All Forum Posts by: Luc Boiron

I have seen similar lists that explain how much a particular renovation increases a house value on average.

One thing is that it depends on where you are starting. If you are renovating a kitchen that is in decent, usable condition, not the most modern style but still attractive to some people, replacing it likely won't increase the property value by as much as the cost. If you are replacing a kitchen that is in horrible condition, cabinets doors missing, avocado coloured appliances, gross and burned laminate, you should be able to make a much higher than average return on a renovation.

The other thing is that many people who renovate areas of their home do ti more to their personal tastes, and worry less about the costs. I can get kitchen cabinets that look god for $2000-$3000 installed. I can also get very high end cabinets for $20,000+. A homeowner may want the fanciest cabinets, but you usually can't get the same return on your renovation in that way.

@Walton Armbrister Welcome!

Have you already bought the property to tear down? Tell us a little about it!

Welcome to BP @Clemel Estrada!

I feel like there are a lot fewer investors (just from anecdotal experience) on the east side of the GTA, such as Peterborough and those areas. I have heard the tenant pool is a little rougher, but I think good deals can be had, particularly if there are fewer investors looking.

What types of properties are you looking for? Single Family Homes? Duplexes?

@David Sabine If the loan is for a 3 year term, the amortization doesn't need to be for 3 years. For example, you could pay interest only for 3 years. Then, you would owe the full balance as a balloon payment in 3 years. At this point, you would refinance with a traditional lender and pay our the owner.

This looks like a great win! Selling it to another investor probably saved you a lot of costs rather than selling it through the MLS, so that increases your net profit as well.

If you have a lot of deals, I find it is best to turn around and make quick money like this (and you made a lot on your investment). If I didn't have anywhere to put the money, I would probably do the flip myself and maximize the money I can pull out of the property.

Thanks everyone for your insight! It gives me a lot to think about and I appreciate you taking the time to help educate me.

@Kyle Critchnau Thank you for your comments. You are right that I may need to look for some higher cap rates, though it will depend on the quality of property I am looking at. In Toronto, multi-family can go for a 3-4% cap in good areas, which is crazy!

@Roy N. As always, very helpful. I do want it set up so the investors get paid first.

@Scott Meyers Thank for the useful info. Your return you are offering is cash on cash return, based on a liquidation event a few years out (In these examples). These investors would be looking at holding on to a property for 20+ years, so the cash on cash return would look much lower with a liquidation event so far in the future. Also, could you give me some more information on how the preferred return works? Like I said, I had planned on providing investors with 100% of the cash flow until their capital was repaid, then start making a split. How does the preferred return work? For example, if cash flow was 5% in the first few years, but we had an 8% preferred return. Would the additional 3% accrue to future years, until cash flow is able to pay it out or a refinance catches it up? Is the preferred return fir the life of the investment, or is there also a concept of return of investors capital? 

P.S.: Your website is great, I downloaded your ebook to learn about Self Storage investing, looks very interesting.

Hi all,

I have been renting SFH, houses by the room, and duplexes part time since I started in 2007. Now, instead of practicing law, I decided to go into real estate full time.

I have been flipping, and have been making good returns so far on my flips. I have investors who will be investing in my future flips, with a simply split of 50% of profits to the investor who puts up the equity.

One of my investors and best friends has told me he has a group of friends who would be interested in investing with me, but are looking for long term rentals. My dilemma now is what a fair split is.

The strategy would be to buy multi family. In Toronto, prices are crazy and cash flow is very limited. Outside the city, within 1.5 hours would be where I would look. Cap rates are usually 5-7% in these areas. The plan would be to find properties that are either at under market rents and can be improved to increase rents, or properties that are in good shape and running well, where the seller is willing to take a partial 2nd VTB mortgage to allow us to buy a larger property with less capital.

I would have a 3rd party do the actual property management. The investors would be silent partners, completely hands-off. I would put about 10% of the equity in so investors can see I have skin in the game. I imagine the total equity in this deal might be $200-$400,000.

My suggestion is to not take an acquisition fee or a management fee, or any fees. All cash flow from the property would go to investors first, until they have fully received their capital back. After that, I am thinking of a split of 65% to the investors, and 35% to the sponsor (me).

What do you think of the set up and the split? It is still early with these investors, but I want to get started as it is only a matter of time before I start doing syndicated deals.

Any advice or suggestions BP?

Is the basement unit legal?

No matter what, the first day that the tenant is late on rent, serve him with an N4 notice for non-payment of rent. The LTB does not allow tenants not to pay, even if they have a dispute with the landlord. If tenants really don't want to pay the landlord, they can pay into the LTB until a decision is made by the LTB, but they can't not pay.

The city inspectors are a different story. Either way, start the eviction process. The sooner you get this tenant out, the better.

@Chris Conroy I personally tell the contractor what I want without designer input. I have construction experience so I do have a better idea of what can be done and what reasonable costs for things are. 

I tend to pick out the finish materials myself, as I find that by looking around I can find nice finish materials at around the same prices as basic ones that many contractors might supply. For example, clearance tile stores can have great prices, I check them out and see if there is anything that looks high-end at a discount.

So I plan how I want it to look, and provide the actual finish materials for the contractor. Certain things I might not need to pick out, but I can tell the contractor that I want the toilet to be dual flush and the shower taps to be chrome.

Designers can make a great impact but can also be expensive. 

It is not really any different than buying a home with a normal mortgage. Just find out if there is a mortgage cancellation penalty. Then you buy the home like you would any other, and the attorney at closing takes care of paying out what is owing on the mortgage, like they would with any other mortgage.

I think you are over thinking this. Treat it essentially like a normal mortgage that will be paid off.