New Investor Seeking Advice

Shinto

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Mar 28, 2008
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#1
My fiance and I are looking to buy our first property. I have a successful vending business and I have all my cash tied up in the business right now. My fiance and I want to start with a triplex or fourplex and live in one of the units. We are looking to be real-estate investors as part of our business portfolio. My questions are as follows:

1. Should I seek an investor, or wait and save for the down payment?
2. Should I start off with a 6-plex, or is it better to start small?


I know we won`t have positive cashflow, espically if we seek an Investor and live in one of the units.

We are only 24 and I guess what I am asking is what would be the best way to start out.

Thanks in advance for the comments.

Brandon
 

housingrental

Frequent Forum Member
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Oct 10, 2007
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Waterloo
#2
1. Wait and Save
2. In many markets the larger the property the better return, and smaller properties that can be owner occupied will be cash flow negative.

Also of note - Having a multi-unit can be stressful, you might not appreciate having your customers as neighbours when things go wrong. I`d never want this.

Purchase your own place to live (No tax on sale??!) then get investment property in time.
 

EdRenkema

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#3
QUOTE (Shinto @ Jun 10 2008, 06:15 AM) My fiance and I are looking to buy our first property. I have a successful vending business and I have all my cash tied up in the business right now. My fiance and I want to start with a triplex or fourplex and live in one of the units. We are looking to be real-estate investors as part of our business portfolio. My questions are as follows:

1. Should I seek an investor, or wait and save for the down payment?
2. Should I start off with a 6-plex, or is it better to start small?


I know we won`t have positive cashflow, espically if we seek an Investor and live in one of the units.

We are only 24 and I guess what I am asking is what would be the best way to start out.

Thanks in advance for the comments.

Brandon

Why not get the best of both worlds and look for a small duplex or a single family home with a basement rental suite. First find a good realtor who is willing/able to find you that, then find a qualified mortgage broker and they will help you set up financing specific to what you want. This way you will be building equity with a mortgage helper and some tax deductions. A good accountant will also be a critical part of your team. If you buy right and put in some work to increase the value of your property you can use the equity to leverage into larger units from there.
1. build your team
2. research the area and the property
3. then do it

When I was close to your age I made the mistake of trying to take a huge step forward and falling flat on my face. I took almost a decade to repair the damage financially and emotionally. If you are this motivated, this early in your life you are already off to a good start. If you haven`t already read Real Estae Investing in Canada please do, and come back to this site to read and research often.

Good luck!

Ed R
 

realfortin

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May 29, 2008
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#4
QUOTE (Shinto @ Jun 10 2008, 06:15 AM) My fiance and I are looking to buy our first property. I have a successful vending business and I have all my cash tied up in the business right now. My fiance and I want to start with a triplex or fourplex and live in one of the units. We are looking to be real-estate investors as part of our business portfolio. My questions are as follows:

1. Should I seek an investor, or wait and save for the down payment?
2. Should I start off with a 6-plex, or is it better to start small?


I know we won`t have positive cashflow, espically if we seek an Investor and live in one of the units.

We are only 24 and I guess what I am asking is what would be the best way to start out.

Thanks in advance for the comments.

Brandon

Hi Brandon, what area are you in? The local market could really change the asnwer to the question.

RF
 

Shinto

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#5
QUOTE (realfortin @ Jun 10 2008, 11:30 AM) Hi Brandon, what area are you in? The local market could really change the asnwer to the question.

RF


I am in Barrie ON
 

invst4profit

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#6
With everything going into a new business you are going to spread yourself far to thin if you try to venture into real estate in my opinion.
Save for after your business is solid and throwing off extra cash.
Some thing to consider for financing is that larger that a 4 plex is considered commercial.

Don`t even consider buying realestate that dosn`t have positive cash flow in the beginning.
Why lose money when you could be making money. Far to many people start out in this business with the defeatest attitude that positive cash flow at the start does not exist in there area.
No matter where you live people have found and purchased positive cash flow properties from the start.
You have to be prepared to work. The way they do it is they don`t buy till they find one that does.
If someone tells you it can`t be done it is because they do not know what they are doing or are not working hard enough at finding it.

