Author Topic: rental property???  (Read 4125 times)

Dmy0013

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rental property???
« on: February 14, 2013, 11:36:11 AM »
L.
« Last Edit: April 13, 2016, 09:52:37 AM by Dmy0013 »

Self-employed-swami

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Re: rental property???
« Reply #1 on: February 14, 2013, 11:48:50 AM »
I am no landlording expert, but I wonder if buying in the same building would have some drawbacks, akin to putting all your eggs in one basket.  Say a special assessment came up for each unit... You now own two, and have to come up with +/- twice the cash.  Or, they have to raise condo fees, because not enough money is being put into the reserve fund, for some upcoming planned maintenance?

Although, there would be some convenient things, such as being onsite to deal with emergencies.

I think you'll likely be asked for some more solid numbers as well, by the more experienced landlord and investment types here.

Kazak

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Re: rental property???
« Reply #2 on: February 14, 2013, 12:03:53 PM »
How much rent can you realistically get for that unit?

Self-employed-swami

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Re: rental property???
« Reply #3 on: February 14, 2013, 12:28:17 PM »
I dont know if they pay the condo fee on top of that? Im assuming they would?  I do know they pay their own electrical and everything obviously, and that condo fee also includes there heat and water

That is an important bit of information.

arebelspy

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Re: rental property???
« Reply #4 on: February 14, 2013, 02:08:44 PM »
Usually (in most areas of the U.S. I'm familiar with), the owner pays the HOA fee.  YMMV, but definitely something to look into.

It's all negotiable based on the lease, obviously, but a renter's going to look at what their total payments are monthly and take that into account, and you can't outprice the market, or you'll be left with a lot of vacancy.
« Last Edit: February 14, 2013, 02:11:55 PM by arebelspy »
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BayIslandSaver

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Re: rental property???
« Reply #5 on: February 14, 2013, 03:00:40 PM »
I like this calculator...it's more detailed than others.

http://www.goodmortgage.com/Calculators/Investment_Property.html

From the numbers you threw out there, it doesn't seem likely you will be cash flow positive (financing, taxes, vacancy, hoa, etc).  You should figure out the average number of days these units take to sell and past sale prices.  If they are trending down, you could wait.


Another Reader

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Re: rental property???
« Reply #6 on: February 14, 2013, 03:03:19 PM »
Use the 50 percent rule.  $1,200 x 12 x 0.5/$270,000.  Your free and clear cash on cash return is 2.67 percent.  Add in a mortgage and you are in a very negative cash flow position.  I would not touch this investment.  Apparently, neither will anyone else at current pricing if 5 are for sale in a 40 unit building.

Kazimieras

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Re: rental property???
« Reply #7 on: March 05, 2013, 11:28:23 AM »
the units around 270000 are two bed two bath, so I expect roughly 1200 is the going rate... I have asked one renter what they pay and they said 1200...

I dont know if they pay the condo fee on top of that? Im assuming they would?  I do know they pay their own electrical and everything obviously, and that condo fee also includes there heat and water

As a fellow landlord in Canada, the first bit of advice is know the rules for your province. Each province has different rules and restrictions with regards to tenants and it is really handy to know what you're getting yourself into. I am in Ontario and typically the condo fee will be included in the rental price. You may be able to negotiate it outside of the monthly rent, but I would check first (I have a house-apartment so different rules). It is easy and recommended to have them pay their own electricity, trust me on this.

If you're still considering buying, look on CMHC's website at the vacancy rates for your area. If you place is average looking or better, assume you will have that vacancy rate in your calculations. Next look on craigslist and kijiji and find out what the going market rate is for a comparable unit. After that it is easy to see if mathematically it makes sense or not. My rule of thumb is make sure you are cash flow positive. Also know tenants can be a lot of work if things go bad and there are some headaches to deal with. For me the property pays well enough that those headaches are worth it, although it is a pain that the rent collected is taxed as income. The only perk is that your mortgage interest on that property will finally be tax deductible!