Some educated advice from the rein members please

[hemipeddler]

There are two properties in the small town where I live and i would like to purchase both. One a three bedroom 1 1/2 bath single family home for $50000.(not as good as it sounds) The other a 15 year old triplex for $170000. Oddly enough they both fit the 1% rule.( i know not everyone agrees with) My question has to do with financing, i have $50000 to spend or not spend between the two of them. I'm open to any and all suggestions or opinions. Thanks in advance for the help. This is by far the best place on the web for REI education!!

 

[Thomas Beyer]

What rents are realistic "as is" or with some minor upgrades ? Are they sustainable due to migration to town or economic strength of town - or will the small town die off as people, especially young people, leave due to lack of opportunity ? Also to consider, assuming self-management, are you tough enough to deal with tough tenant situations on non-payment ?



Suggestion: buy both, assuming rent is at least flat, town is vibrant and no major upgrades required, say to roof, boilers, windows, verandas, fences, structure, basement etc. .. AND you are able to manage property impeccably (even in tough situations that will arise from time to time) !



i.e. 20% down or $10,000 for the 50K house, plus 20-25% down for the triplex or $30,000 .. gives you $10,000 in breathing room for the odd upgrade and the odd vacancy. The mortgage for the 50K house could be a short one or 2 year one, then re-appraise in a year or 2 for say $66,000 and pull out some cash and go to Hawaii to party with the family .. a dream vacation "on the house" !

 

[hemipeddler]

The rent for the single family which will in fact need windows and roof in the next 3-5 years is $650 conservatively and

the triplex is getting $625 a unit currently. Thanks again.

 

[Thomas Beyer]

[quote user=hemipeddler]$625 a unit currently. .. and in 3 - 5 years ? lower due to weak economy and ex-migration .. or higher due to inflation and strong economy ?

 

[housingrental]

Why is rent in a unit in a triplex almost at parity with a single family house rent?

 

[hemipeddler]

There is a slow and steady increase in rent. The triplex in question has increased from $565 to $625 over the past 5 1/2 years. Not sure if thats great or not but up can't be bad. Also the single family is very dated and will require some upgrades sooner than later, that coupled with the fact that triplex units are clean and all three bedroom is likely reason for the rents being so close. Thanks

 

[housingrental]

If what you have wrote is correct, it sounds like you have some nice upside on the single family's rent and the deal looks even better than you have wrote

If the town has a future, and you have cash + expertise to oversee renovations, many people would love to be in your shoes

 

[hemipeddler]

cash yes expertise...not so much. But I do have family in that the constuction industry. Anyways i appricate all the help

and I think I am going to move forward, thanks guys.

 

[Thomas Beyer]

[quote user=hemipeddler]I think I am going to move forward,
educate yourself in the basics of the legal and smart landlording techniques: marketing, leases, eviction procedures etc.

 

[invst4profit]

http://ontariolandlords.org/forum/



It would be wise of you to check out the Ontario Landlord forum for first hand assistance in dealing with the Ontario rental business. In addition you should study the RTA. It is extremely important that you educate yourself on these business practices before you consider purchasing any property. Ontario is not business friendly when dealing with landlords. The LTB is extremely pro tenant.



The key is to not take in any tenant that does not have a excellent credit and employment history. Screening is particularly important. You may find that difficult at the rent levels you have given for the buildings you are considering. $650/month is considered low income rental and consequently very high maintenance for a landlord.

Above all do not consider renting to anyone on OW or ODSP in Ontario. They are too high risk and protected by the government from being financially responsible for any debts they incur.



In Ontario once a tenant has the key to your property they have full control of it and are there to stay until they decide to move. You have very little control over what they do or how many friends or pets they move into your property.



The L9 may likely become your best tenant instructional aid. My advice would be not to waste your time or money pursuing a N4 as it is useless. It simply provides criminal tenants with a revolving landlord line of credit. You will understand what I am referring to once you educate yourself on the RTA and LTB.





http://www.ltb.gov.on.ca/en/index.htm

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06r17_e.htm

 

[Bajic]

Amazing website Greg. I cannot believe I did not find this sooner!



Thanks!