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CMHC small town multi-family gold

T

TangoWhiskey

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For anyone looking at small towns - this is where opportunity is most easily spotted.

Added to CMHC insured take-out financing for turn-around projects this is probably the fastest path in my opinion to rapid financial independence. If the town is good, growing, has a hospital and schools, center of regional shopping - but still isolated comparatively (not GTA or southern Ontario) - then you can do incredibly well and even make the cashflow needed to quit your job.

Just refinanced a 24 unit bldg ... 725 K cheque :)

That was the 2nd refinance in 11 years, the first was 567 K.

Rent growth from 700 average in 2010 to 825 avg in 2016 for a 2 bed apt to 950 today - only 25 $ per month annual rent growth in a building that is all inclusive for utilities - a major drag with utility rates rising at 4- 6 %, far faster than inflation. But with capital investment to boost NOI through heating source conversion financed through the utility .... and especially the historically unprecendented mortgage paydown at 2 % ish rates .... and you have a serious machine to create wealth. Mortgage paydown alone doubles a 15 % downpayment on a 5 year hold.

A 725 K refi is 145 k per year. Not counting cashflow. New mortgage at 1.73 %.

Don't be afraid of small towns if you can get CMHC financing. The right ones along with CMHC financing can make you rich.
 
Are there still have any similar properties that available in small towns in BC? Thanks!
 
Joyce Chen said:
Are there still have any similar properties that available in small towns in BC? Thanks!
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You can find some opportunities, but multifamily in BC is a strange market. I have friends who have done very well in northern resource based communities in BC that have flourished, while resource communities in Alberta have plummeted. It depends on what you define as small, and I would define it as 5000 people or greater, as less introduces more risk. Keep the following in mind:

- BC has rent control, often making raising rents and value very difficult.
- The media poster child of unaffordable housing is BC. (raise rents and your evil vs. raise rents to survive on the prairies).
- Who will you have to manage the building in this remote location lacking any good PM company that will manage there?
- If work is needed (almost all buildings need major work) who will you contract to do it?
- Yes you can get CMHC, but you still need a lender. Often the local credit union is the only one who will lend there.
- Difficult to finance, and even more difficult to sell.

You can do very well, but as mentioned above you need excellent cash flow to justify the added risk, likely 10 CAP or better in most cases.

Hope that helps.
 
Forget BC MF. Tough rent control laws, almost nothing for sale that makes sense and as Cory said tough to finance unless 35-50% down.

I’d go to medium sized cities with a diversified economy and a hospital in US sunbelt states (AZ, TX, NM, GA, TS) or perhaps even Edmonton or other AB towns at the right price.

Unless you take a 10 year view, have oodles of cash AND are willing to buy at 3% CAP rates I’d avoid BC multi family.

You should buy SFH though as they are being banned in many cities now to make room for “the missing middle” and as such will go up astronomically in price everywhere in socialist high immigration and high in-migration yet rent controlled high tax green and scenic BC. The issue it’s tough to cash flow them with high leverage.

Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 
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CorySperle said:
You can find some opportunities, but multifamily in BC is a strange market. I have friends who have done very well in northern resource based communities in BC that have flourished, while resource communities in Alberta have plummeted. It depends on what you define as small, and I would define it as 5000 people or greater, as less introduces more risk. Keep the following in mind:

- BC has rent control, often making raising rents and value very difficult.
- The media poster child of unaffordable housing is BC. (raise rents and your evil vs. raise rents to survive on the prairies).
- Who will you have to manage the building in this remote location lacking any good PM company that will manage there?
- If work is needed (almost all buildings need major work) who will you contract to do it?
- Yes you can get CMHC, but you still need a lender. Often the local credit union is the only one who will lend there.
- Difficult to finance, and even more difficult to sell.

You can do very well, but as mentioned above you need excellent cash flow to justify the added risk, likely 10 CAP or better in most cases.

Hope that helps.
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Hi Cory. Thank you for your response, it is very insightful. I guess the mobile home park with 10 cap would be best bet for small town investment.
 
Thomas Beyer said:
Forget BC MF. Tough rent control laws, almost nothing for sale that makes sense and as Cory said tough to finance unless 35-50% down.

I’d go to medium sized cities with a diversified economy and a hospital in US sunbelt states (AZ, TX, NM, GA, TS) or perhaps even Edmonton or other AB towns at the right price.

