Worth While?

[Flare]

Hey there

I'm new to real estate and looking for help from smarter people than myself.
I'm looking at a condo to rent out. Would this be worth while to buy? It's in a
growing city and a decent spot and brand new

200,000 price
1,500 taxes/year
800 Insurance/year
250. Condo fees/month

Around 1,400 to 1,500. Rent/month

Any insight would be helpful

 

[housingrental]

It depends

What are some positive and negative scenarios for expenses, rent, and value be in year 1, year 10 and how does this align with your expectations and ability to absorb negative operations if required?

 

[Thomas Beyer]

passes the first filter. Now move on to further research on :



a) property due diligence (DD): typical tenant profile ? deficiencies ? reserve fund ? condo board minutes ? age of appliances ? condition of unit ? windows leaking ? elevator inspection ? rook leaks ? [you said new, so much of it does not apply, but be aware of property deficiencies in new buildings please ! check our builder's other projects in town and warranties. There may, or may not, be some nasty surprises]



b) city DD: upside, in-migration, job growth, tax base increases ? transportation improvements ?



c) sub-location DD: rents in comparable properties nearby , anything positive or negative within walking distance ? malls ? stores ? drugs ? parks ? bus or train transportation ? garbage dumps ? smells ? highways ? noise ? new houses or buildings being built ? new subway ? hospital ?



d) cash analysis & financing options: 5 year mortgage ? 2 year ? LOC ? 80% LTV ? 75% ? 65% ? 30 year amortization ? 25 ? reserves for vacancies ? reserves for condo cash calls or interior upgrades ?



e) who is managing it once you own it ?

 

[Rickson9]

[quote user=Flare]Hey there
I'm new to real estate and looking for help from smarter people than myself.
I'm looking at a condo to rent out. Would this be worth while to buy? It's in a
growing city and a decent spot and brand new
200,000 price
1,500 taxes/year
800 Insurance/year
250. Condo fees/month
Around 1,400 to 1,500. Rent/month
Any insight would be helpful




No.



Only speaking for myself. My opinion only.

 

[moparcanuck]

Overall, the numbers don't seem too bad. Would of course need a bunch more info (as pointed out above). Personally, I don't like condos as much as stand alone properties, but I do have a couple.

 

[bizaro86]

The only comment I have is your insurance number seems very high to me. Do you have a quote for that amount? I would consider getting another one if so.



Regards,



Michael

 

[Flare]

Thank you for the help
There a lot of things I didn't consider from those replies.

I also think my insureance is high, my primary residence is even higher, I have been
busy and been putting it on the back burner to get a better quote

It's one of those cases when I have some money burning a hole in my pocket and
figure I should buy real estate than a sports car.

 

[invst4profit]

I do not get the impression that you have put much serious thought into the implications of operating a business. Did you realise that owning a rental property is a business, have you researched the provincial Tenancy Act, are you prepared to put time and effort into managing a property (managining a property manager), are you in a financial position to be able to carry a property with a vacancy or during a period where your tenant is not paying rent ?

Are you prepared to screen applicants or are you simply going to off load that responsibility on a stranger. Are you prepared to face the prospect of evictions or again are you simply intending to off load to a "manager". What are you going to do if the condo corp wants your tenant evicted.

Investing in real estate as a income source is not a arm chair investment and can be extreamly stressful when things go bad. I do not know of a single investor that has not had many sleepless nights.

 

[Rickson9]

[quote user=invst4profit]I do not get the impression that you have put much serious thought into the implications of operating a business. Did you realise that owning a rental property is a business, have you researched the provincial Tenancy Act, are you prepared to put time and effort into managing a property (managining a property manager), are you in a financial position to be able to carry a property with a vacancy or during a period where your tenant is not paying rent ?

Are you prepared to screen applicants or are you simply going to off load that responsibility on a stranger. Are you prepared to face the prospect of evictions or again are you simply intending to off load to a "manager". What are you going to do if the condo corp wants your tenant evicted.

Investing in real estate as a income source is not a arm chair investment and can be extreamly stressful when things go bad.


+1000. ^ This. Greg has some of the best advice on these forums.



[quote user=invst4profit]I do not know of a single investor that has not had many sleepless nights.


I would say that I had no sleepless nights, but technically he doesn't "know" me. And I'm probably unusual as I don't own rentals in Canada.



I bought Phoenix, AZ properties for $40k a pop that rent for $700 a month (that carry for $300 a month) during the U.S. real estate meltdown. It's easy when 1) the margins are so fat so you can "farm" stuff out, 2) Landlord and tenant act favour landlords and 3) vacancies don't really hurt.

 

[invst4profit]

My sleepless nights have always been from nightmare tenants. Due largely to knowing that our tenant friendly LTB would never uphold a eviction application.

That was when I was new to the business, I have now learned to manage tenant "issues" with as little involvement of the LTB as possible.

 

[Thomas Beyer]

[quote user=Rickson9]I bought Phoenix, AZ properties for $40k a pop that rent for $700 a month (that carry for $300 a month) during the U.S. real estate meltdown. It's easy when 1) the margins are so fat so you can "farm" stuff out, 2) Landlord and tenant act favour landlords and 3) vacancies don't really hurt.


That was a smart move .. and now ?



Which markets in the US still provide decent cash-flow (say 75% levered) with rental and growth upside ?



Buying in all-cash in Canada also provides ample cash-flow, the question is is this the best investment or cash-on-cash ROI ? See here: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-26733-133015-What_is_better_cash-flow__or_higher_ROI_.html

 

[Flare]

Hey Greg



To be honest I haven`t put a bunch of thought into the business side (your bang on). All my effort has been to buy the right property in the right place for the right amount. As for the financial part I can afford all the mortgages without ever having them rented out which lets me sleep a little better at night (that is not to sound arrogant but I did do my homework on that one). Sounds like you have some very valid point though and I will put some time and thought into them. I don`t like the idea of having sleepless night though. I have been looking at real estate more for some fun and to get full leverage of my money and enjoying it (that may be naive). Thank you for the reply