All Forum Posts by: Roy N.

@Chase Fibke

A small geographical note which will help you get-on in the Port City whose name is Saint John.  St John's is the capital of NFLD 1000 miles away.

While there is still opportunity in Saint John, prices have risen substantially in the last 12-18 months.  Do you know in which part(s) of the City you are looking to invest?   What type of Clientele do you desire or are ready to accept?   Are you comfortable with an unloved or vacant property or are you looking for something turn-key?

I would also strongly encourage working with local boots on the ground, until you have a solid understanding of the City.  Some parts of the City are best avoided; in others the desirability of a neighbourhood can change from block-to-block.

@Lucien Gautreau

If you do not/have not lived in the building, many/most jurisdictions in Canada will not require a disclosure.   While it is not required, nothing prevents you from voluntarily providing one.   Your real estate agent should follow your direction on this matter.

If you send me a PM, I can provide you some feedback on real estate agents and other possible tour guides in SJ (particularly Uptown).

@Chinomnso Nwamadi

Trevor stole all my usual thunder about Saint John ... glad to see he's getting things figured out and that he's saving me lots of typing ;-)

When you come to SJ in November who is your local boots on the ground (are you touring with a local Real Estate Agent or Property Manager)?

Drop a note before you fly-in and we'll see if schedules can align ... you might even be able to drop by one of our job sites and see firsthand what Trevor referenced above :-)

The 10% minimum on a triplex or quadriplex holds regardless of the value.

See the program fact sheet here.

Some lenders (CIBC and RBC for example) will finance a 5 or 6-unit building as residential (there may be a valuation limit) where as credit-unions tend to finance all rental properties as commercial.

@Leo Merchant

I'll be a Roy of a different nature.

You can access CMHC high-ratio mortgages (if qualified) for all residential properties, but the minimum downpayment changes:

• SFH and Duplex - minimum down payment of 5% (95% LTV)
• Triplex and Quadriplex - minimum down payment of 10% (90% LTV)

The recently introduced tiered valuation restrictions also come into play.

 Dan:

Without more information I cannot really offer much.    $600/mth net revenue would be healthy for 3-4 doors; perhaps acceptable for 5 - 6 doors; rather anemic for 7 - 8; and "run-away" for 9+.   Not knowing the precise market where you will be operating, it is not possible to forecast the viable range of market rent.

If you would like to send more details on your deal and your analysis in a PM, I'll see if I can contribute any value.

@Jason Bajaj  In addition to Dave's comments above, your Canadian partners should obtain tax advice from a Canadian accountant or attorney specializing in cross-border business as their is no equivalent Like-kind deferral under Canadian tax law,  CRA is going to see capital gains as being due on the disposition.

Dan:

The 1% rule (of thumb) bantered around here on BP is just a yardstick to help you with initial triage.   Once a property has made it to your short list (whatever metrics you apply), then you should perform a in-depth analysis to determine if it is really a deal and at what acquisition price.

On the surface, a monthly rent of $2625 for a purchase of $200K looks promising, but what are the operating expenses?   Can you realistically lower operating costs and/or raise rents.  If the market will support higher rent, what level of capital re-investment is required in the subject property to obtain those rents?

As an example, there are 5-8 unit buildings available for under $30K - $60K per unit in Saint John (perhaps even a few still in Moncton), however many are older building stock which has not been upgraded/improved, with common heating plants (or the landlord is carrying utilities to attract tenants), whose operating expense ratio are 70%+.   All of sudden a monthly gross revenue of $2600 looks far less valuable when $1800  - $2000 goes right back out the door.

That said, many such buildings can be fine investments if you go in with your eyes wide open; have the capital available to modernize the building; and make the acquisition at a price where your total costs (purchase plus improvement) are supported by market rent.