I am not familiar with Heloc loans, so I will do some googling and consider this strategy.

I spoke to the realtor for the first property I linked to above.  He told me that an offer was made and accepted, and the deal is pending an inspection next Friday.  I had a feeling that house would go quickly..

Thanks,

Tyler

Hey BP,

I'm on the hunt for my first investment property.  Although I own one rental, it was originally our main residence and not intended to be a rental.  I am focused on SFRs or small MFRs, particularly in the Windsor, Niagara, and Kitchener-Waterloo regions.

I wanted to create a thread to contain all the questions that I've been having, and to run some numbers by the community for analysis and recommendations.  If a good deal presents itself during the course of this thread, I would be open on going in on the project with a partner with more experience.  I have time, energy, and capital that I can commit, but lack the experience.

I'll get it started with a few very basic questions that I have.

1. When a property is listed on the MLS with a realtor, is it even possible to try to contact the owner directly to negotiate a deal without realtor commissions, or is that property locked up to the sellers agent? Would you need to wait for this listing to expire to get around using realtors? How do you know when this expires?

2. Can I use RSP or TFSA money to invest in Canadian real estate, similar to what I've read about Americans using IRA money?

3.  I recently reached out to my current mortgage lender to see what I can get in terms of a line of credit, based on my current equity and home value.  They told me they would give me $28k, at prime + 8.  I feel that this money is very dangerous for me to touch for a long term buy and hold.  I have not looked at other financing options yet, because I don't know how much money I need yet, nor do I want the credit inquiries hitting my credit report.  Should I line up my financing first, or wait until I have a deal in front of me?  I do have cash as well.

Here are a few types of properties that I am l looking at:

http://www.realtor.ca/PropertyDetails.aspx?Propert...

http://www.kijiji.ca/v-house-for-sale/windsor-area-on/under-50k-good-central-windsor-area-warren-rutgers/1030920769?enableSearchNavigationFlag=true

My thought process would be to:

1.  Call the realtors and visit the houses, to get a good idea of the area, and a feeling for the property.  Discuss possible seller motivations, how long the properties have been listed for, and identify if the sellers want out ASAP and get a feel for the price they'd be willing to go to.  I consider myself very apt at negotiation, and am not as much concerned about my capability to get the right price.

2.  Understanding what the rehab costs will be.  Bringing in a trusted contractor or two, to estimate the rehab costs to get the unit into good rentable condition.  I want my tenants to be proud of their home, and since I plan to hold these properties long term, things like installing forced air, tankless water heaters, etc, are important to me.  I consider this area my weakest.  I can personally do demo work, roofing, and painting, but struggle with small handyman fixes, trim, plumbing, electrical, stuff like that.

3.  Researching comparable rents in the area.  Get a good understanding of what this property should rent for once it's fixed up.

4.  Setting my "number", and going back to the realtor to negotiate.  Be willing to walk away if we can't come to an agreement, but use the occasion to let them know what I am looking for, and to think of me if they come across something else.

5.  Pull the trigger! 

6.  Make the improvements, get the property tenanted, and refinance to pull my cash out for deal #2?  I'd like to keep this thread about closing the first deal rather than getting into screening tenants and managing the property, so I will end here.

All suggestions are welcome.  Thanks,

Tyler

@Roy N.  So have you physically visited all your properties before closing each deal?  Do you own any buy and holds that you've never been to?

The reason I ask is because I am debating on how big of an area I should be looking at for reasonable prices for properties.  Hearing all these American investors buying 3b2b homes for like $30k, put in $20k work that will rent for $1,100 seems to be a big stretch for anything in my area.

Thanks again @Roy N.  . Are your buy and holds in the same area, or spread out in different provinces?

Following!  Our Canadian head office is located in Kitchener, so I know the area fairly well.  Interested in reading about the types of deals you find, and how the numbers play out.  Best of luck.

@Roy N.  Do you have any experience in the Windsor market?  Prices are reasonable and it serves as the main transport gateway from the US to Canada.  Although it's economy is heavily based in automotive, imo they have started to diversify well and focused on bringing in lots of outside investment.  Thoughts?