All Forum Posts by: Account Closed

I've been reading quite a bit about corporation vs personal ownership in canada, and i think corporation makes a lot of sense, especially because i plan on expanding eventually to 100+ doors. the corporation just seems like a much better deal for paying as little tax as possible. 

however, i'm concerned that starting out i won't be able to get any loans, because my corporation will be new with no credit history. i plan on starting with tri/quad/quintuplexes and then working up to larger buildings. does anyone know if it will be difficult to find lenders for these types of buildings as a corporation in canada? my personal credit history is quite good, and i have mid-range personal income (60-90k).  

thanks

not sure when it was last renovated...i guess for 100+ year old buildings, it must have been at least once or twice though.

is there any particular structure that is better in your opinion? ie, brick vs not brick.

thanks for the tip about the maintenance. i guess it makes sense, unless its recently renovated.

i was also curious if there are any big ticket items that could come up with old properties like that...wiring, lead paint, etc...

hey all, i was wondering if some more veteran investors in canada (even better quebec) can give their opinions on these two quintuplexes that i'm currently looking at in sherbrooke, and my analysis of the properties

property #1: quintuplex with gross rent 28,260/yr with asking price of 150k

https://www.centris.ca/en/5plex~for-sale~fleurimon...

pros: 

cheap, high cash flow, downtown

cons:

old (built ~1900, in a somewhat seedy part of town)

property #2: quintuplex with gross rent 27,360/yr with asking price 200k

https://www.centris.ca/en/5plex~for-sale~mont-bell...

pros: relatively cheap, a bit newer (1950), good location (downtown+near stores)

cons: on a busy road (kind of noisy), some grafitti on the side (indicates poorer neighbourhood)

what do you think? obviously the first deal is much better in terms of numbers, and its been on the market for almost 2 years now. 

anything i should watch out for when looking at these types of properties (low cost multiplexes in questionable neighbourhoods)

thanks,

Russell

thanks for all the replies. my plan is to start with one property and then scale up. my overall goal is to own 20 doors in the next 2-3 years. (4 quintuplexes or 5 quads, etc), depending of course on the deals available in my area.  

@Andrew Flora i'm not planning on carrying out significant work on the properties i buy, but in some cases i might, if the numbers are great. when you say i should finance from the start if i'm planning on acquiring multiple properties, why would i get better terms if i buy the property using financing rather than financing later after paying cash?

@Julie Toh intersting point about the interest being tax deductible. that should definitely boost the ROI, and seems like a good reason to use financing. i'm just trying to keep the bigger picture in mind (ie, acquiring multiple properties long-term) ... how do you see people managing this in your area? moving to commercial after they've maxed out their personal leverage? how does a mortgage broker take income from other properties into account when calculating how much money they can lend?

@Chris Mason yeah thats essentially what i thought, was just wondering if there were other opinions out there. also, this is the first time i'll be doing a deal by myself and going all cash makes me a bit nervous, ie what if i can't get a loan after the fact for whatever reason, that money i had in equities earning 8-12% per year is now tied up earning like 5-6% in rent :( 

@Brit Zamoyta thanks for the comprehensive list...i'm definitely going to be starting off in residential (Quads, etc). its good to know you can only get 70% of purchase price if you refinance immediately after closing. i guess the other option is to just wait 9 months and then get a 75% loan on appraised value (hopefully after increasing the value somewhat). 

which is the better option, assuming you have the cash? what advantages do you get from buying with cash and then refinancing after?

i'm mainly interested in this approach because, from what i've read, it allows you to refinance based on proven income from the property rather than your own personal income to debt ratio. this will allow you to grow your portfolio more rapidly, because you can get more loans. is this true in canada? it seems to me that you should be able to use income from the property regardless of whether you own it or not, at least, the mortgage broker should not care about whether you actually own the property already when considering its income. 

 are there any other options to going the cash -> refinance route? what are some major drawbacks of this approach? (anything specific to canada would be very helpful as well!)

thanks,

Russell

thanks for the replies. @Steve S. how are you planning to buy multiple units (you said 5-8 mortgages), your debt to income ratio must get pretty high after the first 1-2? i've read that you can scale more quickly/easily if you create a separate trust (or an umbrella trust) for each mortgage and use multiple brokers, so all your loans aren't visible. 

by tenant insurance i assume you mean insurance against tenants slipping and falling on ice, for example? i guess this is the best way to protect your personal assets in the case of purchasing as an individual?

my partner who is a citizen but non-resident makes a fairly high salary, do you know if its possible to leverage salary from someone working outside the country? probably not because they don't pay income tax in $cad...

@Philippe Busque thanks, good to know. by 50% tax you mean 50% of any net income generated by rental income? that sucks, is it different in other provinces? also, if i go personal, how do i make sure my assets/partners assets are protected in case of divorce? thanks,

Russell

hey canadian investors, quick question: me and a guy i know who is a canadian citizen but not currently a resident are planning to acquire some rentals in quebec, canada, to generate some cashflow. we plan to split the down payments 50:50. however, we aren't sure what would be the best way to structure these purchases. obviously, the corporation is the closest thing to an LLC in canada, but i've been reading quite a bit, and even talked to a lawyer and accountant who manage my family's finances, and they both seem to think that it would be better to start off purchasing as an individual, my friend would deposit an interest free loan into a joint account, and make the purchase from there.

this seems to go against pretty much everything i've read with regards to structuring, i know there are some advantages to purchasing as individuals, but most seem to recommend purchasing in the name of a company. do any canadians have any insight into this question, especially with regards to my unique situation (2 people, both citizens of canada, but only one a resident, splitting down payments on rentals)?

thanks

Russell