All Forum Posts by: Anthony Therrien-Bernard

@Anthony Therrien-Bernard Hi Anthony, would you mind sharing your broker recommendation also?

Looking for some advice... I am purchasing my first rental property, a triplex. I would like to know if there is anyone doing depreciation on the rental property? I know that CCA deduction claimed will become taxable upon sale of the property. What should I consider in order to make the decision for my situation? like my current taxable income level, the future appreciation of the property...

Thanks in advance!

Wendy

Quote from @Theresa Harris:

Quote from @Soumojit Sarkar:

Quote from @Theresa Harris:

Quote from @Soumojit Sarkar:

Quote from @Stevo Sun:

I think cash flow in major cities in Canada is hard to find. They are out there but usually in the 'not the best' neighborhoods. Real estate in Canada vs. the US is wildly different. Finding something cash-flowing as soon as you buy would be challenging in the locations you mentioned. You need to look for something you can handle while paying the mortgage and waiting for rent to appreciate. So eventually, your mortgage payment will be lower, and the rents will be higher, then you can cash flow. Hopefully, at the same time, your property has also appreciated a bunch!

 @Stevo Sun: But you cannot get rid of old tenants unless you move-in yourself or do significant renovations?

 It depends where you are and how they are renting.  In BC with annual leases, yes you can. You just don't renew their lease.  Month to month are a bit harder, but still possible. Other areas, eg AB, you give appropriate notice if they are month to month.

AFAIK, all annual leases become month-to-month automatically after the lease duration in BC (at least in the Greater Vancouver area). Please correct me if I am wrong.

 No they don't.  You can keep renewing them as annual leases or if you want, you can change to a month to month.  I keep leases because it is easier to end them at the end (if needed) than to end a month to month.  Note that if the tenant doesn't want to renew the lease as a fixed term and wants to do month to month only, apparently you have to do month to month (or not renew the lease).

 Unfortunately just because a lease is a fixed term (ie one year) doesn't mean you can terminate them at the end of the lease. You can say the lease ends on a specific date, but you need to give a legitimate reason to end the lease on that date such as you or a direct family member are moving into the unit. 

So even if a lease has an expiry date, you can not evict for any reason other than the typical reasons (Personal use of the property or extensive renovations) 

Quote from @Chris Baxter:

You can make any property cash flow with a big enough down-payment. When you do that, though, returns are typically miserable, and you'd be better served with a different investment vehicle. 

Is purchasing real estate with 100% cash a bad investment to you? I’m here to learn!

Are there still some city/suburbs in Canada where you can cash-flow positive/breakeven as an investor in the condo/townhouse market?

Hi Folks,

I want to renovate a 1950s bungalow in Calgary, AB (Canada, cold up here). I'm looking to gut the entire property and redo everything. What I would want ideally is something that can be a little more higher end (not luxury by any means) that will increase the property value (think flip), but it will likely be a rental for a while. 

My question is, what materials would be durable/low maintenance enough for rental but also 'fancy' enough for a flip? I understand I might be able to get the best of both worlds, but I'm hoping to get some guidance on material selections from more experienced rehab/renovators!

For starters, I'm thinking about the following:

Flooring - LVP

Counters - quartz

Cabinets - not sure, I heard MDF is not durable enough, but solid wood seems quite expensive (also what colours would be good? I know white/light colors are popular choices, but I always thought they would get dirty too fast)

Fittings - matte black (looks higher end and easier to clean?)

Shower/Bath - not sure, I heard James Dainard say that for rental shower/tub surrounds are good cuz it's lower maintenance and more durable for waterproofing purposes. I'm very torn here because I think tiling would add more value to the property. Is the best move to put in a surround for now and renovate it to tile later?

Am I missing anything big items for consideration? Thanks for everyone's help in advance!

Quote from @Lubica J.:

Quote from @Paul Sverdlin:

Welcome to RE investing Lubica.

