Hamilton vs KWC purchases

[Gen1GT]

jseib, nor will I be looking in Central Hamilton once I get a decent portfolio. But since I don`t have a single property right now, it looks like a good place to get my feet wet. Since my police officer brother is also my business partner, we can make sure he picks up the rent cheques on his way home from work.

 

[housingrental]

Gen1GT
Your in for a learning curve then
You`ll be amazed how little your future renters might care about having police as landlords
And how when they tell him to go f-off your in for a few month delay getting them out
And how you`ll be waiting awhile to collect your damages (rent and property damages and court enforcement office and ltb costs) off someone with no income and no assets.

Start with a townhouse if needed... not a slum...re-read my post on the first page of this thread on which purchasers these properties are suited for.


QUOTE (Gen1GT @ Feb 23 2010, 06:56 AM) jseib, nor will I be looking in Central Hamilton once I get a decent portfolio. But since I don`t have a single property right now, it looks like a good place to get my feet wet. Since my police officer brother is also my business partner, we can make sure he picks up the rent cheques on his way home from work.

 

[housingrental]

Well said
QUOTE (jseib @ Feb 23 2010, 04:24 AM) I`m not sure I would call that an advantage at all... Gen1Gt

Real estate is far to fluid in a few years the house across the street that used to be owned by a lovely old lady who looked after everything can easily be a boarded up grow op or rented by one of those folks your brother would normally keep you clear of..

If it works for you great but don`t advise people who are new to this to step into those areas... Especially if you believe you have some unique advantage they definitely don`t have..

I`ve seen a lot of those duplexes and even triplexes with amazing cash flow.. Talk to the landlords enough and you`ll see they are desperate to get out because the amazing cash flow only exists a few months out of the year and the rest of the time they are dealing with dead beats who abuse the property and most of these homes need extensive repairs and upkeep unless your running the property into the ground like most out of town investors in Hamilton..

Last Triplex I looked at had $1974/month rental income and I could get it for $115,000 on Chestnut Ave ... When we looked at it the tenants had the heat turned up and the windows open and the landlord was just so happy to have them because the last 3 tenants they had never paid, damaged the house and taken forever to evict.. I no longer look in central Hamilton...

 

[Gen1GT]

Perhaps my lack of experience is showing here. How did these crackheads/slum children/welfare bums get into my apartment without a credit and background check? Where`s the due diligence?

You`re a property manager, isn`t part of an income property making sure you get the right tenants in your property?

 

[housingrental]

What you`ll find is a lack of suitable applicants - The best tenants will not be renting at your place.
So you might be keeping that apartment empty for 8 months until you find someone. Or you might not find them.
You might find the marginal applicant you approve 3 month later when you give up turns on you at some point.
Life happens.
They lose there job.
They decide they no longer want to live there and no the system.
They want rent abatement because of their neighbors actions
Etc.




QUOTE (Gen1GT @ Feb 24 2010, 01:29 PM) Perhaps my lack of experience is showing here. How did these crackheads/slum children/welfare bums get into my apartment without a credit and background check? Where`s the due diligence?

You`re a property manager, isn`t part of an income property making sure you get the right tenants in your property?

 

[Gen1GT]

Can`t these things happen in any rental?

 

[housingrental]

Yes anything can happen anywhere

But with what your looking to do a greatly increased chance...

Ie if you have a nice sfh it can sometimes take awhile to find the right tenant.... but if your doing things properly they`ll often be lots of "right tenants" available....and they`ll have a lot higher likelyhood of:
Paying rent on time
Not litigating against you
Not damaging the property
Etc.

If you have a slum, in an undesirable area, even with great management you`ll have a very difficult time of making a good go of it. Again please re-read my prior post on who these properties are suitable for. From what you`ve described, these aren`t the property type for you.... You`ll find the numbers you were hoping for don`t materialize on actual operations.





QUOTE (Gen1GT @ Feb 26 2010, 06:52 AM) Can`t these things happen in any rental?

 

[andrewi]

Thanks all,
I stopped reading for a while as I was really busy at work and then went out of town last week. I got scared abit too as I don`t want to lose my hard earned cash.... reading the posts would say that Central hamilton would not be my best pick...too risky for me. What`s next then is something that will not have much cash flow with 20% down...even townhouse/condos..unless you guys know of any areas that are a better bet... I looked at properties in Hamilton, Cambridge, Chatham, Oshawa and even a few in TO ( price high here though)....

I want to do this but also reduce the risk..so if its small CF then that`s it...

