All Forum Posts by: Marshall Magnus

@Nicholas L.

You didn't miss it I forgot to put that detail in. When we did the refinance the new bank gave us 80% LTV. So off the new appraised value of $300,000 they retained 20% and direct deposited the difference into my bank account. Thanks for the comment by the way, I never would've thought too include that detail, but it is an interesting piece of the whole process.

 In Edmonton a couple of years ago the city had a big initiative to increase population density. One of the results was that nearly all the lots (unless there was good reason not to) had the zoning set to RF3 by default. This means that in almost any residential lot you can have the main dwelling as well as a basement suite, garden suite, or a garage suite for a total one main residents and two secondary suites. 

@Jay Mao

Hi Jay, this is a bit of a delayed response but if the listing is still relevant please send it my way in a message, I would love to talk about it with you. As far as asbestos, I can’t speak for all the houses in the area but I think at that time the main problem was the tape they used for the HVAC systems. You should speak to a pro about it but to the best of my knowledge, as long as you do not plan on disturbing it there isn’t a problem. That being said I chose to have it removed as I was changing out the hvac system anyway. The cost is really not a deal breaker, ask around for quotes but it should be in the neighbourhood of $2000-$3000. 

@Gilbert Foelscher

Thanks and I am happy to help out in any way! Also welcome to Alberta, I am sure you will find it a little more friendly to get into the market here over Vancouver.

This is probably not the most advisable method for most, but I funded the whole of the rehab with a personal unsecured line of credit. After buying the house I started the rehab with next to nothing and bought the materials and paid the carrying cost (mortgage, insurance, property tax, utilities) on line of credit while working on the rehab.

I actually refinance it in November 2021 and bought it in November in 2020 so it was exactly a year later. I finished the rehab in August 2021 and had renters in it a week later, so I didn’t mind putting off the refinance until the 12 month mark, as I was able to start paying off the debt with the cash flow from the rent  

I had not heard that rule about refinancing, though I would not doubt it. For me it really just goes back to my mortgage broker, if I tell him what I am planning to do before I buy the place, I feel confident that he will make me aware of any rules I need to know and help navigate through the process, or come up with another way to go about the larger plan. If that rule is as clear as you say it, then it might be more difficult for someone who is trying/beginning to make a full time job out of this. I have been fortunate to have both real estate and a solid job as a land surveyor, that may have made it easier for me. I am not sure.

@Stevo Sun

Judging from the several Calgarians I have talked to on BiggerPockets, Edmonton does seem to be better suited for this type of strategy. As far as the cost of the house is concerned there are many houses in Edmonton for that price, they are all just north of downtown or in the north east of the city and represent homes built in the 1950s.

As far as the mortgage is concerned, Chris nailed it. There is a fee for breaking the term of the mortgage, which is what I had to do. There are two ways that the banks calculate the penalty for breaking it, naturally they choose which ever is the greater of the two penalties. One is called the interest differential calculation, and the other is one year worth of interest on the mortgage. The penalty did not bother me, in the long term it was more profitable to extract the money and move on the next deal rather than avoiding the penalty and not having the funds for my next project.

I had originally got the mortgage through a mortgage broker I have been using for a while. He set me up with a mortgage through a major bank. I do wish I had set the mortgage up better for the refinance from the start, I guess there’s a cost to education sometimes.

@Account Closed Anyway the refinance did not go perfectly smooth and we did end up switching banks from the original. None of this was any hardship to me personally as my mortgage broker looked after all of the details, I just told him what I wanted up front and to let me know when he had it figured out. Every once in a while he would call me and tell me how things were going and ask for a decision on “this or that” once he had it figured out we got it refinanced. Actually through the whole of the refinance process we never even met up, everything was done through phone calls and using “doc-u-sign” to sign off on the legal work. (He has been great to work with, if anyone is looking for a mortgage broker I would be happy to endorse him through a personal message).

I hope that was helpful. I was not expecting so many people to see or show interest in this, I will try to put up some more pictures of the place in this post.

Hi Stevo,

There are many houses in Edmonton along this line, some would work better than others of course. The house is 33’X33’ so 1000sqft on the main floor and the basement is the same, less the mechanical room. The stairs don’t affect the square footage as I move them to the exterior. The lot was quite a bit bigger than most you would find in Edmonton, for the situation. the neighbour to the south purchased three lots and used 2 1/2 of them when they developed their property, then this house was built after that development and was able to occupy one and 1 and 1/2 lots, so the legal description actually declares two separate lots. Unfortunately it wasn’t built in a way that I cannot  subdivide the land because the house straddles the property line. Anyway the house is not very big but it made for a large yard which is always a happy bonus. 

