Year 1(almost) in the lift of a Canadian Investor

6 Replies

I see a lot of people posting about their first year and thought I would follow suit. 

Let me start by saying I have done a few deals over the years.  I thought the Canadian market was complicated and I had no real idea how to be successful financially as person.  I have worked in construction or around the trade for some time.  I had a hardware store for 10 years. When I closed it. I was in a position where I had nothing to show for my efforts in life save a family that I deeply love. 

I knew enough to focus on two things.  First is that it is hard to get ahead if your main job is making someone else money. The second is that education is free for the taking.  I am a fairly well trained salesman that does not want to make that a full time job. 

In 2015, I closed my hardware store.  I tried to be an employees for a time. It is not a good fit. In 2015 I re-opened my renovations business when one of my main guys that did that work for me at the store request it. 

My wife works for a significant player in the REI market in rural Nova Scotia. With a family background in rentals we had always talked about it but never really were in a place where we felt we should start.

Anyway, I said this was the first year in REI.

In Oct of 2017 I bought a mobile home on park owned land.  Older 2 bedroom 1 bath - Converted to 1 bedroom with a handicap bath. 

Purchase Price - 1500$ plus pay back taxes - $800 and back lot rent - $1200

Real Purchase Price = $3500

When you buy a mobile for this kind of price expect some rehab, That I can do most of myself, or with my guys from my renovation business anyway. 

ReHab - $4000 

Needed nothing serious but a window was smashed, needed some flooring fixed, wall repaired, a significant amount of cleaning.  All in all, nothing I found serious, I bought this place the last week of Oct and had it rented for Nov. 1st 2017. 

Real purchase price - $3500

Rehab - $4000

Lot Rent - $164 per month 

Mortgage - paid cash 

Insurance - $350/year  or $30/month

Property Tax - 653$ per year  or 55$/month

Rent - 575$/month  - never been late never missed payment 

I manage my properties at the moment so I am putting all rent money aside for repairs and re-investing 

326$ Left for the account every month 

After this property went smoothly.  I went to the park administration and I asked them about other properties in the park.  From this I found another trailer.  At this point, some people are asking me why I am buying trailers, Well, check the numbers see if they work for you. 

April 15th - Older 3 bedroom one bath

Purchase Price - $500 + back lot rent - $212 + back taxes - 379$ 

Real Cost - $1091

Rehab cost - $5600 - New Kitchen, flooring, paint and other minor upgrades 

Total = $6691

Lot Rent - 187$

Mortgage - paid cash

Insurance - $350/year or $30/month

Property Tax - 653$ per year or 55$/month

Rent - $ 750 / month

$ 478 - left every month for the account.  

** This property still needs an upgrade to the heat system that will be $2000 and has to be done before Oct 1st**

In June, I saw a property listed on Facebook marketplace that was in rough shape.  It was an 750sq ft 2 bedroom 1 bath. It was listed for 17,000.  After some work it will rent for 650$ month. I put in an offer of $10,000 and waited. 

Before I heard anything about the house, I got a call from the trailer park.  They had been surrendered a trailer.  

Older 2 bedroom with a bedroom added on, 1 bath. 

Purchase Price - 1$ + Pay the back lot rent - $1347

Rehab - $4500 - This trailer had about 8 truck loads of garbage inside it. 

Total Price - $5848

Lot Rent - $175 per month

Mortgage - paid cash

Insurance - $350/year or $30/month

Property Tax - 653$ per year or 55$/month

This trailer rents for $650 a month. 

Leaves $390 for the account per month

So breakdown of the trailers looks like 

650+575+750 = 2050 

Lot rents = 525

Insurance = $100/month

Property Tax - $150/month 

For the account - $1275 

(yes, I know the numbers don't add up perfectly, I just went off the top of my head) 

On a Wednesday   I heard that my offer of the 10,000 went through on the house. 

On Friday the Real Estate agent I like called my wife and I.  There was a property about to be listed Monday It was a single property of 2 triplexes.  Each was 3 beds and one bath.  The buildings were somewhat neglected. It was not so much willful neglect just that the former landlord and I have different versions of what is acceptable and he was getting older and not so on top of things.  

Asking Price - 179,000

Accepted offer - 174,900 - (written and accepted on the Monday) 

Of the six tenants, 4 had given notice by the closing date. 

Legal Fees $2400 

Deposit Required for the mortgage - 20% - $35,000

Right now rehab - 22,000

Property improvements and correction of deferred maintenance over the next 2 years - additional $24,000 

Mortgage payment - 871$ / month

Water - app $200/month

Property Tax - app. $300/month

Grass/snow - quoted by a local company at $274/month (1800 for snow for the year, 1500 for grass for the year) 

Insurance - $140/month (got a great rate not cheap insurance) 

The heat source and hot water is natural gas, New furnaces and water heaters installed in 2015. 

Heat and lights depend on the month, size of the family all those things, so I want to use the average of $250 per month

Some of the rents were set by the old landlord, and for the sake of writing this today and not in November, I will include the rents from the 3 properties that are rented Oct. 1 and Nov, 1st. 

Unit 1 - 950 - all included 

Unit 2 - 525 - nothing included - old landlord set 

Units 3-4 and 5 - 1100 all included 

Unit 6 - 600 - nothing included. - old landlord set this one too

Total Rents 

5,375 

- expenses as above - 

Leaves 2,590 for the account.  

So, in the run of a year, my wife and I went from 0 passive income to about $3,800 a month.  I still have people that kind of laugh when we talk about the trailer.  Some of you have noticed that I did not talk about the $10,000 house.  Well the thing is there, that it needs rehab.  I used the money for that rehab to get the 6 unit deal done.  So, It will be spring before that is a money maker.  

I feel like I am running on and on.  I am going to stop now. I am looking to keep doing this. I am looking to get to a point where I have 100% of my needed passive income within 15 years.  I am sure every year wont be this productive.  Thank you here for the posts and information.  It helped me. 

Tom,

Off to a good start and you seem to have realistic expectations and enough life behind you to realize there will be acquisition years followed by digestion and stabilization (years where money flows in and others where he tide runs out).

I've never ventured into trailers/ mini-homes, but know folks who both regularly flip them and/or fix-and-rent. As rentals the capital requirement to rent ratio is more favourable than a SFH ... to the point where you really do not care about re-sale value in 10-20 years.

Here in rural Nova Scotia. I am running on the assumption that there will be no apperception in value and that the trailers will have a value of 0 at some point in the future. 

I would much prefer to be pleasently surprised then to count on something that may not happen. 

An appropriate strategy - particularly where you do not have land value to fall back-upon.    We take a similar approach with some of our buildings and model our numbers with land-value at disposition.

Tom - what a great first year! That would be a great any-point-in-your-journey year!

I like the mobile home strategy you've found...who cares what people say about it...you're in a market where it works well for you. I often hear that condos and townhomes don't make good investments, and I'm all in on those. I'm a big believer in finding a niche that works for you in your market and your specific needs. Kudos to you for your determination and success.

Can't wait to read your Year Two review! Keep us posted on your journey...you're an inspiration.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you