Does that make sense?

Would you be able to recommend any good condo or other investment property in Ottawa?

@Jayboard, home insurance for rentals generally have higher premiums. In my opinion, one of the bigger risks of having them is liability, so the higher the coverage the better!

I’m asking because I could buy a place outright (no mortgage) but the ROI is considerably lower. In the 4-10% when not taking into consideration any possible property value increases (which obviously play a part but it’s too difficult to gauge so I rather not include it in any potential ROI). Would I be better off getting a mortgage and investing my money elsewhere? A lot of these posts were made around 2007, so I’m guessing the situation has changed a lot. I also find the “rules” set out quite unrealistic. I live in Montreal and there are no such properties available. I think most large urban centers would be the same. It’s just not possible to get a property at the price of 10X annual rental income. Any advice would be appreciated.

What didn’t make sense for me was 100x rental income. Maybe in other cities but not here in Vancouver, BC. I have a rental property. Market value approx $600K. Rent is $2000/mo. This is 300x rental income. There’s nothing out here that has market value 100x rental.

I’m break even or +$100/mo at most. Way to have positive cash flow is variable mortgage rate and 35yr amortization. However, what I also take into account is principle paid down per month and appreciation. Plus I’m 20% down so I’m leveraging 5:1 ratio so appreciation is 5x too. For example, mutual funds, etc. may average 10% at a high. If I put my $200K into that, after a year I’m up $20K. However, even if condo market goes up a measly 5% (past average in Vancouver was 15-25%+), 5% of $600K is $30)…which means 15% gain on my $200K. On a good year if condo market goes up 15%, that’s $90K gain on the $600K or 45% return based on my $200K investment. Of course this doesn’t include interest (which is tax deductible by the way), realtor fees, etc. but you get the picture…I’m a fan of rental properties.

I’d really want to get another rental property but I think I’m stretched out to the max with my current house and rental condo. One option is to buy a new development. Just need a deposit for now, then rest of down payment 2-3yrs from now and secure a mortgage at that time when the building is complete. This will buy me 2-3 years to save up for the down payment I don’t have now.

My question is do this or better to buy a smaller, less expensive and start renting now as opposed to delaying 2-3 years for a new development to complete.

Thoughts?

I would like to get into the world of real estate and am currently looking into buying my first rental property. However, I do not have the 20% required as a downpayment and am planning to take this from my line of credit. Is this wise? How do I figure out if I will profit or at the very least break even after paying the line of credit, mortgage, property taxes, insurance etc. I am very confused and any help will be most appreciated. Thank you all…

Could you please right an article or two about your experience as a land lord and about your rental property.
How do taxes from rental property work?
How do you calculate property taxes?
What are the rental property expenses that you deduct from your income?
Maybe something else
Thank you in advance

Asking price for the whole home would be somewhere approaching $600K (meaning about $360K attributed to the unit we would rent out). I’d put a 20% down payment on the total.

Gross income from the rental unit about $1700/mo

Further thoughts?

My wife and I are about to be transfered to Kingston, a city we know and love. We’d like to live downtown (reasonably expensive for a city that size) and at the same time have an interest in owning some rental property. One option to hit both bases is to buy one of the large old redbrick homes near the university that have been split into duplexes and be live-in landlords, renting the other half. The vacancy rate there is virtually zero thanks to the perpetual student housing market and no, we’re not terribly concerned with sharing a roof with students….knowing the area and the market, we think we can be picky with tennants. Expecting to be posted out again in a few years, we would likely keep the house, rent both units, pull some equity and take a no-cost move to our next home and pocket about $10K for not selling and saving my employer the realtors fees etc…

I also understand that by renting 4 rooms of a 7 bedroom duplex I am only able to claim about 60% of the overall deductible expenses, CCA, etc. That said, is it healthy to consider (on paper anyways) an arangement like this as two properties, my principle residence and my investment property? As long as I only account for 60% of the totals where they exist this should remain accurate I think? Any profit simply reduces my share of combined expenses.

PROBLEM. This will inevitably be a negative cashflow situation. By my calculations, as much as $7K/yr in the early years. However, an expected tax benefit of greater than $3K/yr would offset this, just not in terms of monthly disposable cashflow. We can reasonably afford this increase in cost of living but we’re not into foolish financial decisions either. Tax deduction, debt reduction and nearly undoubtable appreciation (LOCATION-LOCATION) become the main financial carrots of this situtation. The real benefit to my wife and I would be that we could afford to live in an area we love and enjoy the lifestyle that brings (minus $500 a month mind you).

Thoughts anyone?

The real question is a person’s appetite for leverage and tenants.

In my situation I have now pulled equity out of my home twice (and learned a lot along the way).

Property #1:

ROI: 21%

100% leveraged. 20% out of my HELOC, 80% vendor takeback.

This is a mixed use building. 3 retail/office spaces + 4 residentials on the upper floor. It is an older building that does require maintenance. It is also at the lower end of the residential rent scale. Initially I did the maintenance and rent collection in my ’spare’ time. I have since learned that I can afford a property manager and he is now responsible for repairs and rent colllection. Tenants can be a nightmare in a lower rent area. My suggestion is a rigourous screening process, and to keep the units and common areas in as good of condition as possible. Good tenants attract good tennants.

Property #2

ROI: 17%

100% leveraged. 20% out of my HELOC, 80% mortgage.

This one is a 4 plex with very good tenants. It is a 10 year old building so maintenance is minimal. Again, property management allows me to be a silent partner.

Notes on the 2:
Commercial – it is much more difficult to obtain a mortgage and insurance and the hoops that you go through for property valuations is a lot. Plus the mortgage rates are higher. On the plus side, commercial rent is more profitable. I find that the mixed use building is a good hedge of high commercial rent + easy to rent residential spaces.

Residential – Tenants, tenants, tenants. That is all there is to say. Good ones make it work. Life is easy. Bad ones….tribunals are not fun and cost you even more money.

For the most part I figure I get some extra cash flow each month and I have other people paying off the mortgage on my assets – one day I will be able to sell them for a handy sum, thanks to someone elses rent.