Rental Property Investor · Saint John, New Brunswick · Member since 2016 · 19 posts · 8 votes
6y
There is development on every end of the city in Saint John, NB and the surrounding communities. It may be worth a call to a seasoned realtor who is familiar with the city and has experience with multi family properties.
I just purchased a 4 unit and had people show up at the property asking to rent before it is even ready. There is tons of growth here right now.
@Jasmine May with 20% down and a 25 year mortgage, your monthly mortgage payments are $1200, add to that your taxes and you have $500 to cover insurance, maintenance and repairs. The market is hot in a number of places. Don't overpay just to get a place, if the numbers work for you, then get it.
Thanks for your response Chris and Theresa. What sort of cash flows would you expect generally?
Can you show me some numbers please?
This specific property, according to my model, cashflows about $40 per month. That's after paying mortgage (20% deposit), insurance and property taxes. I've accounted for 2% vacancy.
Rental Property Investor · Port Coquitlam, BC · Member since 2017 · 520 posts · 527 votes
6y
@Jasmine May have you accounted for utilities (water/sewer), repairs, property management? Estimating all of these (I don't invest in Halifax and therefore don't have these dialed in) the property doesn't make sense for me (note that I also don't buy SF residential). If you are happy and confident with your numbers, that's really all that matters. As noted by @Theresa Harris, don't overpay for FOMO (fear of missing out). Good luck!
To be totally honest, it is FOMO. I am sitting on about $500k cash and bidding wars everywhere. LOGICALLY speaking, I shouldn't be investing now. We are in the middle of a huge pandemic, low immigration, university students not coming back this year, CERB/mortgage deferrals ending soon. I think I should just see how this winter turns out.
BUT nothing is following logic these days.
Bidding wars in RE in the backdrop of huge unemployment and epic recession !! I am losing my mind!
@Jasmine May If you are afraid of missing out and want to get in on the action-then sit back and think about what you want to do. Channel that vulcan logic as it will serve you well. I have two condos and two SFH and honestly the SFH are the better option. Condo fees eat up a lot of your cash flow and while both of my condos are well run, I've had one before that wasn't.
Some people like university rentals. Where I am courses are online in the fall, but 60% of the students say they are returning to town anyhow. I like the stability of non-student rentals, plus students are often living on their own for the first time and that can create more problems (eg dish soap in dishwasher).
Take your time to look at places. Are there any towns outside of Halifax with good rental potential that are less expensive? You might find things slow down in the winter, but it will also be harder to find tenants in the winter. Ideally you could find something in Jan-Feb and have closing March or April when things start to warm up.
Thanks for your response Chris and Theresa. What sort of cash flows would you expect generally?
Can you show me some numbers please?
This specific property, according to my model, cashflows about $40 per month. That's after paying mortgage (20% deposit), insurance and property taxes. I've accounted for 2% vacancy.
Don't forget there are some utilities that you will pay (garbage and sewer are two that come to mind).
Rental Property Investor · Port Coquitlam, BC · Member since 2017 · 520 posts · 527 votes
6y
If it helps, we are also sitting on a pile of cash waiting for the right opportunity. With $500k, you can get into mid-sized MF deals and get a much better return than buying a SF home. There will be opportunities when the financial realities settle in.
"LOGICALLY speaking, I shouldn't be investing now."... now you've answered your own question. REI is about logic and numbers NOT emotion (which is how homeowners buy).
In comparison the last one I bought out west here (April 2020) for $328k I put $37k in and it rents for $3200 monthly... so no, I certainly wouldn’t buy that unit.
Investor · Canada · Member since 2017 · 40 posts · 32 votes
6y
I would also pass on this property unless you increase the income. I've found the 1% rule on income and 50% rule for expenses to be quite accurate for a quick analysis. I agree with the previous comments that this property would not cash flow.
Few expenses missing assuming SFH:
Vacancy
Utility cost - Heat, Electricity, Water/Waste? (even if tenants pay, you should factor some cost during turnovers or for when you get stuck with the bill).
Insurance
Taxes - Depending on location, taxes will reset to purchase price. For example, in Saint John, NB, the taxes will reset at 1% of the transaction value.
Property management - 10% of gross rents (even if self-managed, your time has to be valued)
CAPEX - 5% gross rents
OPEX - 5% gross rents
Snow/Lawn (who's responsible)
Bookkeeping/Legal/Accounting
I would not buy on the fear of missing out, investors should be disciplined, you do not have to swing at every ball thrown. If you can't find any opportunities in your market, try searching in a different market!
Rental Property Investor · Saint John, New Brunswick · Member since 2016 · 19 posts · 8 votes
6y
There is development on every end of the city in Saint John, NB and the surrounding communities. It may be worth a call to a seasoned realtor who is familiar with the city and has experience with multi family properties.
I just purchased a 4 unit and had people show up at the property asking to rent before it is even ready. There is tons of growth here right now.
@Jasmine May I’m still new and only doing a lot of number working, research, and meetings. However, this property doesn’t seem that it would have a positive cash flow. Always look for a good deal. This doesn’t seem to be the best deal, so hold tight and keep looking. I have a spread sheet set up currently where when I find a property I’m interested in, I plug in the numbers and project what I will be making for the next year as long as it is rented.
Rental Property Investor · Halifax, NS · Member since 2019 · 41 posts · 33 votes
6y
@Jasmine May Hey there, I am in Halifax and things are hot here. But have you considered investing in surrounding areas like windsor, truro, kentville ? I recently just bought a duplex in Kentville and so far it cashflows 1000+ a month. And a lot of properties there perfectly meets 1% mark. Of course, if you are also thinking about buying with potential to appreciate, then Halifax is surely a great market for that.