HGTV-Income Property

[Anonymous]

What surprises me is I never see anything about REIN on the show Income Property. I know a tad about REIN and the process of income property and investment and this guy on Income Property really needs to be a investor and not a speculator.

 

[Rickson9]

Not all successful RE investors are REIN members. Just sayin.

 

[terri]

Why would you say that he's a speculator? A speculator buys with the intention of creating wealth through increase in equity and is not focussed on cash flow. That is not at all what he is doing or suggesting on the show. He teaches home owners how to get additional cash flow from their (often, but not always) principal residence by creating a quality rental suite.



And, I'd like to add, it's a great show.



Terri

 

[invst4profit]

I am in agreement that the show is entertaining as far as renovation work goes, the results do appear to be of good quality however............... It really ticks me off when he consistently implies that receiving $1000 in rent will decrease the home owners mortgage by $1000.



This show leaves the impression that the total rent is positive cash flow which is fantasy.

Consider the fact that all units appear to be rented inclusive. They do not consider income tax implications and there is no consideration for ongoing maintenance or bad tenants.



Although the show is primarily about renovating apartments I believe it gives home owners unrealistic expectations regarding basement apartments and the reality of being a landlord.



It's 99.9% reno, .1% landlording.



It would be really nice to see some information regarding landlord/tenant responsibilities.



For example do home owners know that in Ontario if they rent out a basement apartment they are obligated to maintain that apartment for as long as a tenant chooses to live there. Except for just cause (as determined by the RTA) a tenant may not be evicted or required to leave other than by there own choice.

 

[terri]

Greg,



I agree that not all "additional costs" of renting out a suite in your home are discussed. They also don't take into consideration the interest payments on the money used to do the renovation in the first place. Where does this money come from? Does it get refinanced into a new mortgage? How much extra will it cost monthly to do option 1 vs option 2?



BUT....if you look at many flipping shows, they don't included the total cost either. The show often only states how much someone paid, the cost of the renovation, and how much they sold it for. They don't all show legal fees to buy, legal fees to sell, realtor fees, utility costs and other carrying costs, additional charges to terminate the mortgage early....and so one.....and they never mention that the net profit will be taxed at 100%.



Alas it is first and foremost a renovation show, or to be more correct, it is first and foremost a reality tv show. Still, I think it's one of the better ones.

 

[bizaro86]

[quote user=terri]Alas it is first and foremost a renovation show, or to be more correct, it is first and foremost a reality tv show. Still, I think it's one of the better ones.



Definitely! There's only so much information you can squeeze into a 30 minute show. (Probably more like 22 after commercials!) And the typical participant on the show is a homeowner who is putting a suite in their basement who lives in the upstairs, so if their mortgage is $2000 and they get $1000 for the suite, now their payment is $1000, but they also have the extra costs associated with the suite. It would be more intellectually honest to assume only a % of the rent goes towards the homeowner's mortgage/taxes, but it wouldn't make for as good TV. I'm not surprised that's what the producers chose.



Also, I think he's basically as close as you're going to get on tv to a true REIN-style investor. Shows about flips are way more common, and that is highly speculative (imo). I would argue getting a discount on your living space by having a downstairs tenant could be considered a form of investing, even though it's not the classic investment only property. The way to run the numbers would be to add the rent from the basement plus what you're willing to pay to live upstairs yourself (as a personal lifestyle choise) and then add the two, subtract off all expenses (utilities, tax, maintenance, vacancy, etc) and compare that to your capital cost of ownership.



Michael

 

[invst4profit]

I agree, as reality TV goes, this is a quality show.

My concerns are of course related to the peripheral impact of such a concept, particularly in a area like Toronto, where basement apartments are so popular.

Your typical basement landlord is your stereotypical Mom and Pop with no concept what so ever of the clientele they will be dealing with. Quality rentals with rents north of $1000 are one thing but unfortunately not the norm for that market.

Likely out of every 1000 applicants only one will qualify to be on this show. The unit needs to not be your typical Toronto old home basement configuration. Low ceiling, dark, narrow, damp and uninhabitable are the norm.



This show opens up the possibility that all basements can attract quality tenants. Your typical basement dweller is one of a collection of challenging clients. Young single including single parent, unemployed, welfare or ODSP recipient etc. Difficult at best but combined with a landlord demographic that has no concept of tenant screening a recipe for disaster.



It's a good show but for me, as with the house flipping shows of 10 years ago, it is portraying a candy coated reality.

 

[GaryMcGowan]

There are some great points made here. As for entertainment the show is a success and that is what the networks wants.



I can tell that my close friends where on the show and they had a great experience. They where the first ones on the show that had an existing basement unit which needed updating. You could say they where already in the game. They where quickly able to find a quality tenant which I helped them with and he pays above market rent because the unit demands it.



As for their experience with the Host my friends felt like they where in good hands and his knowledge of residential investments isn't really portrayed well on TV.



Yes, the show could dive deeper into the realities of being a landlord but that is not the focus of show.

 

[invst4profit]

[quote user=Gary McGowan]

Yes, the show could dive deeper into the realities of being a landlord but that is not the focus of show.






Focus is one factor but it is undeniable that the intent is to show how to turn home owners into landlords. The closing of each show being the turning over of the keys to the owners new business.

Advertise, find a tenant and start taking there rent checks to the bank. The underlying suggestions in the show is that it is easy money and anyone can do it. In addition, unlike investors, they can not escape the reality that they will be landlords.



I equate it to providing a teenager the keys to a car without bothering to teach them how to drive.

I am very concerned for the thousands of Toronto home owners viewing the show and dreaming of extracting easy income from there basements.



Admittedly I am a regular follower of the show however I would not for a moment consider having a cellar dweller in my home.

 

[kir]

What a great idea...I reality show that emphasizes landlording realities, as Invest4profit have suggested. Somebody should let HGTV know....Now the public can see how evictions are done, renters committing suicide, and tenants burning down a house because his girlfried left him. Don't forget the good tenants (ex. grandma baking cookies....but a much duller watch).



As for Income property....it always amazes me the equity is substantially more than the input.

I watched one episode today, the tenant payed 25K...and the after-repair-value of the house increased by 62K.

Is this even possible?





Kir.

 

[jonathanb]

[quote user=kir]I watched one episode today, the tenant payed 25K...and the after-repair-value of the house increased by 62K.

Is this even possible?


It is possible, but not easily replicated.



Consider a single family home with a run down basement, being duplexed and updated. Now the home has income (mortgage helper). Also, the homeowner may be paying less than the going rate, ie less labour by having a show filmed in their home.



I've also see an appraisal done which is a year or two after the home was purchased, not taking into account property appreciation.



Just a couple possibilities....



jon

 

[housingrental]

Jon has brought up some good points

To add the value add # is easy to do when looking at Toronto - or maybe Calgary or Vancouver - when you're talking about that sort of lift to a $800K home vs a $200K home

 

[TerryKruse]

It is definitely possible to increase a home's value past the dollar amount spent (at least inCalgary), especially if the home hasn't been updated in a while.



Terry