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Hey guys looking for some experienced investors advice

T

trifectaCEO

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I am currently 25 years old and bought my principal residence 3 years ago, and have about 80 000 in accesible equity. I want to buy my first investment property, but im not sure which way to turn. My original thought was to go with a duplex or residential home with an accessory apartment. If any of you out there with a little experience could throw any suggestions my way, it would be greatly appreciated. My brother and myself plan on growing a large portfolio someday, and I feel I have hit a roadblock and cant quite make the jump.




Edit: I am from k-w




Thank you all in advance for the help.









Rudy
 
Can you turn your current principal residence into a profitable income property? Would you (and your family) be ok with changing your current personal residence?

Your capital might go further by refinancing your current property, then buying a new personal residence with 5% down. Typically, investment properties require a higher down payment than your personal residence.

You could move into a 2-unit next, live in one unit for as long as you desire, but plan to keep it long term as a rental. This depends on how flexible your living situation is. Short term sacrifice can bring long term rewards!



If you want to make your capital go further, and you have the time and energy, you could buy fixer-upper properties. Buy low of course, raise the value with renos, and refinance after renos. Maybe you can find an opportunity where you only have 5-10% in the property after renos, instead of the usual 20% down for investment properties.

For example: buy for $200,000, it costs you $40,000 to renovate, the property then appraises for $280,000. An 80% mortgage is $224,000... so you have roughly $16,000 in the property. Compare this to the $56,000 down payment (20%) if you bought a renovated property for $280,000.
 
What type of strategy are you looking for? Buy hold, buy flip hold or rent. Do you work full time what is your brother doing and what is your job? Have it in writing and both agree on it. When the things get hard who can stay the plan. I have buy old multy plexs that cashflows. Then when a tenant leaves I spruce it up charge more rent and move on to the next unit. Expect 3 to 5 years to do the flip for a 5plex or a 6plex. Refi and repeat. Find a vtb seller do the same. And move on to jv. I suggest that you go at the first building alone learn what you can handle. Then if it's for you team up with your brother. Learn to manage the properties, then you can manage the property manager. Don't go too fast let dust settle before you look for the next property. Good luck.
 
A great way to delay the creation of a large portfolio is have your first investment blow up

In your situation, in KW, I would hold off on any purchase

Wait for impact of rental licensing as more non conforming listings keep coming up at discounted prices

If prices are lower, pick up a discounted property you can add value to
 
Properties all come with "equal pros and cons" All I say is plan for 5 years, and positive cashflow. can't go wrong there. It's a simple yet effective rule of thumb rather than getting engulfed by the buffet of choices!
 
Thanks for the kind words guys. Just cant seem to find something in the 300-400k range that works for me right now.. I am going to keep looking and any more advice you can all provide would be greatly appreciated.





thanks again folks!
 
Are you interested in doing the landlord work, or just the investing?



If you're more interested in the investing portion, have you considered partnering up with an investor who works in an area with better numbers?
 
It was not that long ago when my wife and I were in your situation; waiting to get in to our first investment property. There is a lot to consider and it is easy to get overwhelmed. My recommendation would be to ensure you have a good team around you: real estate agent, mortgage broker, lawyers and peer support. Also, identify what type of property you feel comfortable with and within a certain area (remember cash flow is king). Once you have established your criteria and your agent has a good idea for what you are looking for, just sit and wait until the right property comes up. It's been 3 weeks since we closed our first investment property and without the support of our team, I don't think we would have survived.



REIN members are a great resource for first time investors. I was very fortunate to have been able to reach out to people I never knew and ask a bunch of questions. That's why this community exists!

-Chris
 
Hello Trifecta,



I am in your area also. your comment of 300-400 dsnt lend enough information to help.

if you are looking for 300-400k SF, you will struggle to make the cash flow+

if you are looking for a 300-400k MF, good luck unless you want to put a hefty reno in.

i do not think the rental housing fees will be too much a factor. Waterloo already has it and if Kicthener bring it in, which they most likely will as it is a cash grab, then both KW will have it and people will not flock out of the area. rents will go up and values will see some pressure, BUT thats where cash flow is key.
 
Thanks so much for the encouraging response! One thing i do have going for me is a great team. A close friend as a realtor who has MY best interests in mind, my brother is a mortgage broker, and a couple close friends of mine and I have recently been in conversation to go the joint venture route.(now all we need to do is figure out a price range and what type of real estate we want to go with) I feel like this would be a great way to get my feet wet instead of jumping in alone. I know deep down that if I start now I can have something huge someday. I just need to make the jump...
 
One thing i would caution you on is to become an expert first with your own money. Never experiment with someone else's money. Make all your mistakes on your own dime- then attract some JVC. Good luck and happy investing :)



jon
 
Some really good advice from the other posters and all I can say is that you need to find the right location where you're money will work incredibly hard for you.

I can second the JV principle as you need a track record (credibility), confidence and integrity. Make all your "lessons" with your own properties and money and then talk to everyone who will listen actively about what you do.

Good luck - you have a great team to use so get them to work for you.
 
Timing matters

Be careful

[quote user=trifectaCEO]

Thanks so much for the encouraging response! One thing i do have going for me is a great team. A close friend as a realtor who has MY best interests in mind, my brother is a mortgage broker, and a couple close friends of mine and I have recently been in conversation to go the joint venture route.(now all we need to do is figure out a price range and what type of real estate we want to go with) I feel like this would be a great way to get my feet wet instead of jumping in alone. I know deep down that if I start now I can have something huge someday. I just need to make the jump...
 
Timing generally = price.



I find it really amazing that I haven't read any discussion at all on the forums about the release of all that data on the returns of the three types of investment properties: SFH's, condos and townhouses across Canada. If I recall, generally speaking the appreciation returns were all about 5-7 % PER YEAR for the last ten years or more, depending on market and asset type.



Sure, buy cash flow positive real estate. Its the number one rule. But over the long run, returns of any asset class regress to the mean.



Timing and price matter because they are usually the same thing.
 
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