All Forum Posts by: Roy N.

The answer to your question, from a legal/regulatory perspective, will depend upon the jurisdiction where the property is located.

The answer to your question from an ethical perspective, will depend upon you.

I'd like to expand on Mike's cost of third-party management.  Not only is there more maintenance and turnover, the quality of the repairs and improvements to the property tend to be inferior.   When filling a vacancy, the screening tends to be weaker as well.

Jatinder ... be aware some of the advice being offered above is U.S.A centric and things will play a little differently in Canada.

When dealing with residential financing in Canada, the only costs on a refinance (with the same lender) would be any pre-payment penalty on your existing financing; an appraisal of the property (you can usually convince the lender to eat this); and the cost to register the new lien on title (lender normally eats this as well).

If you were planning to force equity and refinance a property shortly after acquisition, you would initially finance it with open terms (no penalty for pre-payment) or a variable rate note (penalty is 3-months interest).

While it does happen - investors negotiate acquisitions of properties with "no money down" - it is rare, especially in a tight market where properties are selling easily.   It is even more rare a conventional lender would be providing the financing on such a deal {but it never hurts to ask}.  You may find private money - either on your own or via a broker - which will provide financing until you can force some appreciation and re-finance conventionally.  Such financing comes at a price.

No "out of pocket" is more probable when you are looking at a tired, unloved property, one in a bad location, a vacant property that cannot be financed, an (investor) vendor who wants to retired, etc. ... something that doesn't fit nicely into your traditional MLS listing ... and the owner is prepared to entertain an instalment sale or vendor financing {both of these action require a knowledgable vendor and/or a very good educational sale on your part}.

@Jatinder A.

Your downpayment must be from your own means (capital), legally it cannot be borrowed.  

Financing regulations are a little different between Canada and the U.S.A. as you have already experienced.  Mainstream lenders here are somewhat more conservative in their underwriting.  In addition, most of the insured mortgage programs from CMHC (or the two private insurers) are aimed at owner occupants.

@Kyle Leeyaw

Canada is a rather large place. There are markets which would provide you the lower cost per door / higher CAP than Southern Ontario, without rent control or the exchange rate.

As a general practice, we not permit smoking in, or on, any of our properties. When we acquire a property where smoking is occurring, we provide existing tenants with a generous sunset notice (18 - 24 months) that the property will be going smoke free.  Any units that turn-over during the transition are re-let as smoke free.

Pets are a continuous existential debate in my head.   In contrast to @John Underwood's experience we have not found tenants with pets to be any more or less responsible (we screen pretty thoroughly), but we have found the wear and tear on the properties to be significantly greater.  We have had a couple of huge (25K+) pet-caused renovations (acquired tenants and pets in both instances).  While those are the exceptions, turning over units with pets takes longer and costs more.

Yet, like a moth to flame, we haven't given up and are continually try to find ways to make better pet friendly (aka: pet proof) units that we can rent.

@Tuan Hoang

The CRA does not recognize LLCs as passthrough entities and will treat it as a corporation for Canadian tax purposes.  This could become an inconvenience at some point in the future, so as Lance suggested, better speak to your accountant (one that understands taxation on both sides of the 49th) before setting-up your ownership structure.

@Chris Baxter

Reach out to A.P. Reid (Nicole Morgan) and compare policy/rates ... they have a specific program for landlords.

We still reference the GMHC / StatsCan data, but find it is more generalized and less accurate - it is also appears to be gathered/updated less frequently - than it use to be ... particularly in the Maritimes.