First investment advice

12 Replies

Greetings BiggerPockets!

This is my first post and Im hoping to get some suggestions from everyone.

So let me explain a bit about myself first.

My name is Mikey and my wife and I live in Southern Ontario Canada.

I own a successful one location vape shop and I have been saving in my TFSA for the last year. I have around $11,000 currently to invest.

I rent my house at the moment and we have turned it into a cash flow positive house. It was a three bedroom when we moved in but I built a room/vocal recording booth in the basement. We rent out 2 of the rooms upstairs and the room we built downstairs.

Our rent is $1100 and we make $1800 from the house so we are already house hacking a house we don’t own.

Its time for us to start getting some equity instead of paying off someone elses investment.

I don’t have a ton of time to put into it because Im still growing my business but I want to get started.

What would your first move be in our position.

We made the mistake of reading ALL of the info we could get our hands on and we are now overwhelmed with options.

My thoughts are to find a multi family or single family around the same size as what we have now and simply move everyone from this house to that one.

We already have tenants and cash flow.

Anyways, any ideas would be SUPER appreciated!

The first step is to get a pre approval for your mortgage. That will help you determine what price range you can look in.

And ask them about how much higher a pre approval could be if it was a duplex or triplex and if you had income from those units.

And get a couple of opinions. Banks sometimes are limiting so be sure to check with at least one mortgage broker that is not tied to a bank.


Best wishes  and if you share options as they come up, I am sure this community will help you evaluate those options.  Best wishes.


@Mikey Bars

I would do exactly what your thinking in purchasing a multi-family house. Get into the market as soon as you can and let that equity grow. You could even buy a house, and keep your original apartment and sublet it, keeping those individuals there. Keep that cash flow going while adding another source into the picture!

For now, you may need to continue saving for a little bit until you have enough for a down payment and closing costs!

If your interested, reach out to me and we can discuss options and plan for your families future! Especially since you said you don’t have a lot of time, I can assist in assessing your situation and help you obtain a pre-approval. So then you know how much you can afford and how much you need. Then, when the perfect property goes on the market, you can be ready!

Regards,

Zach Bousquet

Mortgage Agent and Multi-family investor.

So you're arbitraging the current house? You added a bedroom in property you don't own? I guess I'm the only one confused by this post. House hacking is great way to get into real estate if that's your goal but I would never plan on jumping ships with the same roommates. I wouldn't bank rental income to cover expenses either. That's incredibly risky. Just my 2 cents.

@Jaron Walling Im not entirely sure what you mean by "arbitraging" my current house. I am renting a house for $1100. I added a bedroom using my own cash. Spent $6000 in the basement to built a room and an isolation booth. Definitely increased the value of the property for the owner. 

The rent in our town for a small one bedroom is around $900 and nobody can really afford that. So my cousin and two of my friends took a room in my house for WELL below the cost of average rent elsewhere.

Rather than pay $100 a month in rent we are making $1800 and putting the income towards bills.

We are absolutely willing to live with roommates and don't mind it and we would like to get into real estate.

I'm not sure what is confusing about the post.

I just don't know if it would be a better idea to move all of us into a house that I have a mortgage on or what my best choice would be.

I own a business so I'm not "banking" on anything to cover anything. I have more than enough to pay my rent if I had to but as an investor I am always trying to find ways to increase income and decrease expenses.


I was just explaining my entire situation to give anybody willing to give advice as much to work with as possible.

I appreciate your reply

@Mikey Bars It's confusing from a property owner perspective. Airbnb arbitrage is very similar and people do it in bigger cities. You have an agreement with the owner I'm guessing?

@Jaron Walling  I thought arbitrage was something that happened in the stock market I didn't know it applied to real estate. Thats why I am here! I am great at running my business but admittedly weak in the real estate department but I am working on changing that!

I had an agreement with the previous owners who had owned the place when I moved in to build the room. I do not have an agreement to be renting out rooms or anything like that but the house I live in is connected to a strip of 9 other properties and the owners are very....how should I say this...."uninvolved". 

I don't think they really care about this place and if anything they are trying to just wait until we get sick of all the issues and just move out so they can renovate and increase the rent. We pay $1100 here and when they took over they kicked out other tenants whos lease was up, renovated and increased the rents to $1700.

My entire life I have had roomates that have paid a majority of the rent and I'm now 30 and definitely want a place of my own by the time Im 35. 

So I figured why not take advanatge of the fact that I have 3 paying tenants that are also my friends and give them a sweet deal on rent while also gaining equity instead of paying off someone elses investment. 

Hopefully that makes sense.

@Mikey Bars That totally makes sense and you have a great perspective! That's a cool situation. 

I've had roommates since college and my brother rents off of me now. It's very helpful. If he moves out I'll probably find another roommate and increase the rent! I'd cover 3/4 of my mortgage payment easy.  

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