Unless you take a 10 year view, have oodles of cash AND are willing to buy at 3% CAP rates I’d avoid BC multi family.

You should buy SFH though as they are being banned in many cities now to make room for “the missing middle” and as such will go up astronomically in price everywhere in socialist high immigration and high in-migration yet rent controlled high tax green and scenic BC. The issue it’s tough to cash flow them with high leverage.

Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
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Hi Thomas. Thank your for your comments. it is so true for people who would like to invest in their backyards. I like the idea to "store" SFH, but it is hard to have cash flow . Also i dont know how to scale the business and wondering if you have any suggestions . i also consider to invest cross the border , but hard to find lenders to finance canadians . I checked your site and noticed that your company had done some investment sin US.Very appreciated if you have connections recommendations. Thank you !
 
Joyce Chen said:
Hi Thomas. Thank your for your comments. it is so true for people who would like to invest in their backyards. I like the idea to "store" SFH, but it is hard to have cash flow . Also i dont know how to scale the business and wondering if you have any suggestions . i also consider to invest cross the border , but hard to find lenders to finance canadians . I checked your site and noticed that your company had done some investment sin US.Very appreciated if you have connections recommendations. Thank you !
Click to expand...

You scale up by finding JV partners or investors based on a proven track record with a story based on facts, figures, realistic projections & assumptions and images !

Yes first SFH tough to finance in US. Best to buy SFH in cash in US with LOC on your own SFH in Canada. MF is self financing ie based on cash-flow, anywhere. Budget 25-30% down then refi cash out when value higher.

Thoughts on how to get started and JVs here https://myreinspace.com/threads/educational-rein-posts-by-thomas-beyer.10663/ or in my book “80 Lessons learned on road from $80,000 to $80,000,000”.


Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 
Thomas Beyer said:
Forget BC MF. Tough rent control laws, almost nothing for sale that makes sense and as Cory said tough to finance unless 35-50% down.

I’d go to medium sized cities with a diversified economy and a hospital in US sunbelt states (AZ, TX, NM, GA, TS) or perhaps even Edmonton or other AB towns at the right price.

Unless you take a 10 year view, have oodles of cash AND are willing to buy at 3% CAP rates I’d avoid BC multi family.

You should buy SFH though as they are being banned in many cities now to make room for “the missing middle” and as such will go up astronomically in price everywhere in socialist high immigration and high in-migration yet rent controlled high tax green and scenic BC. The issue it’s tough to cash flow them with high leverage.

Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
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Good morning Sir
Kindly I have a question..what do you mean by tough rent control lows?
 
Thomas Beyer said:
Forget BC MF. Tough rent control laws, almost nothing for sale that makes sense and as Cory said tough to finance unless 35-50% down.

I’d go to medium sized cities with a diversified economy and a hospital in US sunbelt states (AZ, TX, NM, GA, TS) or perhaps even Edmonton or other AB towns at the right price.

Unless you take a 10 year view, have oodles of cash AND are willing to buy at 3% CAP rates I’d avoid BC multi family.

You should buy SFH though as they are being banned in many cities now to make room for “the missing middle” and as such will go up astronomically in price everywhere in socialist high immigration and high in-migration yet rent controlled high tax green and scenic BC. The issue it’s tough to cash flow them with high leverage.

Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
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And what if I tried to build MF in bc what is the cost and is it worth it?
 
1.5% annual rent caps. Tough to evict. Very tenant friendly. High prices to buy old product with huge deficiencies.

BC = Bring Cash !!

Lots of it.



Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 
Thank you Sir for fast response, also I would like to know the best investing for real estate in BC Or I will find another city or province because my target is MFH .
 
Sarmad Kabad said:
Thank you Sir for fast response, also I would like to know the best investing for real estate in BC Or I will find another city or province because my target is MFH .
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AB or SK still cheap with ample upside.


Thomas Beyer, Asset Manager & Improver, Hard Asset Investor & DeFi Asset Hodler, Author, Father, Mentor, Hiker, Kayaker www.prestprop.com
 
CorySperle said:
I would also agree to avoid BC at this time. The prairies provides the best returns and lowest prices right now.
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In this case I Will either search for SFH in BC or MFH in Alberta but I need contacts there or a partner, thanks for the advice.
 
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