All Forum Posts by: Ryan Kirk

@Greg Mildenberger

Hi Greg. I have converted a SFH to legal duplex in Hamilton...it's really not that complicated of a process. It sounds like the peace of mind will make the time & cost worth it for you (in addition to higher resale value).

You can hire Suite Additions (or similar businesses in Hamilton) to come and assess your property’s requirements for a duplex conversion, and then choose to do the work yourself, or have Suite Additions do it all for you. They are experts in the permitting process.

@Alex Kovalenko - I’ve got a couple duplex conversions in Hamilton examples on my profile. (Not sure you can see them on the app, maybe just on a computer)

@Travis McEwan - I’ve got info on my profile for 3 deals in Hamilton that have purchase prices in that range. Check em out, and I hope they’re helpful

@Evan Robert - welcome to BP! An amazing resource if you can translate all the American jargon to our Canadian systems.

Thankfully we’ve got lots of great Canadian real estate podcasts and Youtube channels too.

I’m investing in Hamilton area.

All the best!

Hi Sam,

I think it's possible to cash flow a little bit, but it's tight.  If you're in it for the long haul and aren't looking to live off the cash flow month-to-month...it could still be a wonderful investment.  

I've got a property in Hamilton that was recently valued at $610,000.  The basement rents for $1175 and upstairs for $1875 including utilities for a total of $3150.  $3150/$610K = 0.516%.  I've had a rough couple years because I had to evict a tenant, which added legal fees, I've had abnormally high turnover, and I also replaced a fridge.

$1893 = Mortgage payment (25% down)
$298 = property tax
$255 = property management (2018 & 2019 average)
$111 = insurance
$271 = utilities (2018 & 2019 average)
$63 = lawn care (2018 & 2019 average)
$10 = advertising on kijiji (2018 & 2019 average)
$212 = maintenance, repairs, banking fees, travel costs (2018 & 2019 average)

$37 Cash flow.  I've included EVERYTHING here.  Basically the place breaks even from a cash flow perspective during the tougher times, and cash flows really nicely when all runs smoothly (Averaging $800+/month for 2020 so far).

The nice thing is it was valued at $405 less than 4 years ago, so $1000/WEEK of appreciation makes it all worth it.  However, if you're hoping to replace your income in the near-future...getting closer to the 1% rule will ensure more cash flow, and less dependence on long-term appreciation.      

I wouldn't recommend a purchase + improvements loan for the following reasons:

1.  Conservative after-reno valuation.  The banks take a look at your basic renovation plans and guesstimate what your home will be worth afterwards.  They are conservative, because they don't know if you're going to do a good job with the renos, or what types of finishings you will include.  This means the amount of equity you can withdraw is reduced and you end up leaving a lot of money locked in the property.

2.  Time constraints.  You mentioned 3 months, my experience was 4 months.  But that can add pressure to an already challenging time overseeing the reno & looking for quality tenants.  You don't want to rush either in order to meet the bank's timeline.  

I would get a 1-year mortgage and shop around for flexible terms so you can refinance after 5-6 months.  This ensures the renovation is 100% complete, the units filled with quality tenants, and you can benefit from any market appreciation in that time as well.   

It's getting harder to buy a home in Canada, which is great for investors! Canada Mortgage and Housing Corporation (CMHC) insures mortgages with less than a 20% downpayment, and they are tightening up the qualifying rules.

Starting July 1, 2020, at least one applicant for an insured mortgage with CMHC will need a credit score of at least 680, up from 600. Also, the total debt service ratio is being lowered from 44 to 42, and the gross debt service ratio from 39 to 35. In addition, buyers will no longer be able to borrow the down payment from 'non-traditional sources.' In effect, buyers will need to be in better financial standing in order to qualify for a home purchase with a low downpayment.

Real estate investors are already required to put down 20% on every purchase, so these CMHC changes won't directly impact investors. However, the rule changes will definitely impact the real estate market as a whole, and the impact will be positive for investors, for the following reasons:

1. Decreased demand for starter homes
First-time home-buyers will feel the effects of the mortgage rule changes the most, as they must now reach a higher level of financial health. First-time buyers will be forced to wait on the sidelines while they improve their credit score and debt service ratios, or save up a larger downpayment. This decreased demand will inevitably lower prices, creating opportunities for investors who want to add some highly-liquid single-family homes to their portfolio.

2. Increased demand for rentals
As buyers wait to meet the new qualifying standards for purchasing a home, many of them will continue to rent properties. Investors benefit when rentals are in high demand because they have a larger pool of potential tenants to choose from, and opportunities to increase the rents to match the increased demand.

3. Long-term Stability
Though a market crash provides opportunities to buy properties at a steep discount, overall economic stability is something all investors should desire. It's reassuring to see policy makers and finance leaders taking preventative measures to avoid a real estate bubble and a repeat of the 2008 financial crisis.

2020 has been full of surprises and uncertainty, but the changing conditions may be ideal for well-positioned real estate investors to grow their portfolio. Now is the time to organize your finances and prepare to capitalize on falling prices across many markets in Canada this Fall.

@Matt Geerts will know if there are meetups happening around London, ON

Hi Gurjotbajwa, 

BP has a LOT of American members & information.  I'm assuming you live in Southern Ontario and are looking to invest there?  We've got a lot of incredible resources specific to our GTA market...I recommend the podcasts "The Truth about Real Estate Investing", "Breakthrough Real Estate Investing" and "Where Should I Invest?".  You should also check out the YouTube channels "Rock Star Real Estate" and "Matt McKeever".  

There are meetups in London & Hamilton that happen regularly, (currently online due to COVID).  Search for BP members from these specific cities and you'll find a solid community.  

Lastly, I've written a few blog posts and shared details on some deals I've done in Hamilton...you can see all of it on my profile.  Best of luck!

Everyone has a different approach to debt & equity, especially when it comes to your primary residence. Personally I prefer to withdraw and re-invest equity because I want to grow my portfolio with cash-flowing assets, and I want to increase my ROI. So yes, it makes sense to me to access some of the equity and buy your next property.

In the Hamilton market, you can buy a great property for around $500K ($100K down + closing costs), completely renovate the basement, improve upstairs, and convert to a legal duplex for around $100K.  Then you can refinance and get back $75-$100K.  You're all in for ~$125K and you've got an excellent cash-flowing asset.