All Forum Posts by: Tyler Walker

Hi Ashdale. I grew up in the Soo. Currently living in the gta, like yourself. I have been investing here for the past couple years. 

Sault Ste. Marie is an old city with a high vacancy rate, declining population, poor tenant quality, and will never see any meaningful appreciation. The positive is the cheap housing prices. If you can’t afford anything else then it’s better than doing nothing. You may have a tough time getting a pm you can trust and it will be difficult to make your first couple purchases unless you know the area well. I regret some of my initial purchases and I would be much better off if I had invested elsewhere. The cash flow is good when you actually get the rent and make the expensive repairs to these old buildings but the lack of appreciation really sucks so I’m back to investing in St. Catharines instead. 

I do hope the city revitalizes itself. They are trying to stop the declining population and have a plan to reverse the trend and get to 100k people but I have my doubts. It seems like they are always striving to improve and not really getting anywhere.

Looks like a good analysis. My vacancy rate tends to be a bit higher than CMHC numbers so I would probably use 5-7%. Depending on the neighbourhood.

The only mistake that I see is the cap rate. 3% is typical for Toronto but Windsor is probably in the 6-8% range.

Cap rate is calculated using the Net Income before mortgage payment. So this property would be 18900/249000= 7.6%.

Hope that helps. Tyler

Hey Darryl. My knowledge on this topic isn’t that good but I do have a passive corporation in Ontario. And yes I do pay 50%. And yes it does make me want to cry!! As you said you need to have 6 employees in order to make it an active Corp. You can start a separate management company but you can only pay this company reasonable management fees from the holding company and setting this up does cost money so I have not yet done that. My opinion is that owning properties in a corporation should only be done if you are already in a high personal tax bracket.  But I do believe the corporation gets a tax break when it pays the income out to you.  It’s called a refundable dividend tax on hand RDTOH.

Hi Dan. Personally, I would be happy with the way things are. If he appears clean and has a good record of tenancy over the year, then I wouldn't want to mess with it. Especially in Edmonton where the vacancy rate is twice the national average. If you are going to be living there then it's tempting to be too involved. Good tenants can sometimes feel like they don't have the privacy they wish for with house hacking. Keep the relationship good and choose your battles carefully. I'm still fairly new myself, only did the house hacking for a couple years, so maybe an experienced investor can chime in.

I asked my real-estate lawyer this question two years ago. He is located in Niagara Falls, Ontario. His response was that I could move out any moment after I own the property and that's what I did. There is no minimum and there is nobody who cares to check up on it. You must have (or atleast fake) the intention of moving in when you are signing the papers and that's it.  

In Niagara Falls, I used Lawyer Brian Wilcox a few times. I found him well priced, generous with his time and knowledgeable. Hope that helps. Not sure if he handles American transactions or not.

Hi Mike. You may want someone more local to deal with on a regular basis but when I purchased my 4plex less than two years ago I was rejected by about 10 major lenders. I finally manged to get a conditional sale and after the appraisal, Sociabank changed their mind and cancelled my pre-approval. Property was in very rough shape and their were other issues as well. Joe Bondy with RBC was the only person I could get to make the deal without going to some private lender for some awful interest rate. He is based in Windsor but handled my St. Catharines purchase just fine. They accomplished this with a drive by appraisal instead of looking closer at the building. I ended up with a slightly higher mortgage rate but the tough deal went through. 

@ Nick Ovington. Finding properties that will cash flow is much easier with multi family buildings but the location is a big factor as well.

The purchase price to rent ratio can be used as a rough indicator to find areas that will cash flow well but they may not do as well in terms of appreciation which can be a more risky purchase.

Your best chance at cash flow is where you can pay the least for the building and charge the most rent for it. Consider that the Home Price to Rent ratio in Toronto is 1.67. I purchased my 4-plex in St. Catharines where the ratio is 1.03 and I cash flow very well. If you are willing to invest in Windsor where the ratio is 0.87 you may get very good cashflow.

Source: http://www.moneysense.ca/spend/real-estate/best-de...

But with multi-family and being a beginner investor like myself you want to live close to your investment. I am 30minutes away from my multi-family building and I wouldnt want to be further. Espicially since I do all the work myself at this point.

@ Nick Ovington. Single family vs multi family. High quality tenants vs low quality tenants and how much you value your time or how much you dislike dealing with the tenants are big factors in when you decide to hire a property manager. I am a 30 minute drive from a needy fourplex and I am ok with that but when I grow, I will consider a property manager more and more.