As an investor in Ontario and Ohio I can totally relate to your frustration. It is not that the books or US focused podcasts are incorrect. Its just that they seem to be behind the interest rate increase wave. It was easy to find a cashflowing property when rates were 1.5%. Now at 5-6% the same task is nearly impossible. 

When reading your post I recalled Robert Kiyosaki's books. Not sure which one covers it, but he mentioned that him and his wife waited 4 years at some point to buy their real estate. That time went into market research, negotiation, saving up some cash, etc. There is no need to jump into the market when cashflow is negative! Personally I've been on sidelines for 2 years already, constantly assessing deals and not buying anything yet. There will be an estate sale, a foreclosure, a duplex (or better a triplex) that will make the cut and we'll pick it up. As Warren Buffett famously said: imagine you have a card with only 20 holes to punch. You'd be very careful about what to buy if you could only make 20 buy decisions in your lifetime. Speaking of Buffett - he's been sitting on piles of cash for 12 years before making a couple of purchases in the last few years.

To be a bit more action biased I'd look at Alberta where prices are still low-ish; at houses without any condo fees where you could carve out 3 units to rent instead of just one; perhaps STR-MTR in cottage country where you could negotiate a good deal. Those seem to be the only options on the table now in southern Ontario. As for US - Florida short-term rentals are clearly cashflowing if you'd be willing to invest in US. Nothing is keeping you in Canada from investing perspective. I've gone to US a long time ago and its been amazing. Just pick a landlord-friendly state and see how different an eviction process works as compared to our %^&& LTB up here.

Thank you for your support and encouragement, @Paul Sverdlin, I really appreciate it. I have been hearing that Canadian house market bottomed already (they say US market did not yet) and is about to start rising again, so I admit that I feel the pressure. I believe that it is better to buy cheaper and pay more on mortgage, because I can always adjust the mortgage later (if I have a full -feature mortgage), but I cannot fix the high purchase price if I buy when everyone else jumps into the market.

I am also VERY risk averse and have been reading financial books regularly for over 15 years, though I admit that I don’t recall nearly as much of their content as you do. I was always too scared to take action. However the pain of not doing anything grows over the time and I am now at the point when the pain of inaction is bigger than the fear of failure. I am absolutely determined to find answers to all of the million questions I have and to buy my first property this year even if the market is not right – I will try to put more hours of work and research into it to compensate for the more difficult conditions. I also don’t believe that I could time the market correctly, so I might as well jump in, I just need to find the best way to do it.

I heard that Alberta is more cyclical and oil-dependent? That when the oil price goes down, companies reduce drilling and many people leave the province and rents plumet. If I invest in Alberta, I will have to do it remotedly so that I can keep my job – in which case it might be better to invest remotedly in USA?

Love your advice on landlord friendly states – I’ve seen some scary enviction troubles on YouTube. I am going to research remote investing and setting up local teams (cleaners + handyman etc) more both for Canadian provinces and US, so I’ll look into Florida numbers closer.

Would you know, are there any additional taxes for foreign investors purchasing US properties that local residents do not pay?

Thank you again.

 @Lubica J.  "I am also VERY risk averse and have been reading financial books regularly for over 15 years, though I admit that I don’t recall nearly as much of their content as you do. I was always too scared to take action. However the pain of not doing anything grows over the time and I am now at the point when the pain of inaction is bigger than the fear of failure. I am absolutely determined to find answers to all of the million questions I have and to buy my first property this year even if the market is not right"

This is a very important realization, but you need to take it a step further. Inaction is still a choice and what has not taking action cost you? You will never find the answers to the millions of questions you have, especially if you don't start taking action.

I'm not suggesting you take unnecessary risks, but if you wait until you know everything before you buy, you'll never buy. 

I'm a huge fan of Josh Dorkin's saying "If knowledge was the key, we would all be rockstars with 6 pack abs." We all know exactly how to get six pack abs. Lots and lots of situps. So why don't we all have 6 pack abs? We don't do the action. 

Knowledge isn't your problem. 

