All Forum Posts by: Huong Luu

Hi BP Family, I am putting together a list of Fears/Worries around RE for a presentation I am doing. Last summer I met a gentleman who told me he was worried about the RE market in Canada and US and so liquidated all of his US portfolio and most of his Canadian portfolio. He was worried he would lose his $40M... What would you recommend/say to this person? What fears have you heard from others? Thanks in advance for any feedback.

@Kyle Johnston

Depending on where you are in Northern Ontario, there are affordable properties you can get that should cash flow since the purchase price is lower. I was recently looking at places in Timmins for $250K and Thunder Bay for $400K. Look at SFU that have the opportunity for you to convert to duplex. When you say SOUTH, do you mean southern Ontario or the US? Good luck.

@Hardik Solanki, I would suggest you and your friend decide what you want to be doing in 2 yrs, 5 yrs, 10 yrs, etc, and how involved you want to be in RE. You can invest in RE very passively or actively. Part of this is what you want in the end. Depending on your answers to these, that will determine the strategy you pick. I would suggest you guys look into partnership structures as well. It may make sense for both of you to buy your 1st place under your own name to take advantage of the tax benefits while using the 5% primary residence and RRSP FTHB, and HELOC. Once you buy a property, some of these will not be available. Best to talk to an accountant on this.

You also asked about cashflow. Be more specific about what this means to you. $1 is still positive cash flow. Learn to analysis and run your numbers. I would also suggest you focus appreciation on FORCED appreciation rather than future appreciation. Good Luck. 

@Elijah Williamson

Be more specific of the investment deals you are looking for so you don't waste your time. If you put even $5K of earnest money in, that could get tied up for a couple of weeks, as the seller could instruct their lawyer or broker not to release the funds. I have done deals with $0 earnest down, so it depends on the conversations you are having with the seller.  Good luck

@Doug Findlay Welcome to the REI world. 36 hours in and your already found BP. Good job! I would suggest you and your wife get as much knowledge over the next 3-6 months as possible, while getting the HELOC set up. During these 3-6 months, find a mentor, figure out what strategy you want to do, how much risk you are willing to take, etc. Just because you have family in the US, doesn't mean they want to get into RE. Also, the area they are in, may not be an area you want to invest in. A word of caution, the HELOC has to be paid back so it is no free money. Take some time and read up on OPM and Smiths Maneuver. Buying an investment property may be a few months off yet for you, so maybe using the HELOC for second private mortgages may be an option.

Good luck

CIBC has a pkg starting at $6/m

@Jocelyne Sema to expand on what @Chris Baxter and @Account Closed shared with you:

1. The heloc you get with your primary residency: Get a re-advanceable kind (ie as you pay down your mortgage, the heloc goes up). When you make an investment with the heloc, the interest you pay on the heloc is a tax-deduction. Look into Smith Maneuver.  

2. Do you want to be a landlord? What is your long term goal?

3. Take the time to learn how to analysis properties and determine if you had to carry the investment properties along with the new mortgage, how long would you be able to carry them (worst case scenario)? Ensure your plan has a mitigation to protect your primary house.

Good luck. 

@Cloud Huang You are in a great position! If you plan on staying in your job long term, then perhaps a TURN-KEY rental portfolio is better suited for you. You are completely silent and have a capability team running things for you. This also opens up the JV and syndication options for you. With your relocation plans to the US, do not limit yourself to only Canada. Investing in the US allows for 1031 exchange which is not available in Canada while giving you other similar benefits to Canada.

In regards to your questions, I would narrow them down. They are too vague. Look at your long term goals, what returns you want, etc to help get better questions. 

Good luck.   

Hi Ramesh, I invest in Ottawa and have a team there. Happy to connect.

@Jeremy B. Here are a few other things to consider:

1. depending on your experience and what you bring to the table, the split doesn't have to be 50/50. It can be 75/25, 40/60. Be open to making the numbers work for your investors. 

2. what is the CF and forecasted future refi at? If the money investor is only getting their initial funds back after refi and no additional growth, then this is not a good investment for them. They risk the capital, cashcall and make no income for x years. Check your wording "money partner keeps 100% of the refinanced money pulled out to get as much money back as possible". So for example, if I put in $100K as a money investor and at refi, the property is able to refi and pull out $250K, does that mean I get the full $250K?

3. the money investor may or may not need to qualify for the mortgage. This can be set up in several different ways.  

Lastly, 'best structure' depends on which side of the fence you are on. 

Good luck