Author Topic: Buying a Rental Property for Students in Canada  (Read 1550 times)

NorthernDreamer

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Buying a Rental Property for Students in Canada
« on: January 03, 2017, 08:11:27 AM »
I live in a Canadian city with two universities. There is a large student housing market in this city. I work at one of the universities and have always been somewhat interested in purchasing a student housing rental. Looking for advice as to people who have done this - either positive or negative stories.

For example, there is one 3 bedroom/1 bath two-floor apartment unit for sale right now for $230,000. It is rented at $1500/month until the end of August. It doesn't explicitly say it is for students but I know it is. It is 15 years old, located in a great place, has parking, looks to be in decent condition. I could take money out of my and my husband's TFSAs and put at least 10% down. I've played with a mortgage calculator and it looks like the monthly mortgage payment would be around $950. I know I'd have to add in insurance and property taxes. Plus there is any maintenance cost (my husband is fairly handy and we live 10-15 minutes away, plus I work quite close). We have two young kids and rarely go on vacation.

We've never been landlords before and obviously I'd have a lot of research to do, but I feel like it could be a good market to get into. Students rent for 12 month terms and rarely break the lease - if anything, they sublet if you get a student with co-op/work terms. I am going to try and find some local student landlords to chat with as well but figured this could be a good place to get some good food for thought.

The other option is, keep socking away as much money as possible in our investments and stay far, far away from rental properties.

Cwadda

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Re: Buying a Rental Property for Students in Canada
« Reply #1 on: January 03, 2017, 08:15:56 AM »
Quote
for sale right now for $230,000. It is rented at $1500/month

To me, this doesn't make sense because I don't see how you could be cash flowing every month with this kind of income. I also don't know what property taxes are like in Canada so I could be wrong.

I think student housing can be a great investment. Rents are typically inflated because folks rent by bedroom. There are houses around where I live that rent for $3000/month minimum.

NorthernDreamer

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Re: Buying a Rental Property for Students in Canada
« Reply #2 on: January 03, 2017, 08:26:50 AM »
Quote
for sale right now for $230,000. It is rented at $1500/month

To me, this doesn't make sense because I don't see how you could be cash flowing every month with this kind of income. I also don't know what property taxes are like in Canada so I could be wrong.

I think student housing can be a great investment. Rents are typically inflated because folks rent by bedroom. There are houses around where I live that rent for $3000/month minimum.

Okay so there is one for $310,000 renting for $2400/month. Yes because it is 5 bedrooms and they are rented by the bedroom. I guess I was thinking the more tenants, the more potential issues. But I can see how the cash flow increases much faster than the purchase price.

Alternatively there is one for $390,000 renting for $2900/month. 6 bedrooms.

I was hoping if we do this, to dip our toes in and stay under $300,000. But that might be fear talking. I am pretty sure we could get the mortgage.

Cwadda

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Re: Buying a Rental Property for Students in Canada
« Reply #3 on: January 03, 2017, 11:43:40 AM »
It's all about cash flow. You don't want to be making meager amounts for the cash you put into it. You definitely don't want to be losing money.

Here's the cash flow calculator I use for deal analysis.

NorthernDreamer

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Re: Buying a Rental Property for Students in Canada
« Reply #4 on: January 09, 2017, 07:21:07 AM »
Thank you! This is a good place for me to start figuring out if owning rental properties is worth the time and money investment right now. I appreciate it!

ToTheMoon

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Re: Buying a Rental Property for Students in Canada
« Reply #5 on: January 09, 2017, 07:43:24 AM »
Check out the resources at www.biggerpockets.com

The Canadian market (gross generalization) is tough to find properties that truly cash-flow, but they are out there, and you need to learn how to tell if you have found one.

Cwadda

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Re: Buying a Rental Property for Students in Canada
« Reply #6 on: January 09, 2017, 11:05:12 AM »
Thank you! This is a good place for me to start figuring out if owning rental properties is worth the time and money investment right now. I appreciate it!

You're very welcome, best of luck on your journey towards financial independence.