All Forum Posts by: Yousef Reda

@Michael C. ive heard of investors being successful with a collection agency. Im in the same boat now. My brothers friend is dating the tenant who is not paying rent. Looks like i will be using him as my spy to gather information such as employment information and or bank information that you can use to garnish while i await my order from the LTB.

Being negative cash flow is not ideal but can be done.

Few issues with negative cash flow are 

A) if the market corrects or drops you are at risk of being underwater 

B) that no one here has mentioned is higher debt to credit ratio which will make it less likely to scale in the future the more you have these types of properties as banks will find you higher risk.

C)  you won’t have the ability to save up for repairs/maintenance/cap ex in future unless you did a realistic assumption in your numbers 

D) longer time to get to FU money status 

I personally only buy for cash flow. Equity appreciation I aim for but is icing on the cake. Cash flow first and equity second. If you do equity only your basically gambling to some degree.

Buying negative cash flow assets is better then not buying anything at all however.

Thanks everyone.@Chris Baxter

@Chris Baxter Thanks for the information. Im not planning to sell any of my properties to anyone. Im wondering maybe the best route is selling my properties to my holding company (Corporation in Canada) that way I can pay it down with my primary income at a tax advantaged way. Rather then buying more properties. This way I can pay down debt and increase cash flow. I probably need to look at Canadian Tax Real estate resources to help understand this more. 

@Roy Cleeves Thanks also. I am trying to build cashflow and not really interested in getting equity pay outs. 

Im starting to think im answering my own question. I will probably talk to my accountant and see if maybe the best strategy is moving my personal properties to my holding company that way I can pay off the debt way faster (Canadian tax manuever, in USA you guys are lucky to have that 1031 exchange which maybe going away under Biden administration)

We learn about BRRRR and buying properties no money down. Brandon also teaches the formula to retire on a certain Passive income. The problem is if we are buying property after property with zero down all the money is in the form of equity and to a lesser extent cash flow. If the goal is to retire with cash flow. I have reached a level of units where I can say if the debt is all paid off then I can live comfortably retiring myself and my mother. However lots of debt remains. Would you try to start paying this debt down? Keep buying more properties to BRRRR or another strategy like seller financing?
Interested  to hear peoples take. Or if anyone has recommendation for resources on the later stages of real estate investment and retirement planning/implementation. My properties are in Ontario for context. 

@Brian Dean

I invest in Ontario and I live in Winnipeg. There is opportunities here for small appreciation around 3-4% per year. The downfall I see is the landlord friendliness of the enviornment. I was looking at buying a 14 unit building here and wanted to renovate it using the regular BRRRR strategy. The issue here is in order to increase rents at reasonable rates to cashflow well you need to not just do cosmetic changes they require you to do extensive plumbing and electrical to be able to increase the rents. I spoke to local owners who have been audited for increasing rents without there permission and they had to pay back the difference! (This is what scared me a lot) So in terms of BRRRing here you will need to find burnt down buildings to be able to make it work to bypass the rent control requirements. However if your strategy isnt this and your looking to flip there is good opportunities here for flipping but I wont comment as I dont do this myself. There are a bunch of investors from Calgary who are investing here as they find it more fertile grounds then there local market (So they tell me this)

So the take home point is if you want to BRRRR in Winnipeg then you will find amazing deals with buildings that are burnt/plumbing/electrical work needed so you can get exempt from rent control and obtain the cash flow you want. If you dont have big pockets for this type then doing less extensive renovations is not as efficient numbers wise as you will see in Ontario to cashflow well as you are limited by stricter rent control and there is less degree of appreciation (Use the Biggerpocket calculators and you can see how massive the difference is with differences in appreciation over time even by.a few % points). In terms of development and flipping my friend does a lot of this and does good in the million dollar range but he uses OPM for these larger projects.

