[quote user=flyingsquirrel]I am thinking about Barrie. I know the GO train is going to ..
Barrie is in the Top 10 in ON towns of REIN .. so a good start. But you have to do FAR MORE HOMEWORK.
Let me highlight a few:
First of all you should assess your CASH situation .. then your CREDIT situation.
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[*]CASH is a
combination of `real` cash, committed friends and family`s cash and a
HELOC (Home Equity Line of Credit) or short: LOC. On a LOC you have to
pay interest only on the portion you use, which is good. It has to be in cash for 3+ month for a bank to recognize it as "cash" for a downpayment !
For CREDIT: Talk to a mortgage broker, to get pre-qualified for a mortgage !! To get a mortgage,
you need various documents including property documents and personal
documents showing the bank that you are credit-worthy. REIN calls this the `networth binder`. Spend A LOT OF TIME preparing this document, find a mortgage broker
to get you a mortgage, or at least tell you what kind of mortgage you
can get roughly, depending on the type of property listed above. Townhouses are treated differently than condos, for example !
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Then, research a market VERY THOROUGHLY !Any area takes time (and a little bit of money for driving time,
flying there, donuts, lunches, research material ..) to research.
Then, decide on a TYPE of property: townhouses ? condos with lakeview ? single family homes older than 50 years ? new sub-divisions
? pre-sales ? acreages ? horsefarms ? trailer parks ? office buildings
in crappy parts of town ? high end luxury condos with high end
finishings ? land with sub-division potential ? strip malls ? defunct
shopping centres ? warehouses ? storage facilities ? fixer upper homes
? ANY of these property types allow you to make money once you know
what you are doing.
The best one to start as there is plenty of supply and plenty of
seller motivation is a small house or a townhouse. Not a condo as you
can`t control costs of the condo association. Not a big house either as
they are usually more expensive and hard to cash-flow.
Then spend a TON OF TIME BECOMING AN EXPERT on the property type in
an area. THEN AND ONLY THEN should you start writing offers and buying.
And yes, better several smaller properties than one huge one. Many
properties allow you to sell one if you have to.
You must know, for example, the price differential if the townhome is facing south as opposed to north ! If you do not know it: do more research. You must know, for example, the price differential if the townhome is 3 BR with a finished basement as opposed to a 2BR with an unfinished basement ! If you do not know it: do more research. You must know, for example, the price differential if the townhome has 2 bathrooms vs. 1 1/2 only ! If you do not know it: do more research. You must know, for example, the price differential if the townhome is east of ABC street or north of XYZ avenue, PER BLOCK ! If you do not know it: do more research.
For each piece of real estate you have to hang in financially and emotionally.
This means realistic assessment of cash situation (inc. closing
costs, vacancies, upgrades required in addition to `normal` expenses
like: mortgage payment, taxes, utilities, condo fees, insurance,
management fees ..). It also means realistic assessment of mental
`toughness` or time commitment. Vacancies will arise. Basements will
flood. Tenants occasionally have to be evicted. Maybe the police gets
involved. Boilers break .. sometimes at midnight. Get used to it .. or
anticipate it. Be prepared to handle those things yourself, or
preferably, hire a property manager that does it for you, but then be
prepared to pay this person or company well.
So, ask yourself: who will manage this property impeccably? Before
closing ensure you have someone in that market to manage the property
impeccably. That could be you, although a professional with in-depth
market insight, knowledge of legalities and local knowledge is likely
better. Spend some significant time finding that special someone, as
good property managers are VERY hard to come by.
Once the deal makes sense .. you got the money (cash +
mortgage) .. and the manager .. ask yourself if you will be able to
hang in emotionally and financially .. if so: CLOSE.
