All Forum Posts by: Tom Stromar

As for shaw, I'm guessing they are providing basic cable services

I tried to PM you but your name didn't come up. So I clicked Colleague request and put the message there.

Yes, you'd need to arrange private garbage collection (or take over the existing contract)

Yes, exactly, hence the rules of thumb to get the process started. I can tell you on this property that it is older and the roof was replaced about 25 years ago, membrane. The tenants pay their own hydro and the rents have not been increased for sometime and they have been in place long term apparently.

I do have the financials for it, your numbers are quite close really but for example:

1) There is still hydro for the building itself (common areas)

2) There is a monthly shaw bill

3) the garbage / sewer / water is over double your estimate.

I'll attempt to PM you

Hi Tyler,

It's been busy - I just put together 6 deals in the last 2-3 days. But now that I have a relaxing Saturday morning..

That is excellent start. I think thought that the magic happens in the next step, and that is, flush out the numbers AND plan out a couple of scenarios.

By flushing out, I mean, get the actual values for city services, insurance, etc.. I can help you with this if you like as this is listed at my brokerage. I recommend that you take advantage of this offer if you don't already have a REALTOR you're working with. Often people think that in dealing with listing REALTOR they may be able to get a better deal or get better information about the property. However, under BC's agency law, they are LEGALLY obligated to not only protect their client's interests but also to do so at your expense. I can explain this further if you like, let me know.

You'll also want to look at and as best as you can determine the service life of the various components, factor that into your plans (buy and hold? sell before replacing roof? etc..), market expectations, etc..

Scenario wise, consider your lending situation as well. While mortgage rates are not forecast to rise in the short order, 3 years from now if both the vacancy and the mortgage rate doubled how do you sit? etc.. I think that as you play with this a bit you'll get a very good sense of the deal's suitability for you.

On final note, I recently did an investment deal with 20% down and the week before close the lender suddenly demanded mortgage insurance to the tune of several thousands dollars tacked on directly at closing. The banks are wary, so don't be surprised if some hoops appear.

Sorry I've been away, its been quite busy, we haven't seen activity like this since 2007.

When you're looking at a property definitely run out some projections. What if your rate doubles. 3 months no rent? etc... You may find that it might make sense to save up some more cash to have a healthy buffer given your 'day job' Mine is not dissimilar with high monthly expenses and see-sawing revenues.

Truthfully, if I might suggest, you want to start analysing some potential deals. See how they sit. Get into the mix and I think you'll find it will start to work itself out. While it may seem as though there are no opportunities, I can assure you there are, you just need to keep an open mind on how to make it work and don't pull the trigger 'just to get in'. There's no need for that.

As I mentioned way back, and now I have a number of colleagues jumping on the band wagon for 'creating' 10-15% CoC return properties and that's with properly factored expenses including vacancy, maintenance, etc..

Not sure if this is the appropriate forum but I came across a very cool info-graphic that I thought BP members might like:

http://www.foreclosuredeals.com/wp/2011-rent-vs-bu...

It overlays the raise in rents from 2008 to 2011 against home prices.

Enjoy!

P.S. Apologies if this is old hat!

Hi Aaron - interestingly I find myself in a position where I have a demand to set something like that up here in Canada. 

Yes, the closing costs of course include the PTT and as an investment the lenders will generally all want 20% down minimum. Occasionally, they'll even want to insure the mortgage (and you'll need to use Genworth, not CMHC in this case) even you put that down. Lawyer / Notary is another $1000. Title Insurance where a survey isn't available or if they think there might be a bylaw contravention adds another $150.

Agreed on the property tax, also, just a heads up, taxes in the RDN are 1/2 that of the city.  Also, in the fall the city conducts a tax sale. Couple more tidbits for you. :)

Ron, I agree completely and I think I did not articulate my position clearly enough.

That was this: there are Canadian specific issues that one needs to be aware of. 

The features of a corporation may still be desirable (liability control, income splitting, trust, etc...) but these benefits come at an additional cost and a higher tax rate. It has been my experience that short of setting up a REIT the rental income is taxed at its highest rate when within a corp. Combined with the effective practical loss of some benefits, for example, that lenders may still require personal guarantees, etc.. I think it's important to (as you suggest) to determine what it is you're getting (in reality) and how much it actually costs to place the properties in a holding company, such as annual corporate tax return, taxes, etc..

In fact, after being solicited repeatedly by other investors I am currently exploring options with my legal and accounting councils and money lenders for how to best setup an R.E. investment corp and honestly it's a bit of a quagmire.

In contrast, I am in no way experienced in US real estate investing but from where I sit it appears there is a bevy of beneficial structures that are *truly* investor friendly. 

Earlier in thread I did mention to Tyler that creating an end vision is one of the very first steps in the process. You may have missed that.

How are things in New Brunswick? It's an area of the country we don't hear much about out here. I imagine your cap rates are probably much higher than ours?

You're exactly right about cap rate, etc...

Probably like dating, it allows you to quickly get to suitable candidates, saving you some time. For instance, if you only like girls, no point chatting up all the guys in the room. But to make a commitment you need to put in a bit of time to make sure it's a suitable match.

Drucker said it best when he said, a person needs to think about what he needs to do but not as much as he thinks.

Good plan on the books - I think that you'll get a good base of knowledge here. If anything you may want to consider some Canadian specific content. For example, while very popular south of the border, it's typically detrimental to hold property in a corporation up here particularly from a tax perspective. Stuff like that.

While it can be hard to quantify, as Rumsfeld put it, the unknown unknowns, how comfortable are you feeling right now with what you need to do and what your next step would be?