Looking for people who have developed/ has experience with larger 100 or more units in Ontario. Particularly experience with affordable housing development via CMHC. Looking to invest in Toronto or Niagra region. Would be nice to meet developers from the area who can give me a straight answer on quantifying numbers to build a 110 unit building there versus building one in Niagra. Pros and cons. I have done a lot of background research but due to the size of project I want to confirm with experienced people. I’m also willing to give someone who has experience money in the deal to due a joint partnership to help me with a few deals I have already found off market.

Depends on your goal. Most people who are real estate investors ultimately want to build cash flow to retire so they escape the rat race. In expensive markets this is very limited . So you are betting on appreciation which goes against one of the laws of surviving any real estate market.  If you study the townhouses in the area in question very well and find that the deal is let’s say 0.70 on the dollar and you know it needs between 5 to 15 percent on the dollar and the after repair value is 1.10 - 1.15 then that is a good deal for flipping. Flipping is good for building cash but it’s not a great strategy for cash flow. If you are building money to save up for a buy and hold sure try it out. If you want to buy and hold a good investment like a lot of people eventually want to do I would suggest finding a deal that cash flows much better like a tripleX or more In a less expensive area. I’m in Toronto so I look within one to two hours away for better deals as they benefit from the ripple effect, expansion of transportation from Toronto to these smaller cities, massive immigration that is occurring and lots Of companies moving here increasing significant jobs.

Good luck 

It sounds like your market is getting pricey. You either have to look one hour away from there to analyze good markets with better pricing or you may have to look at out of state deals. If so there are plenty of resources on how to invest out of state in bigger pockets just do a search on the forum. What some people do in expensive markets though is look for poorly managed/needs complete remodel multi units at a large discount that you renovate with your own workers and you can make a good amount of cash from the negotiation alone and compound that with the power of efficiently renovating it. One billionaire real estate investor once said the key is finding value add deals where when you put one of your dollars in the property it turns into four dollars and that’s how you know you are in a good deal in a pricier market. Find things like a duplex that has maybe 16 parking spots but you are able to build another duplex on the lot which would significantly increase the price of your investment. So the answer to your dilemma depends on many factors listed above which would correlate with your network and how many deals you can analyze to get the best outcome... 

@Ashley Knodel living in Winnipeg but invested mainly in southern Ontario. I looked at the market in Winnipeg but due to the landlord tenant act, rent control enforcement here a well as the real estate climate I’ve been favouring investing in Ontario despite Winnipeg being a “stable “ market, it just doesn’t compare to Ontario at this point in time. Definitely investing in Winnipeg is possible as it is appreciating conservatively but if you have the choice to do It out of province in more favourable climate why not.

@Yi Chung Chen my argument for you to funnel your money into strictly real estate will obviously be biased as you are in a real estate forum. However the strong points are you can not negotiate the price of stocks as your can with real estate. Moreover you can’t force appreciation of stocks as you can with real estate. You also can deduct certain things like depreciation costs etc with real estate that you can’t with stocks. You cannot leverage bank money with stocks as you can with real estate.

Although real estate can appreciate you want to follow the three laws that will get you through any real estate market. The bigger one of these laws is buy for cash flow not appreciation. The best thing is to aim for cash flow first and also appreciation as a second metric but knowing that this is somewhat of a gamble. If I was in your shoes no question I would put all my money into real estate either buying a 60 to 100 unit building using your money as downpayment and borrowing the rest from the bank OR develop something new if the area does allow a more favourable environment for construction. This would require you to do some homework. I do not know your area in question but I’m from Toronto and this area is highly over priced and hence I have been buying in smaller cities surrounding it that are benefiting from the ripple effect as well as massive pro immigration laws in Canada as opposed to USA.

Mark Cuban says diversification is for idiots. Those who diversity are not confident with there main investment strategy. So I encourage you to learn real estate and continue to experience it to the point your confidence will allow you to focus mainly on that rather then trying to diversify. Currently the stock market did take a nosedive due to coronavirus but this still aren’t great numbers if you want your risk low. Buying Apple stock, Tesla and all those big names which have been stable are at a 15 percent discount currently which can easily be beaten by real estate strategies.

Cash flow is king my friend!!!!