Sorry, but I hate to hear young people believing it can`t be done and give up trying before they even start.
 

Shinto

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#7
QUOTE (invst4profit @ Jun 10 2008, 11:22 AM) With everything going into a new business you are going to spread yourself far to thin if you try to venture into real estate in my opinion.
Save for after your business is solid and throwing off extra cash.
Some thing to consider for financing is that larger that a 4 plex is considered commercial.

Don`t even consider buying realestate that dosn`t have positive cash flow in the beginning.
Why lose money when you could be making money. Far to many people start out in this business with the defeatest attitude that positive cash flow at the start does not exist in there area.
No matter where you live people have found and purchased positive cash flow properties from the start.
You have to be prepared to work. The way they do it is they don`t buy till they find one that does.
If someone tells you it can`t be done it is because they do not know what they are doing or are not working hard enough at finding it.

Sorry, but I hate to hear young people believing it can`t be done and give up trying before they even start.

Hi Greg,

I`m not saying that properties can`t cashflow, I`m just saying that If I have a triplex and I live in one unit, thus taking up 1/3 of the rents, then it`s not likley to cashflow.

Thanks

Brandon
 

realfortin

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#8
QUOTE (Shinto @ Jun 10 2008, 12:00 PM) Hi Greg,

I`m not saying that properties can`t cashflow, I`m just saying that If I have a triplex and I live in one unit, thus taking up 1/3 of the rents, then it`s not likley to cashflow.

Thanks

Brandon


When considering cashflow in the unit you are planning on moving into, wouldn`t it be best to factor in the fact that you are not paying rent?

ie if you are currently renting the apartment you and your partner are living in at 1000$, in your calculations for a triplex using rent from suite #1 and #2 and "imaginary" 1000$ from the 3rd suite that you are living in. That would give you a positive-like cash flow. or for the exact same result, consider that with suite 1 and 2 rented and you living "for free" in the 3rd, you can accept a negative cashflow of up to 1000$ while you are in that suite?

I plan on moving to Ottawa next year. When I do I plan on selling my Victoria townhouse and moving into a tri or fourplex. I plan on living in the unit that is grossing the least, which is not necessarily the one that is the smallest considering a long term tenant only has their rent increased by 2% (ish) a year in Ontario.

RF
 

Shinto

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#9
QUOTE (realfortin @ Jun 10 2008, 12:38 PM) When considering cashflow in the unit you are planning on moving into, wouldn`t it be best to factor in the fact that you are not paying rent?

ie if you are currently renting the apartment you and your partner are living in at 1000$, in your calculations for a triplex using rent from suite #1 and #2 and "imaginary" 1000$ from the 3rd suite that you are living in. That would give you a positive-like cash flow. or for the exact same result, consider that with suite 1 and 2 rented and you living "for free" in the 3rd, you can accept a negative cashflow of up to 1000$ while you are in that suite?

I plan on moving to Ottawa next year. When I do I plan on selling my Victoria townhouse and moving into a tri or fourplex. I plan on living in the unit that is grossing the least, which is not necessarily the one that is the smallest considering a long term tenant only has their rent increased by 2% (ish) a year in Ontario.

RF

Hi Real,

That` s a good idea. I will do my analysis of cashflow based as if I were not living in a unit, but in all reality, on paper it will still be negative.

Thanks for the comments

Brandon
 

invst4profit

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#10
Realfortin

Definatly a good plan. As we all know in Ontario the rent review board definatly has a negative effect on landlords and good tenants alike. Getting rid of long term tenants is sometimes the only way to improve cash flow on a property.
I have resently aquired a large property and would love to turn over at least half of them even though they are all good tenants.
 

Shinto

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#11
I`m thinking that starting with a duplex and working my way up is the best way to go. That way I get out or our apartment, and I gain some experience being a landlord.
 

realfortin

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#12
QUOTE (Shinto @ Jun 12 2008, 05:20 AM) I`m thinking that starting with a duplex and working my way up is the best way to go. That way I get out or our apartment, and I gain some experience being a landlord.


That, in my opinion would be a great idea, simply for the fact you are paying "rent" to your very favourite landlord...you. This will build you some equity, some experience and will hopefully set you up on a path of greater wealth. Good luck !

Real