I bought my first investment property in Prince George. I had never set foot in Prince George and I bought it sight unseen. I had a good idea what it would rent for and calculated the basic expenses. My calculations we pretty close to reality and it's generated a steady profit for 6 years now. I could have spent months or years researching migration trends, the economy of PG, historic vacancy rates, blah, blah, blah. I could have found a million reasons to talk myself out of buying. What I learned from the first one, I used to buy 3 more in PG and then 4 on Vancouver Island. 

When you're calculating whether or not to take action, if you're going to calculate the cost of a bad investment, be sure to calculate the cost of not taking action as well. There's risk to inaction.

There a lot more people that have failed to take action, and lost out on great investments, than there are people that were too bold and took action when they shouldn't.

I heard that Alberta is more cyclical and oil-dependent? That when the oil price goes down, companies reduce drilling and many people leave the province and rents plumet. If I invest in Alberta, I will have to do it remotedly so that I can keep my job – in which case it might be better to invest remotedly in USA?

Love your advice on landlord friendly states – I’ve seen some scary enviction troubles on YouTube. I am going to research remote investing and setting up local teams (cleaners + handyman etc) more both for Canadian provinces and US, so I’ll look into Florida numbers closer.

Would you know, are there any additional taxes for foreign investors purchasing US properties that local residents do not pay?

Feel free to DM me and we can connect directly.
From what I hear Alberta is less and less dependent on oil, it is clearly diversifying, but I am no expert in that area. Just heard from multiple sources that compared to Ontario there are better deals to be had there.

Think through tenant-landlord laws carefully. In ON you can't raise rent beyond government set limits (which are capped at max 2.5% per year even when inflation is 9%). We can't remove tenants if we want to sell the house since they live in it; making it nearly impossible to show a nice looking renovated home to prospective buyers. Since raising rents is hard - tenants tend to stay longer, meaning that you may end up renting your unit for $1000 below market and won't even be able to sell it if the tenant refuses to show the unit to prospective buyers. Any kind of issues with non-payment of rent will take 8-12 months to resolve through our Landlord Tenant Board and you'd have to carry the house, pay for legal advise, etc while the tenant will employ a free lawyer from Legal Aid. There is no "security deposit" which can be applied towards damages and suing the tenant for damages is pointless as they have no money usually. Etc-etc-etc. In AB or in US the laws are much more landlord friendly. There is no "security deposit" which can be applied towards damages and suing the tenant for damages is pointless as they have no money usually. Etc-etc-etc.
 

There are no additional taxes in the US for Canadians that I am aware of, however you will need a legal structure, a bank account, you need an ITIN from IRS, you need to file taxes in Canada and US (and pay accountants extra due to complexity). Luckily US tax will be considered when you pay Canadian taxes to avoid double taxation, yet there are some cases when that's an issue to be carefully researched. Most of those points are one-and-done hindrances though, you can set up the system once and let it serve you for decades. 

Quote from @Stevo Sun:

Quote from @Theresa Harris:

Quote from @Lubica J.:

 It really depends where you are in Alberta. In Calgary, Edmonton and 'the north' it definitely depends on oil.  In the south (eg Lethbridge), not so much.

 Oil and gas comprise about 20-25% of Alberta's revenue base. So it is a massive factor in the economy's overall health here. I can promise you when oil crashes, the housing market is very depressed. The reason is that the oil and gas sector has always had very high-paying jobs; when those jobs get cut the overall economy in Alberta suffers. Think about all the consumer/retail/hospitality industries that serve the major population centers (Edmonton and Calgary); those will take a huge hit too. 

So I think as long as you are prepared for the cyclical nature of AB and know there will be good and bad times, you will do fine.

I agree it is important, but there are cities in the south where it doesn't affect housing. I can tell you that as I live in one of them and have for almost 20 years.  When prices went down about 10 years ago, that didn't happen where I live.

I had a deal brought to me that looks good on paper, is close to me, and has a motivated seller. Even at asking price, the numbers seem to work out decently. My only problem is I'm currently renovating a property and don't have enough to take it.

Any advice on what I should do? The property is located in Alberta, Camrose