Your advice needed about first investment property

[warrenv]

This is my first post here


My wife and I are considering our first investment property, however we are a bit nervous. Can you please give your views


Condo conversionn in Hamilton (Rosewood apartments)roughly 205 units


2 bedroom condo in downtown hamilton, purchase price $71,400

Rents for about $700.00 / month

Maintenace fee's $275.00

Rental pool management $25.00

taxes I am not sure about yet but I am guessing about $100.00 / month


Of course I still have to add in possible utility payments.


My question are rental pool the ordinary for condo converts ?


When I did try and cash flow this it does break even, a little bit (35.00-$75.00)on the positive side with 25% down.



Also I am living in Winnpeg, is it common practise to buy sight unseen?


What does everyone think ? You can post here or email me wcancon@gmail.com



I apreciate your advice






Warren

 

[margaretcowan]

A cardinal rule for me is that I always go and see any property I invest in as well as walk the neighbourhood around it. Break this rule to your peril. The building condition may not be good with repairs needed that you will have share the expense for.



Check out the strata council too by not only reading the last two years' minutes but also talking on the phone with one of the council members. Are they rational people who run the property like a business? How do they feel about investor owners? What repairs are coming up? What problems are they having? Look athe their financial statements. There are more things to check out than this for a strata purchase, I'm sure.



I'm in Vancouver, so don't know the Hamilton market at all. I think you need a better positive cash flow, not just break even. You'll also need a reserve fund for unexpected vacancies or repairs.



Hope this helps,

Margaret



Mama Margaret & Friends Cooking Adventures in Italy

www.italycookingschools.com

 

[warrenv]

Hi Margaret





Thanks for your worthwhile advice





I have done some more digging since I posted.





The property is in downtown Hamilton , the downtown is being revitalized , as well the go train will be expanding service into Hamilton, more trains going in and out, as well the LRT shall eventually arrive if not sooner then later. I have decided that since it is a questionable neighborhood I will go take a look if I am serious, by that time I get to that point I might have been talked out of it by then.


The downtown is beside a industrial park another black mark.





Vacancy I will not have to worry as much, as the unit will go into a rental pool, meaning if my unit is unrented for a few months, I will not be without income, as income will be shared among all investors.





The condo is a conversion so I assume the strata board will be just forming.

 

[johnsu]

Definitely go see if or have someone "trusted" view for you.



How do you feel about vacancies? If this makes you nervous say 6+/10 than you should also have a safety fund of 2% of purchase price sitting there specifically for just that property.



Design a plan to hold for 5 years and you should do very well!

 

[invst4profit]

Ontario is not investor friendly. The RTA and LTB are a nightmare to deal with (extreme pro tenant) and rents are controlled.



You will most likely see condo fees rise if this is a new conversion and guarantee your other expenses will be higher than you estimate.



Did you include insurance, utilities when vacant, advertising, routine maintenance/upkeep between tenants, accounting, phone bills etc. Also unlikely it will appreciate much which will hurt when selling (real estate fees).



My advice would be to buy close to home where you can manage your investment.

 

[markl]

The Condo is not in Downtown Hamilton. It is at Barton and Ottawa St which is the North part of the city. Yes the mall has been revitalized in the area and Ottawa street has some restaurants opening up.



You are paying $72k for a unit which sold to a home owner would likely sell in the $50 - $55k range. If sold all together you would be paying $35k - $40k max in the area you can pick up smaller multi's in the area cheaper than that at the moment.



$700 is the advertised rent. But this is a rental pool so what is the occupancy of the property? In this neighbourhood a 5% Vacancy if obtain and held would be optimistic. You get higher turnover and tenants are tougher on the property so expect your repairs and maintenance to be higher.



If you want to get in the Hamilton market and want to do so cheaply or minimal down side risk I would suggest a condo town house purchase price is $150 - $170k rents are $1,250.00 - $1,400.00 per month with condo fees ranging from $200 - $350 there are a number of good property managers in Hamilton you can use to manage it from afar.



If you want to plan a trip out here I would be happy to show you around Hamilton and help you find a property that would be a worthy investment.



Drop me an email if you want more info mark@theversatileinvestor.com

 

[Thomas Beyer]

The property was purchase for $7.575M or about $38,000/unit .. see here: http://league.ca/summaries/11rosewood_pt2.pdf



I am not sure what upgrades have been done to this property, both inside and in common areas like hallways, roof, parking lot etc. ..



Ask for specifics here.



Ask for a reserve fund study.



TAKE A PHYSICAL LOOK !!



If it rents for $700 and costs about $70,000 that is an OK deal, assuming all common elements are in decent shape or new.



Check details .. then decide !!

 

[ShannonMurree]

People can definitely buy from out of Province and not have seen for themselves but really, really important to work with a Geographic specialist, develop a relationship and have on your team to be your eyes and ears, see the property and report back to you. Definitely have the home inspection and review that if you can't come in to see for yourself. I have many clients that do this (but I work out of Barrie). As long as numbers work and you research area.



Not only Mark above but also interview Erwin aka 'Mr. Hamilton" or Cam McCarroll who are not only licensed Realtors but REIN members and real estate investors themselves.