HI my name is Colin I'm 21 I live in Canada and I'm brand new to Bigger pockets and I'm looking to buy my first property sometime in the summer but until then I'm just trying to educate my self as much as possible. My plan to getting started is to buying a single family house 4-6 bedrooms for around 200-300k and renting out each bedroom for around 600 a month the area I'm looking to invest in has 2 major university's and 1 major collage so id be looking to rent to students , I do not have enough money to put down a conventional 20% down payment for an investment property so id have to put down 5-10 percent down with Mortgage insurance and put it as my primary residence but realistically I wouldn't be living there. I would like to get some opinions or advice on this idea and what you guys think?
Hey there- 1. Welcome to BP! and 2.) couple questions for you... Have you done the research to find out if its reasonable to purchase a 4-6 bedroom property in Ontario for $200-300K? Sometimes there is the dream and then there's the reality, so just making sure that's possible. Also, have you looked up what rents go for? Would you rent to one family or multiple people in the same home? You can find out rents at rent-o-meter.com, although I'm not sure they service Canada. Additionally, have you considered closing costs, repairs, maintenance, taxes and utilities? All good things to consider when you're running the numbers. I know because I run investment properties for clients in Denver and Colorado Springs, and these are items to consider. Likewise, what metric is most important (cap rate, cash on cash, cash flow, etc.?)
As to getting a primary residence and then renting it out, this is mortgage fraud and in the US (at least) you can get in a lot of trouble for this. The reason lenders require you to put 5% down on a primary is because you are more willing to fight for it and it'll be a more important asset to you if times get tough. They require 20% for investments because it's a risker loan for them and they need to know what their risk level is across their portfolio. I would advise lying about it because if you get caught, there can be serious consequences that will impact your ability to invest long term. Better to go with a smaller/cheaper place and put the full 20% down.
hi there @Colin Dunne , welcome to the world of bp
there are many ways to go about investing in real estate and the truth is that there is no wrong way of going about it.
as long as you #getstarted is the main thing, oh yes and don't lose money,
there is some great information out there is on this website as well as youtube etc.
the podcasts on here are amazing and they allow you to hear others successful stories as well as what was their motivation to get them going and continue pushing on.
i'm soon starting my own meet up here in the area and bring in people that can help along the ways through this process,
i'll keep you posted on the dates.
That would be awesome! Id like to meet more real estate investors learn and get more advice.
You are in the right place to get education. Here is a list of all the books ever mentioned in the podcasts.
Rich dad poor dad is a great starter book. As far as the house goes you should talk to a local expert.
There are some old Victorian homes in Colorado Springs near the colleges and universities (downtown and north end). Might be right up your ally. Feel free to reach out for informal advice or ton@Kaley Roberts my wife a local agent. More than happy to assist.
@Colin Dunne welcome to the party!
In your area, near the schools, etc, you will find what you want, but it won't be on the MLS through a realtor. You are goign to have to find other ways of getting deals. There are investors in Toronto with deep pockets willing to pay WAY more than that for what you're describing in that area, so make sure you're buying what they don't know is for sale.
Go to the neighborhood where you want to buy. Knock on a door and say "Hi I'm Colin, and I really like your neighborhood and I'd like to buy a house here. Do you know know anybody who might want to sell a house soon?" and start the conversation. Don't be "salesy" just go there to ask people about their neighborhood and who might want to sell.
As for the mortgage... some people call this "grey area", but really that's mortgage fraud. It happens all the time and I can't imagine anybody actually getting caught doing it. As long as the bills are getting paid the bank doesn't care. However, since you're going to rent by the bedroom, I'd HIGHLY recommend to you, because you're a young guy, moving into one of the rooms!
If you move in, you have three MASSIVE advantages.
1) 5% down. Obviously this is important.
2) You are NOT bound by the residential tenancy act! This is HUGE in Ontario because the RTA is brutally anti-landlord. Because you live there that law does not apply to you. You can evict people at your whim and raise rents however you'd like. Your house, your rules.
3) You'll be present. That means you can keep an eye on it, but it also means that the people living there will know that you're a real person, not an evil faceless landlord.
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