I’m glad I was able to help you out! I started a BiggerPockets account a while back but I only just started being active on it in the last month or so, I’m finding a lot of motivation from other peoples experiences too. 
I like exploring different cities on the MLS and seeing what houses sell for in different areas. Atlantic Canada is a whole different beast from here. That's amazing that you can get a two unit house in a build up area for that price. What does an average house rent for in that area?

Doing the work yourself is interesting, it seems like a really good foundation for understanding the development of a house and the whole building process. It’s not for everyone and I don’t know how sustainable it is as a long-term business plan, but it sure is A good learning experience. The planning involved for a basement suite is not as crazy as you might think. There are several things you need to address and then besides that it’s just a regular dwelling. If you look up basement suites on the Edmonton website you will find their design guide and it talks about everything you need to address and the specific requirements. The basic version is you need to address sound between the units, they need to have separate bathrooms kitchens living spaces and bedrooms, separate ventilation and heating, fire protection between the two units, and access egress for the two units. Off the top of my head that pretty much covers it. I have always made my own drawings for projects, and that part of the project is where I was able to plan everything, and learn the rules. There’s a program called Trimble Sketchup that is free to use and can be a good way to plan things, there might be other programs out there. Are use AutoCAD now, but when I started Trimble sketch up was a god send. To create a drawing that shows all the separate systems of the house means that you can’t ignore any problem. For instance it’s nearly impossible to create an electrical drawing that shows all the outlets smoke alarms electrical panel, light switches lights and fans without first considering each one of those items. By the time you’ve looked into how frequently you need to place a receptacle along a wall and what type of receptacles you need in a kitchen and where to use GFCI, AFCI etc. you are going to have a much deeper understanding of your project than someone who just walks on to a site and is given a set of plans. Very likely by the time you finish your plans you will not need them anymore because he will know your project down to the tiniest details. I like to take this approach with each one of the different scopes of work, plumbing, HVAC, electrical, structural, drywall and insulating, flooring and tiles, cabinets and countertops. Then when each drawing is finished I send it out to someone who knows about that specific trade for critiques, or to a business for a quote if you were hiring sub trades, they will tell you if you made any mistakes. At that point you probably have a drawing that’s ready to send into the city for approvals, and if you’ve gotten to that point you probably have a drawing that will get you a permit, and an understanding of your project that will help you avoid costly mistakes. 
I think if you talk to five different people about their approaches you’ll get six different answers about the best way to do a thing. I’m not sure this way is for everyone, it is a very specific approach, but I hope it helps!

@Mark Diamond

I see what you mean about the West End. It is an area that I plan to invest in eventually, but the numbers do look a lot nicer for me at this point in the north east. 
One of the things I have found to be very prominent in that area of the city is the marked change in feel from one street to the next. I know what you mean about 118th avenue, that is not a street I want to own houses along. Now if you look only six Avenues South, you see Ada Boulevard where many houses sell for $1,000,000 or more. I see a lot  of value, not only financially but also in bettering a neighbourhood and the city, by bringing a house up to the top of its class in the neighborhood. In a neighbourhood like Mountrose (or surrounding) this can be done for a pretty modest fee. Whereas other neighbourhoods in the city, at this time anyway, are too cost prohibitive for me to bring a house up to the top of its class. I wouldn’t buy a house without exploring the neighbourhood on foot first. There are definitely areas of the city where I don’t feel comfortable walking around, and if that is the case, than any investment opportunity is a moot point. The particular street I bought on is not a through street and the traffic there is confined to the people who live there. The street is beautiful and full of 60 year old trees, the people are very similar. I spent a bit of time talking to the people on the street before I bought the house. After only a few visits I knew the neighbours on both sides of the house as well as across the street. I think the thing that makes one neighbourhood rough and another pleasant is the people who live there. I am getting a bit rambly, but what I mean to say is that you should only invest where you feel comfortable and maybe one Street doesn’t define the neighbourhood. 
I have really enjoyed this project and the BRRRR method as a whole. I would like to keep doing it, and specifically in situations where I can add more units than I purchase the property with. Flipping houses is very tempting, but I think I would rather search for help in financing then to have to sell the house after the renovation. The 30 year outlook on buy and hold investing is the goal that I'm working toward. I have not looked at the numbers recently but I think on a flip there could be a profit of several tens of thousands, and on a buy and hold, by the end of the 30 years, there could be a profit several hundreds of thousands. This is probably too simple of a perspective, but a flip just seems like a job in addition to the one that I have, and buy and hold seems like a way to build wealth over time.
I am not married to any one part of the city, but I have come to appreciate Montrose in particular. I will probably follow the deals more than a neighbourhood, but I do hope that happens to be in Montrose. 
Do you have any idea when you are looking to pull the trigger? If you do move on a flip or a BRRRR would you hire a contractor, or hire the sub trades and be the contractor, or do the work yourself?