Andrew


QUOTE (housingrental @ Feb 26 2010, 10:20 AM) Yes anything can happen anywhere

But with what your looking to do a greatly increased chance...

Ie if you have a nice sfh it can sometimes take awhile to find the right tenant.... but if your doing things properly they`ll often be lots of "right tenants" available....and they`ll have a lot higher likelyhood of:
Paying rent on time
Not litigating against you
Not damaging the property
Etc.

If you have a slum, in an undesirable area, even with great management you`ll have a very difficult time of making a good go of it. Again please re-read my prior post on who these properties are suitable for. From what you`ve described, these aren`t the property type for you.... You`ll find the numbers you were hoping for don`t materialize on actual operations.

 

[housingrental]

Hi Andrew
Small cash flow is possible with good purchase and good management in those area`s with a townhouse.
Getting setup with a good investment realtor and manager is key.
Much cash flow won`t happen with a single sfh purchase in these markets, or anywhere without corresponding risk.

 

[asifghayoor]

can you define north central hamilton, are you talking about the area between victoria and sherman? perhaps north of main? if this is so, then I agree its very hard to find good tennants to even look at your property in that area. I have a single family home on mary st that looks amazing inside but its difficult to get people to come look at it.

QUOTE (larysa002 @ Feb 22 2010, 12:42 PM) Just my opinion, but it seems like some hope is on the way to North Central with the introduction of tighter mortgage rules and the shift toward lower priced homes. There are quality character homes and duplexes
in that area. Pride of ownership, when the area improves. There should be a turning point when good home owners take the lead. Not just sure how long it will take.

 

[larysa002]

Between Victoria, Sherman, Cannon and King lots of beautiful houses with good size lots and parking,
close to shopping and schools. The prices already climbing, might be better for a flip for now.

QUOTE (asifghayoor @ Mar 4 2010, 12:41 PM) can you define north central hamilton, are you talking about the area between victoria and sherman? perhaps north of main? if this is so, then I agree its very hard to find good tennants to even look at your property in that area. I have a single family home on mary st that looks amazing inside but its difficult to get people to come look at it.

 

[andrewi]

QUOTE (housingrental @ Mar 4 2010, 12:38 PM) Hi Andrew
Small cash flow is possible with good purchase and good management in those area`s with a townhouse.
Getting setup with a good investment realtor and manager is key.
Much cash flow won`t happen with a single sfh purchase in these markets, or anywhere without corresponding risk.


Hi housingrental,

What about a bungalow with a separate suite in basement? does having 2 units not spread your risk a bit..actually reduce it...if 1 is empty at least 1 is full..some rent still coming in? may cost a bit more than a town but less risky? Oshawa seems to ahve some reasobanle prices...

I feel condos are not a good proposition as if its not rented you still have to find the condo fees? plus any mortgage you have....

Triplexes are probaly better as the probability of all being empty is even smaller..I saw a few in Chatham that would cash flow but appreciation looks slim down there..

Actually the KWC area looks like the most promising...but Waterloo seems a bit too pricey to cash flow with 20% down....

Any further pointers as to my next steps....find good realtor ..notsure I need a property manager as will not be able to afford one...have to manage myself for the 1st few at least...


Andrew

 

[housedoc]

Chatham? KWC? Hamilton? Oshawa?
Where do you live?
Are you going to self-manage by helicopter?

Appreciation is `gravy`. Don`t count on it

 

[housingrental]

hi andrewi

This will depend on the particular market and property but your correct you might be able to find a higher grm available on suited property (and at tops if you can find townhouse with legal basement apt.)

The problem is there`s more risk to this (ie less consistency of revenue stream) for some reasons as:

Harder to find quality applicants willing to live underground in certain area`s
With above comes potential for: longer fill time, higher default, higher damages.
Interpersonal (ie inter unit) conflict - noise, yard use, parking, etc.
Steeper learning curve for self managing.

Self managing might not be the best route for you if your choosing a town a few hours away - what is your time worth to do a rental viewing? 5 hours for round trip and being there and expenses each time? Are you looking for a job as a property manager or as an investment?

Same idea - Are you going to be cleaning the property yourself or hiring a cleaner?



QUOTE (andrewi @ Mar 4 2010, 11:46 PM) Hi housingrental,

What about a bungalow with a separate suite in basement? does having 2 units not spread your risk a bit..actually reduce it...if 1 is empty at least 1 is full..some rent still coming in? may cost a bit more than a town but less risky? Oshawa seems to ahve some reasobanle prices...

I feel condos are not a good proposition as if its not rented you still have to find the condo fees? plus any mortgage you have....

