Rental Property Investor 路 Montreal, Quebec 路 Member since 2014 路 100 posts 路 42 votes
Hey Fellow BP members,
I'm so excited! I just purchased my 3rd SFH in Montreal, Canada 3 weeks ago. I purchased the property for 165K, however it's worth more like 200K in it's current condition. It came with tenants & the cashflow is decent. The best part about this deal is that I actually didn't have to come out of pocket at all. The bank took a lien on my 2nd property for 20% which means that I didn't have to take out mortgage insurance through CMHC & I didn't have to come out of pocket. I also worked out a deal with my real estate broker & the bank broker whereas they would split the costs for my notary.
I'm so happy with how this deal turned out. I have a beautiful house that is already cash flowing & It didn't hurt my back account at all. :) I'm looking forward to my next buy & hold. Hopefully I'll be just as lucky the next time. It's awesome trying to figure out creative ways to save money. On to the next one... Hopefully Jan/Feb 2016!~
@NormaJean Cupp Thanks a lot Norma... I'm definitely starting to get a feel for everything. Even with 3 houses I'm still a newbie but I'm learning everyday & I'm so excited about future projects & learning as much as possible. Sky's the limit!~ :)
@Lisa Lavie Congrats! I was just visiting Montreal and obviously i couldn't help but look at some of the prices and what the market rate for different properties were. I saw on your profile that you were looking at investing in Miami. I was curious on how owning and renting properties in different countries work with taxes, financing, currency exchanges, etc. Could you shed some light on what you have found thus far?
Hey Connor, Thanks a lot!
I have a unique situation being that I'm a Canadian citizen but I do a lot of work in the states. So far I've only invested in Canada so I don't have anything to compare it to but I hopefully will in 6 months or so I will hehehe! :P I currently live in NYC but I'm always keeping my eyes open for great deals in Montreal. Miami is somewhere that I'd also like to focus on.
Financing differs in Canada... normally the term of the mortgage with the bank is for a 5 years period & then renewable afterwards which could be a good thing or a bad thing. For the property I just purchased it was great because I purchased the property when interest rates are historically low. I'm locked in at 2.64% for the next 5 years. What the interest rates will be in 5 years though is another story & no one really knows, however for the last 4 years the interest rates have stayed steady around the 3% mark.
Currency is in my favor at the moment seeing that I make most of my money in the US, so when I transfer it over to my Canadian accounts, I come out ahead again that could change but for now, it's awesome.
other bits of info:
*In Canada the total term of your loan is 25 years, not 30 years like the US. It use to be 30 years but that was changed in 2012.
*US citizens investing in Canada have to put at least 25% down
*In Canada when purchasing your first house, you could get away with putting only 5% down on a property, when purchasing a 2nd home as an investment property (that you won't live in) you're required to put down 20%.
@Craig Bellot Hey Craig, thanks! I'm constantly looking at properties & being patient until the right deal comes along. Everything fell into place perfectly for this deal. It was only on the market for 3 days but the owner wanted to seal the deal right away & we worked it out. I knew that if I didn't jump all over this place that it was going to be off the market in a matter of days, so I made an offer immediately & luckily it was accepted. :)
@Daniel Schulman Thanks a lot Daniel! So I purchased my 2nd property 10 months ago. It was a foreclosure. I bought it for 161K but the municipal evaluation on the property is at 228K & I also put 20% down on the property, so there was enough equity to be able to put a 20% lien on this property. I honestly didn't know this was an option for me but the bank I deal with is awesome & they offered me that option. :))
So does the bank effectively finance you 100% of the purchase price and just place a lien against your other property as collateral? I'm not sure I understood the details. Is the interest rate consistent with standard conventional loans of 80% or did you pay a premium to secure the 100% financing?
Thanks for letting me pry! This is very interesting to me.
Hey Nathan...Thanks a lot! A lien was places on my 2nd property in the event that I wouldn't pay for this property, they could then force me to sell my 2nd property to pay for the property I'm delinquent on. I didn't have to pay more on my 2nd property & anything on my 3rd, it's just a lien set in place in the event that something goes wrong on my end but both places are rented & all of the extra income that I have coming in every month stays in their respective bank accounts. I never use that cash flow, I keep in there for a rainy day. :)
The interest rates in Canada are historically low at the moment. I'm locked in for 5 years at 2.64% & I didn't have to pay any premium for the full financing. :)) So happy!
@Lisa LavieAnother creative financing option, I am learning options for all the financing options to be able to make my next MF building. Thanks !
Thanks a lot Siraj... I have yet to get into MF units but definitely want to do so in the near future. Good luck with your investments. Any info you want to share, I'm all ears heheh :)
It sounds like you've found some interesting ways to buy property with very little money down! I have some money to put down, but can't seem to find houses for a decent price that will cash flow well. Do you find being in the real estate industry really gives you the inside scoop? Do you have any advice for someone looking for a good deal who is not in the industry?
Hey Dea, Thanks a lot. The way I found this property was by being very patient & waiting for something interesting to pop up. I always search in my own area. It makes me feel a lot more comfortable because I know my market really well when it comes to SFH, so I tend to stick to what I know. I literally search MLS listings everyday and keep tabs of whats on the market, what sold, etc Your area may not have cash flowing properties, maybe you have to go a little outside of your neighborhood. :)
Congrats @Lisa Lavie! That's an awesome deal! Is that new property in Chateauguay as well? How much does it rent for (if you don't mind sharing)?
Hey Philippe, How are you? Yes, it's also in Chateauguay. The previous owner still lives in the property, I offered him to stay in the property for the next year if he'd like & he wanted to. In doing so I rented it to him for a lot less than I would typically rent it for. He's renting it for $1100 which is right above how much the expenses of keeping that property is (after mortgage, taxes & insurance)... Next July when he moves out, I'll be fixing it up slightly & putting it for rent at $1300. It will cashflow roughly 300$ a month starting next July. I've tested the market for that house to see if renting that type of property out for $1,300 would be feasible & it is! :) How are things going on your end? Any new deals?
Great job @Lisa Lavie! I am currently exploring creative ways to use equity to finance future investments! Did you lender required 2-3 months of cash reserve for your current properties in addition to 6 months reserve on your new property?
Hey Carlos.. Thanks a lot! They actually didn't require any cash reserve to move forward with this deal. It was done so smoothly and had no hiccups along the way. I feel very lucky!
Congrats & Question for Lisa: Does the property cash flow, break even or have a monthly loss after the accumulated loans-taxes-PITI ?
Hey Claude, Thank you! The property cash flows. For the time being, I allowed the previous owner to live in it for the next year covering all expenses & barely making cashflow but next July once he moves out after mortgage, taxes & insurance the property will cashflow a little under 300$ a month. :)