Trying to get two apartment complexes at once?

Question

Looking at getting two apartment complexes. One in Ontario and one in Manitoba. The Ontario one is a delabitated property and the Winnipeg one is pretty much turn key that needs a bit of lipstick.

Ontario property:6 unit + 1 commercial -> Plan to convert to 12 unit residential B- C class area

Estimated renovation cost ~ 300 KMonthly income 12400$ and expenses 9779.98$ (Includes cap ex, repairs, maintenance)

Cash flow prob around 2200 -4500$/monthBuying at cap rate of 8.57% and market cap rate typically 5-6%

Purchase price: Only 700 K
After repair value at a cap rate of 6% should be around 1.5 Million
Cash needed $452,000 ( I have one investor who will come in with me at 128 K where I would cover the remainder of the cost)

Manitoba property14 units all 2 bedroomsc class area Estimated renovations around 60,000$Issue here is rent control in Manitoba have to jump through a lot of hoops to get around it Monthly income 16966$, monthly expenses 11172.89(Includes cap ex, repairs, and PM) Cash flow probably around 5800$-6600$ depending on few variable factorsBuying at a cap rate of 10.85% and the cap rate of this area is about 8%.

Purchase price 1.2 million Cash needed $410,000 Post repair value: 1.6 million dollars

I only have enough liquid cash to buy one of these. The other property I would be able to get from secured line of credit from my properties.

My question is has ANYONE ever baught 2 apartment complexes at the same time and if so is it feasible?. My mother would be helping me manage the Ontario one while I work on the Manitoba one. Secondly is it wise to use only credit to purchase my Manitoba property as it is in theory cash flowing well and hence can take the extra cost from a line of credit for the down payment?

Anyones advice. I would like to hear from people who actually have done apartment complexes please. THANK YOU !

Yousef Reda · Answer

@Edward Liu these are numbers automatically generated from the biggerpockets rental calculator. Current NOI is 90,000 but after I increase rents should jump to 130,000$ according to this calculator. Also I have multiple multiunits in ontario that I am familiar of electricity and hydro costs. Typically if you have a bad tenant that doesnt care about energy conservation there unit typically reachs 250-300$/month. Good tenants are more like 100-150$/month. We do get some tenants to pay for there own utilities and others to do a shared utility agreement, hence this will offset a lot of the inflated expenses that I put in the calculations above. So what i used was the high 250-300$/month/unit for utilities in my expense calculations

Great so what I needed to know is that it is possible. So im going to try to a bit ambitious as Grant Cardone likes to emphasize. More units the better albeit many factors involved in this statement. I mean in the end its a game of coordinating a crew of contractors, lawyers, accountants, property managers, etc.

Although I have multi properties I dont have any that are in the 10+ range. However it should be more economical then my fourplexes and triplexes.

I am thinking of taking a mastercourse with EDNA Keep who is essentially boasting to be the Rich Dad Poor Dad course of Canada.

Anyways any other thoughts would be much appreciated.

Theresa Harris · Answer

@Edward Liu Houses in Canada are usually well insulated. Having said that electricity costs in Ontario are ridiculously high. Still tenants usually pay for these costs.

Edward Liu · Answer

Am I missing something? For Manitoba property, your net profit is around 5800-6600 per month, purchase price is $1.2M, how is purchase CAP at 10.85%?

How many 10+ apartment buildings do you own? If you have less than 3, then my suggestion is only do 1 deal. If you don't have any apartment building, then don't do either of these deals.

I have bought multiple apartment buildings at the same time (with couple of months). It is doable if you have the right people on the ground to manage for you.

My very 1st apartment building buy was my worst investment as I under-estimated a lot of cost, especially utilities vs small multi-plex or SFH. If you are in Canada, being very cold, heating cost likely will be very high for owners. This winter, we had some cold spells in the US, some of my apartment buildings had extremely high utilities bills. Please make sure your expenses includes everything, try to assume worst case.

Theresa Harris · Answer

Good luck. I bought two houses at the same time (twice actually), but not apartments.

Trying to get two apartment complexes at once?

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