Triplexes are probaly better as the probability of all being empty is even smaller..I saw a few in Chatham that would cash flow but appreciation looks slim down there..

Actually the KWC area looks like the most promising...but Waterloo seems a bit too pricey to cash flow with 20% down....

Any further pointers as to my next steps....find good realtor ..notsure I need a property manager as will not be able to afford one...have to manage myself for the 1st few at least...


Andrew

 

[andrewi]

QUOTE (housingrental @ Mar 5 2010, 01:45 PM) hi andrewi

This will depend on the particular market and property but your correct you might be able to find a higher grm available on suited property (and at tops if you can find townhouse with legal basement apt.)

The problem is there`s more risk to this (ie less consistency of revenue stream) for some reasons as:

Harder to find quality applicants willing to live underground in certain area`s
With above comes potential for: longer fill time, higher default, higher damages.
Interpersonal (ie inter unit) conflict - noise, yard use, parking, etc.
Steeper learning curve for self managing.

Self managing might not be the best route for you if your choosing a town a few hours away - what is your time worth to do a rental viewing? 5 hours for round trip and being there and expenses each time? Are you looking for a job as a property manager or as an investment?

Same idea - Are you going to be cleaning the property yourself or hiring a cleaner?

Hi Housingrental,

Thanks for the continual support...I would prefer not to property manage but if I had to pay for that, from my calc, I would not find anything that cash flows....unless I am doing something wrong. i am using the property analyzer that Don has in his books.

I agree that basement apts would be harder to rent but then if rented part year its still some cash in versus just a town or bungalow with a single tenant. Again my calc with a single tenant seem to always come out at 0 or negative cash. It seems I need the 2nd rent of say $700 to offset the increased purchase price of maybe an additional $40k to $50k to get a 2 suite unit and then I kinda end up with a 200-300 cash flow.

I am still trying to figure out here what would be my best option as to city/location and building type....

Thanks,

Andrew

 

[housingrental]

Hi Andrew,

If all the options your looking at are cash flow negative choose none of them.
Which is not to say give up, but keep looking and expand your search.



QUOTE (andrewi @ Mar 13 2010, 11:18 PM) Hi Housingrental,

Thanks for the continual support...I would prefer not to property manage but if I had to pay for that, from my calc, I would not find anything that cash flows....unless I am doing something wrong. i am using the property analyzer that Don has in his books.

I agree that basement apts would be harder to rent but then if rented part year its still some cash in versus just a town or bungalow with a single tenant. Again my calc with a single tenant seem to always come out at 0 or negative cash. It seems I need the 2nd rent of say $700 to offset the increased purchase price of maybe an additional $40k to $50k to get a 2 suite unit and then I kinda end up with a 200-300 cash flow.

I am still trying to figure out here what would be my best option as to city/location and building type....

Thanks,

Andrew

 

[andrewi]

QUOTE (housingrental @ Mar 14 2010, 12:05 PM) Hi Andrew,

If all the options your looking at are cash flow negative choose none of them.
Which is not to say give up, but keep looking and expand your search.


What is a reasonable cash flow to look for?
Andrew

 

[housingrental]

Too broad / nonsensical of a question

Please rephrase

QUOTE (andrewi @ Mar 14 2010, 11:32 PM) What is a reasonable cash flow to look for?
Andrew

 

[benjaminbach]

QUOTE (andrewi @ Mar 14 2010, 10:32 PM) What is a reasonable cash flow to look for?
Andrew


it depends on many variables, mainly your goals and means.

Generally, our clients look for a `cash on cash return` - which is a measure of the cash flow against the initial investment (down payment). Our clients typically achieve between a 7 and 20% cash on cash return, depending on what they`re buying.

How much $$ were you looking to put down? Some properties generate more cash flow (like a student rental in Waterloo) but need a higher % down payment, which restricts some people from acquiring them

 

[andrewi]

QUOTE (benjaminbach @ Mar 15 2010, 07:25 PM) it depends on many variables, mainly your goals and means.

Generally, our clients look for a `cash on cash return` - which is a measure of the cash flow against the initial investment (down payment). Our clients typically achieve between a 7 and 20% cash on cash return, depending on what they`re buying.

How much $$ were you looking to put down? Some properties generate more cash flow (like a student rental in Waterloo) but need a higher % down payment, which restricts some people from acquiring them

I can come up with $60k max with refinance on my residence. That equates to 20% on $300k of property. I can do 1 property or 2 depending on which option gets me the better deal.

Andrew