I too need advice

[SPeever]

Hello everyone:



I agree that it makes no sense to be mortgage free on investment properties, and that positive cash flow is king.



However, what advice would you give an investor just starting out with 100-150K cash. Where would you suggest I start investing and how. I have read advice that suggests starting near where I live, but Victoria BC is a challenging investment environment. My concern is property management elsewhere, etc. I would really like to hear how investors got their start.



Thank you,

S Peever

 

[invst4profit]

If your open to something few investors are aware of consider Mobile Home Parks. Cash flow is far above average and maintenance, since you only rent the dirt is below average. Parks should generally be purchased at a 10 cap the only hurdle getting in is finding financing. BC is big into parks and is definitely a option if you want to think outside the box. Plenty of seniors/retirement communities. Don't think "trailer park" or you will be way off the mark. These are Manufactured Home Communities.

Invest groups are buying up most parks in my area so obviously they are aware of the upside.



http://www.mobilehomeparkforum.com/list.php?3#



If interested in something you may never have thought of take a look at the forum I have linked.



Your $150,000 may get your foot in the door.

 

[moparcanuck]

I have to agree with the mobile home park idea. You will find that entry and exit is not as easy as single family homes (need more cash to get in, only really going to sell to another investor on the way out), but they can be great properties. My best property is a mobile home park I pretty much fell into. The comments mentioned are fairly accurate (you only own the dirt) although you often do own a bit more than that (common area pluming, roads, etc). These are indeed still prone to wear and tear, but there's usually very little that a tenant can do to damage these. Vacancies are much rarer (my small park has never had a vacancy in 6 years that I've owned it). Return is very good as well.

 

[Alvaro Sanchez]

If you are starting out, I think you should invest in your education or try few courses from the school of hard knocks. If you can take the ACRE or something similar, you will be ahead of the game.

 

[Thomas Beyer]

[quote user=SPeever]I would really like to hear how investors got their start.


one rental pooled condo in 1997 for $80,000, $20,000 down plus 60k mortgage

a second one in 1998, similar

a third one in 1999, no money down, all borrowed

a 15 suiter in 2000 in the mid 30's/door, 15% down plus 85% CMHC mortgage

a 20 suiter in 2001 in the high 30's/door, same cash and mortgage %

a 24 suiter in 2002 in the low 40's/door

sold a condo and the 15 suiter in 2002.

Another 24 suiter in 2003 .. rest is history as they say .. or in "track record" on website or on blog "how to get started" .. and God willing in a book I will have published later this year called "80 Lessons learned on the road from $80,000 to $80,000,000".



Property management is vital. That's why I started with rental pooled condos as I did not have the time, nor the interest nor the expertise for property management (today I co-own one that manages 1700+ units .. but that is another book).



With 150K cash I'd buy three townhouses in Edmonton for 200K each, such as those Russell Wescott has done. Scalable, liquid, hands-off management, individually titled, low to no condo fees, cash-flow positive with 75% LTV, in a city with tremendous upside potential in a booming province with no debt and not just one but two right-of-centre parties vying for leadership.



Or a house in Victoria (but only if you don't have a personal residence yet) and sublet the basement, but you will see little upside in Victoria due to high prices and poor economy. Or an ugly ugly property in Victoria that you fix up and then sell. Or give Julia Broad a call and see what she does in Nanaimo as rents are 10-20% lower than Victoria but prices 25-40%. I am not a big fan of Vancouver Island due to the poor economy there, but in the right locations catering to retired folks, seniors or students might work well for you there.

 

[JBagorio]

There are definitely advantages investing locally specially when you want to be hands on and wanting to learn the land lording and management side of the business first hand, but if it's true what you said about investing in Victoria BC, I would not hesitate investing elsewhere where the fundamental is right. Starting out...I would consider investing remotely, but with a sophisticated and experienced co-venturer that is willing to mentor and share knowledge as you go. This way you will be able to mitigate some of your worries and at the same time not missing out on opportunities to put your $$$$ at work.

 

[SPeever]

Thank you for this information -- I have looked in the Victoria BC area and unfortuntately there are not many rentals allowed in the mobile home parks here.....



I originally had thought it was a great idea also, but perhaps mobile home rentals are more common in other areas?

 

[SPeever]

Thank you!

 

[SPeever]

Thank you for this excellent feedback. I have looked at rental pooled condos - there are some in this area, and I am assuming you are not referring to 1/4 ownerships.



Where would I be able to see the condo type deals that Russell Westcott bought? What area of Edmonton?

What is your opinion of receivership condo purchases? There are some in Victoria and Vancouver right now. - List prices are still above the provincial assessment prices, but what are the risks regarding investing in condos like these?



Thank you again.

 

[Thomas Beyer]

To my knowledge Russell owns mainly townhouses, not condos, in NE Edmonton.



receivership condos: why not, if the price is right and the deferred repair work is not too great. Generally, condos make a good investment only if bought inexpensive enough to allow cash-flow.



Receivership condos in Vancouver and Victoria are probably too expensive, relative to rent, but may be OK. What is the reason for receivership ? Overlevered "investor" ? More details please for a meaningful answer besides: it depends !

 

[SPeever]

http://www.bclocalnews.com/news/131230889.html



Hello: I understand it to be bankruptcy, and the RBC bank owns the condos. A few left - apparently from what I can gather, and I have seen the inside of several of these - they are absolutely over built, gorgeous, and no condo that I have seen comes close to the quality, size of the decks, water view etc.....I think that the prices are still too high, sitting at above BC assessed value, as compared to any other new condo - the others are selling below assessed value right now. However, I understand that cash flow is the key, and future value is speculation, but these condos apparently are reduced by 40-50% at the moment.

Because they are higher end condos, a 900 sq foot one at 300K would rent for 1500.00. Of course it only makes sennse for cash flow if a fair down payment was made.

Thank you very much.

 

[Thomas Beyer]

Aquattro project is in Colwood, a town with few jobs and a depressed economy.



I would buy only if you intend to live there as the location is great, close to water and good views. Don't even think you can rent them for $1500 !!



Vancouver Island around Victoria has a poor economy and only wealth sinks (as opposed to wealth creators): navy, students, seniors, BC government .. and some seasonal tourism.



Great place to retire, but not to invest. The job market is horrible, kids can't get a job and leave the university unemployed or with $12/h jobs in the service industry serving wealthy retirees from Alberta or Lower Mainland. Overpriced, corrected and now flat real estate market. Few Asian or economic immigrants. Mainly an area for seniors that are tight with their money.



Make a stink bid, say $220,000 for that $300,000 condo. Then it may make sense. Rent it for $1200 and maybe in a decade it is worth $250,000 or $300,000 even !



Just north of there is the home of Canada's only green party member, in Saanich.

 

[SPeever]

Perfect, this is the advice I was looking for!



Thank you very much.

Do you have a suggestion regarding property management in Edmonton, if the townhouse buy makes more sense?

 

[Thomas Beyer]

not really as I do not do single family houses in Edmonton and the one I use for my 2 houses outside of Edmonton is still "under evaluation".