Hi BP community, this is my first engagement on the forums. I've listened to many of the podcasts and I'm looking for some guidance for the Canadian (Ontario) real estate market. Any help would be appreciated and I welcome any brutal honesty.
I purchased a home in the Toronto (Beaches) and would like to plan my next move.
In my mind:
Option A: use my 50k HELOC + 60K savings to fund basement reno (1 bed rental).
cash flow "immediately" $1400/m (excluding expenses)
In future... rent main floor (3 bed) for $2800
$1400 (basement 1 bed) + $2800 (upstairs 3 bed) = $4200 (excluding expenses)
(note: Mortgage is $2800/m)
pros: no travel, increasing density/existing squarefootage, proximity to Toronto, high ROI (15%), money back in 6.5yrs
cons: no leverage or debt pay down on second property,
Option B: use 50k HELOC and 60k savings for a downpayment on a 500k-600k du/tri outside of the city. Cash flow might be $100-400
pro: leverage, greater (potential) return on appreciation of 2 properties, debt pay down on second property, step towards a larger portfolio
con: travel distance, highly leveraged, property management, low ROI (3%), money back in 36 years.
Option C: something I'm not thinking of?
Thanks. Happy to grab coffee with someone to go over options in more detail, partnerships are always an option. Finding deals... use an agent? MLS? Basement reno's/underpinning in 100+ yr old homes? What's your experience?
Option C1: Find yourself a partner some distance away from the Big Smoke where 600K will buy you 6+ units and the property will cash-flow 600+ / month.
@Kyle Good Honestly different investment styles suit different goals and lifestyles. The reality is there isn't one universal best thing to do.
It really depends what you value (your time, cash flow, appreciation potential, tenant profile, etc) & what your long term investment goals are.
I think step 1 is figuring out what your clear cut approval looks like & investigating deals as they come and seeing what makes sense. I'd really recommend going to see a few of the property types listed in option A & B, have a walk through and see how you feel.
Your plans will likely adjust once you're actively out looking.
Feel free to DM me I can set aside some time this week for a call.
The Option A is for a reno in your existing home?
@Meghan Chomut yes the basement reno would be in my primary residence.
@Roy N. thanks, I haven't seriously considered the the partner thing, but I will now. Appreciate the feedback
@Jacob Perez bang on. I need to get out and see some properties for option B. just for clarity, option A is in my primary residence. After I've seen some more deals i'll circle back with you. Appreciate it!
look a little further like Roy said where you can find a 6 unit or more around 500-600k that cash flows well