First time real estate investor in Windsor

House Hacking
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First time real estate investor in Windsor

Sat Palshetkar
Member since 2023 · 2 posts · 4 votes

Hey,

I'm a first time investor in real estate and my wife and I are planning to invest (with house hacking) in Windsor, Ontario, Canada. Our agent is very helpful and found us a great deal (duplex). I wanted to share the numbers and want to make sense if it's a good deal for us according to what we are looking for.

Price: $450k (agent said that we can get it down to $420k)
2 Units (1 bedroom in each unit)
Mortgage with 3 year fixed comes up to around $2.3k
Insurance and tax is roughly $400
Rent per unit is $1.4k so if we move out then total rent comes up to $2.8k
There's a detached ADU (garage) that can give us another $100-$150 if we rent it for storage and there's a scope of converting it into another unit later on.

So currently rough calculation says that it can cashflow up to $300 per month. But my question is that if we consider other operating costs like maintenance, capital expenditure, vacancy, etc then this property won't cash flow, so is this a good deal? Am I stretching this too much by adding these operating costs?

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Stevo Sun
Calgary, AB · Member since 2021 · 327 posts · 176 votes
2y
Quote from @Sat Palshetkar:

Hey,

I'm a first time investor in real estate and my wife and I are planning to invest (with house hacking) in Windsor, Ontario, Canada. Our agent is very helpful and found us a great deal (duplex). I wanted to share the numbers and want to make sense if it's a good deal for us according to what we are looking for.

Price: $450k (agent said that we can get it down to $420k)
2 Units (1 bedroom in each unit)
Mortgage with 3 year fixed comes up to around $2.3k
Insurance and tax is roughly $400
Rent per unit is $1.4k so if we move out then total rent comes up to $2.8k
There's a detached ADU (garage) that can give us another $100-$150 if we rent it for storage and there's a scope of converting it into another unit later on.

So currently rough calculation says that it can cashflow up to $300 per month. But my question is that if we consider other operating costs like maintenance, capital expenditure, vacancy, etc then this property won't cash flow, so is this a good deal? Am I stretching this too much by adding these operating costs?

The numbers are tough and it's hard to account for all unforseen expenses. There's no risk free investment in real estate. So it's really what you are comfortable with and what your investment thesis is.
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  • Stevo Sun
    Calgary, AB · Member since 2021 · 327 posts · 176 votes
    2y
    Quote from @Sat Palshetkar:

    Hey,

    I'm a first time investor in real estate and my wife and I are planning to invest (with house hacking) in Windsor, Ontario, Canada. Our agent is very helpful and found us a great deal (duplex). I wanted to share the numbers and want to make sense if it's a good deal for us according to what we are looking for.

    Price: $450k (agent said that we can get it down to $420k)
    2 Units (1 bedroom in each unit)
    Mortgage with 3 year fixed comes up to around $2.3k
    Insurance and tax is roughly $400
    Rent per unit is $1.4k so if we move out then total rent comes up to $2.8k
    There's a detached ADU (garage) that can give us another $100-$150 if we rent it for storage and there's a scope of converting it into another unit later on.

    So currently rough calculation says that it can cashflow up to $300 per month. But my question is that if we consider other operating costs like maintenance, capital expenditure, vacancy, etc then this property won't cash flow, so is this a good deal? Am I stretching this too much by adding these operating costs?

    The numbers are tough and it's hard to account for all unforseen expenses. There's no risk free investment in real estate. So it's really what you are comfortable with and what your investment thesis is.
    1Reply
  • Huong Luu
    Specialist · Vancouver, BC · Member since 2016 · 315 posts · 145 votes
    2y

    @Sat Palshetkar Welcome to the RE world and congradulations on jumping in. If you are planning on living there (ie in 1 unit) then you are house-hacking and this is a different calculation consideration then renting out both units and making it a true investment. If you are living there, then you need to weigh the benefits of having a home, as oppose to renting somewhere else. Your calculations should include utililies and repairs, legals, snow removal, etc. Keep in mind if you are house-hacking, you will only be able to write off a percentage of the bills. Even if you are negative cash flowing but living there, it may be worth it, as you are not paying rent to someone else. You need to consider how long you will live there. Anything less than 5 years may not be worth it. 

    Will this property allow for Bill 23? If you are not going to leave there at all, and you can't do Bill 23 or have any value-add to get to positive cash flow, then NO, don't do it. 

    As a side note: my 1st place was also a house-hack. Best financial move I made. 

    0Reply
  • Stevo Sun
    Calgary, AB · Member since 2021 · 327 posts · 176 votes
    2y
    Quote from @Huong Luu:

    @Sat Palshetkar Welcome to the RE world and congradulations on jumping in. If you are planning on living there (ie in 1 unit) then you are house-hacking and this is a different calculation consideration then renting out both units and making it a true investment. If you are living there, then you need to weigh the benefits of having a home, as oppose to renting somewhere else. Your calculations should include utililies and repairs, legals, snow removal, etc. Keep in mind if you are house-hacking, you will only be able to write off a percentage of the bills. Even if you are negative cash flowing but living there, it may be worth it, as you are not paying rent to someone else. You need to consider how long you will live there. Anything less than 5 years may not be worth it. 

    Will this property allow for Bill 23? If you are not going to leave there at all, and you can't do Bill 23 or have any value-add to get to positive cash flow, then NO, don't do it. 

    As a side note: my 1st place was also a house-hack. Best financial move I made. 


     I mostly agree with Huong, but in specific cases, a small negative cash flow is not the end of the world. For example, if the property you are buying is a development property, like a small house with a large lot in a developing area, then a small negative cash flow could be okay if you can carry it. You have to be honest with yourself, understand the risks and assess if you can afford the negative cash flow. This is where your investment thesis comes in. Are you buying this property for cash flow? Are you buying this property for redevelopment? Are you buying this property for some other reason?

    No one can answer this for you; you have to be intentional about what you plan. Some people have gotten lucky in the past, and the market has carried them through everything. This has been the experience in Vancouver and Toronto for the last while, where anything and everything just increased in value by crazy amounts. 

    Where I am, the market has been flat and down for a long time. It has accelerated quite substantially in the last couple of years due to Ontario and BC migration (both in people and capital). But I don't think anyone can be sure if that will last.

    0Reply
  • Kunal Saluja
    Windsor, ON · Member since 2024 · 4 posts · 0 votes
    1y

    Hi Sat!

    I did exactly this in Windsor myself, would be happy to chat about it, feel free to reach out.

    0Reply
    • James Turner
      Los Angeles, CA · Member since 2015 · 3 posts · 0 votes
      1y
      Quote from @Kunal Saluja:

      Hi Sat!

      I did exactly this in Windsor myself, would be happy to chat about it, feel free to reach out.

      Would love to connect please call me at 510-943-2539 or else please share a number for me to call you 


      0Reply
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