Is it reasonable that I can only cover mtg, ppty insurance

Member since 2020 · 3 posts · 0 votes

I recently bought my 2nd ppty but the market rent can only cover the mtg and ppty tax. Is that reasonable? How can I turn it into a positive cash flow ppty?

0 Reply

16 views

Most Popular Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

@Chien-Jung Huang

If the fixed expenses are mortgage and taxes (not including all the other costs) it does not appear you can lower those two

So you need to increase revenue. Can you rent by room, or get more in rent somehow. Unless this is in a high appreciating area I would sell it ASAP and be prepared to take a loss, as it is just going to continue to burn a hole in your pocket

7e investments53 Reviews

Website View Page

2 Reply

See this reply in the discussion

7 Replies

Jump to latestLatest

Sort by

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
6y
@Chien-Jung Huang
If the fixed expenses are mortgage and taxes (not including all the other costs) it does not appear you can lower those two
So you need to increase revenue. Can you rent by room, or get more in rent somehow. Unless this is in a high appreciating area I would sell it ASAP and be prepared to take a loss, as it is just going to continue to burn a hole in your pocket
7e investments53 Reviews
Website View Page
2 Reply
Anthony Therrien-Bernard
Realtor · Calgary, Alberta · Member since 2018 · 291 posts · 132 votes
6y
It doesn't sound reasonable to me unless there was high probability of high appreciation, as Chris said I would also sell ASAP and purchase a good cash flowing property instead. You need to calculate your net cash flow taking mortgage, property tax, maintenance, vacancy, insurances, property management, utilities and whatever other cost you have into consideration, it should cash flow after paying all these costs( and personally I also stress test whole thing with lower rent and higher interest rates just to be sure).
1 Reply
Account Closed
Rental Property Investor · Port Coquitlam, BC · Member since 2017 · 520 posts · 527 votes
6y
What was your process for selecting this property? Does your market have rent control?
2 Reply
Chien-Jung Huang
OP
Member since 2020 · 3 posts · 0 votes
6y
Hi guys, thanks for your feedback. Yes, the area I am buying has recently passed increased it's vale. That's why I decide to proceed to buy the 2nd one. However, there were some electrical and plumbing issues in place when I visited the ppty. The good things are that all is resolved and I was able to convert the storage/garage room into the 4th room with city permit. After spending all these money, my property manager told me that the market rent can only cover mtg and ppty tax. I was worried..... Hope the forced appreciation can help me build up some equity soon once the tenants move in may.
Really appreciate your feedback tho..
0 Reply
Chien-Jung Huang
OP
Member since 2020 · 3 posts · 0 votes
6y
Harry thank you for the feedback. Will put it into my consideration.
Cheers
0 Reply
Brian Murphy
New to Real Estate · Edmonton, Alberta · Member since 2020 · 10 posts · 5 votes
6y
Hi 👋
I currently live in Edmonton and have a duplex 3 up two down (Basement suite). I used to live upstairs and rent downstairs until last September. I then bought my principal property which is a 3 bedroom single family. I am currently adding a garage suite to this property and will have good cashflow once both are rented. For my rental ...the first year I was only breaking even once everything was covered but for the upcoming year I will have positive cashflow but not a vast amount due to increasing the rent, allowing pets etc There is a future lrt coming (due to start next year) it will have 3 stations in close proximity of the house and I am hoping that this will also add appreciation
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.