All Forum Posts by: Account Closed

@Delbert Standifer

You’re very welcome, can you rephrase the question? Are you looking literally for a month to month comparison of what expected return would be? Because that’s going to be a purely theoretical assessment since no two properties are the same. And which month? The month where the furnace craps out and is -$1,500 cashflow with $500 principle paydown or the month where you have no unexpected expenses? You’ve gotta consider the lifetime return of the asset.

There’s always a continuum, Ned Flanders <————-> Tony Soprano. And you can only move one direction on that continuum. Begin accordingly.

@John Desmet

I’d be tempted to do both. Buy a property and house hack it. Live in the basement or in one unit, rent out the other unit and/or bedrooms. Plow ALL extra income towards paying down those student loans. Student loans are a boat anchor. In the USA as well as Canada the student loan system is set up to absolutely keep you poor for decades (in my opinion).

@Delbert Standifer

Monthly profit shouldn’t be your concern. Long winded discussion below on 3 profit centres of buy & hold real estate.

Cash flow: 

Essential. Especially when starting out. This allows you to hold for the long term. And cash flow projection needs to include worst case scenario possibilities. If for some reason you had say $400 monthly negative cashflow and bought 5 properties like this you would be required to input $2,000 monthly into the properties to cover costs. It doesn’t take a genius to see that this is going to eventually make you go bankrupt. 

Additionally, you will never get wealthy off cashflow. Why? Because it comes in drips monthly that’s why. Even if you bought 10 properties at $500 monthly cash flow you’ve made a whopping $60,000 at the end of year one. That’s great money, but it isn’t wealth creation any more than your day job is.

Mortgage paydown:

This is where wealth generation happens. It happens while you’re sleeping. While you’re on vacation. While your at your day job. But it happens slowly, in drips monthly. You will never get wealthy quickly with mortgage paydown. However, if you hold long term, it’s pretty dang guaranteed that you will get wealthy. Example: 

Buy a $300,000 house. Assume it does not go up in value (appreciation) at all. Hold it for 30 years. What are you left with? A $300,000 house that someone else (tenants) paid off for you. You’ve built a $300,000 asset with time and a downpayment (in this case, $60,000 down payment). So over 30 years you turned $60,000 into $300,000 which is a 5x multiple. Using simple interest (non-compounding) that’s about 17% per year return. Using compounding interest it is a little less.  

Appreciation:

This is like the cherry on top. And it needs to be treated like it. Some sundays come with cherries, some don’t. Appreciation is NOT guaranteed. NEVER buy a property based off appreciation only. That is called speculation. Many rookie investors have gone absolutely broke buying as speculators. Many experienced investors too! 

Appreciation can build massive wealth. Why? Because you’re using leverage to get it. If a $100,000 property appreciates 3% it is worth $103,000. But your return on investment is NOT 3%. You only invested $20,000 to buy that property. So your return is $3,000/$20,000 which is 15%. 

Always set yourself up for appreciation. How? You pay attention to local economic fundamentals. GDP. Jobs. Local policies such as densification programs. Which areas of town are improving. Which areas of town are declining. Which areas have increasing vacancies. Which areas have decreasing vacancies. Which areas have high rent to price ratios. Which areas are high maintenance. Which areas are a dog on your time compared to return. And dozens of other metrics that an experienced investor looks for when choosing where to invest. 

Quick recap.

Cash flow: you need it to hold long term or you’ll be feeding the property monthly and you can only do that for so long before you’re broke.

Mortgage paydown: Slowly but surely you’ll build generational wealth here.

Appreciation: if you’re adept enough to invest where this is a strong possibility you can drastically increase your roi. If you’ve got this, it’s like hitting the afterburners, you’re gonna get wealthy a lot faster.

@Jonathan Greene

Acronyms & far away places are all the rage, don’t you know? Nobody ever refinanced a fixer upper before the acronym.

Do not leverage to 95% even if they let you.

@Walter Lee Bandy Jr

Quick tip, a pro will get discounts.. example, I get 50% off when I walk into Sherwin (you can too when they’re running promos!). Getting top quality paint and Home Depot price is pretty rad.

@Walter Lee Bandy Jr

Careful with the P&P in one products, I don’t recommend using them on raw drywall under any circumstances. And they’re quite often THICK, meaning a rookie can leave lap marks pretty easily. They market them to “dummies” or the rookie but don’t make them dummy proof basically.

I use a CIL colour called “touch of grey” but I use Sherwin paint. I get it custom mixed. It’s the lightest grey colour I’ve found that still pops against white trim. It also goes great with my flooring of choice as well as my feature wall scheme that I put in almost all the properties. Find what works and standardize it (as mentioned above). You’ll never regret having 15 units all the same floor, colour, baseboard style, trim colour, door colour, counter top, faucet brand, etc etc ... makes life so much easier

@Roy N.

Saskpower. They reduce to 15A total service and do not kill it completely. Official policy