What Property Would You Buy

[BDFI]

Hi All,

I was wanting some opinions on what property you would buy if you were in my position. A am planning on purchasing one more property to add to my current portfolio. This will most likely be my last purchase for ~5 years as I purchase the properties on my own (without JV`s) and will have reached my LTV comfort level with this potential next deal. My current portfolio does look after itself and has a little left over at the end of the year. I do still work and do require the cashflow to live.

The next property will be a 4plex/small multi-family. My question is if you were in my shoes where would you purchase this next property?

A) A 4plex in Calgary, Cochrane, Red Deer that when you run the numbers will just look after itself (breakeven/small cashflow) but will better suited to appreciation, easier resale and all the benifits of the larger centers (or being close to a large center).


B) A 4plex/small multifamily in small town Alberta. These properties typically cashflow better but come with all the challenges of a small town.

It is a general question that I know I need to make on my own but would just like to hear some opinions from others! ............property A or B?

Thanks,
Bart

 

[Thomas Beyer]

QUOTE (BDFI @ Apr 15 2010, 12:24 PM) .. ............property A or B?
..
4 plex in big city is $400,000 or more .. and needs about 30% down .. do you have $120,000 ?

4 plex in small town is about $160,000 to $280,000 .. depending on province and city .. and needs perhaps only $30,000 to $50,000 down ..

You did not state one key variable: how much cash do you have !

The issue in small towns is it is harder to manage .. or find someone to manage .. and it is harder to sell !

Assuming you have at least $120,000 you should look for 8-12 plexes in towns within 3 hours from you .. assuming decent upside in that city and assuming a minimum 5 yar hold as it will likely cash-flow better .. and a bigger asset is easier to manage as you can pay more for a manager !

 

[BDFI]

QUOTE (ThomasBeyer @ Apr 15 2010, 10:14 PM) 4 plex in big city is $400,000 or more .. and needs about 30% down .. do you have $120,000 ?

4 plex in small town is about $160,000 to $280,000 .. depending on province and city .. and needs perhaps only $30,000 to $50,000 down ..

You did not state one key variable: how much cash do you have !

The issue in small towns is it is harder to manage .. or find someone to manage .. and it is harder to sell !

Assuming you have at least $120,000 you should look for 8-12 plexes in towns within 3 hours from you .. assuming decent upside in that city and assuming a minimum 5 yar hold as it will likely cash-flow better .. and a bigger asset is easier to manage as you can pay more for a manager !


Hi Thomas,

Thanks for the reply.

The 4plex`s (legal, 4 corner) in or near Calgary are going for $600K and up (in the better area`s they are $800K+). One just conditional sold in Cochrane. Asking price was $600K and it was only bringing in $3000/month rent! It did have room to bring the rents up some but it would require a min. of $5K per door worth of reno`s. It is crazy what people are paying for these properties.

I will keep my eye open for a multiplex that works - anyone looking to sell something like this in southern AB????

Take care,
Bart

 

[Thomas Beyer]

QUOTE (BDFI @ Apr 16 2010, 07:27 PM) Hi Thomas,

Thanks for the reply.

..
I note you chose not to divulge how much cash you wish to invest a critical variable ..

more here: How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

 

[margaretcowan]

I`d love to know where in Alberta, not really small town Alberta, you can put $120,000 down and buy an 8-12 plex. With the new 20% down rule, $120,000 would buy a property at $600,000.

I`ve been looking at 4plexes in the $800,000 range in Edmonton with 20% down. 8-12 plexes on the top 10 Alberta town list seem out of my price range unless I find one with a high assumable mortgage. I came across a couple of older 4plexes in Lethbridge in the $500,000 range but they didn`t cash flow at all.

Thanks!
Margaret
4 plex in big city is $400,000 or more .. and needs about 30% down .. do you have $120,000 ?

4 plex in small town is about $160,000 to $280,000 .. depending on province and city .. and needs perhaps only $30,000 to $50,000 down ..

You did not state one key variable: how much cash do you have !

The issue in small towns is it is harder to manage .. or find someone to manage .. and it is harder to sell !

Assuming you have at least $120,000 you should look for 8-12 plexes in towns within 3 hours from you .. assuming decent upside in that city and assuming a minimum 5 yar hold as it will likely cash-flow better .. and a bigger asset is easier to manage as you can pay more for a manager !

 

[BDFI]

QUOTE (ThomasBeyer @ Apr 16 2010, 09:26 PM) I note you chose not to divulge how much cash you wish to invest a critical variable ..

more here: How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html


Thomas,

I do have sufficient funds for a property up to approx. $650K.

Margaret - I feel your pain! It is extremely difficult to locate a small multi-plex that works.

Thanks,
Bart

 

[Thomas Beyer]

QUOTE (BDFI @ Apr 16 2010, 10:39 PM) ..

Margaret - I feel your pain! It is extremely difficult to locate a small multi-plex that works.
actually that is true for large multi-plexes too .. and you have to appreciate that you need 25-35% down for decent cash-flow and that very few well located properties are sold at bargain basement prices ! .. most properties have an "issue" such as a leaky roof, or bad area of town, or vacancies, or moldy bathrooms ..

if it were that easy everyone with money would do it !!