All Forum Posts by: Matt Andrews

If anyone wants 1% (even 1.5% in many cases), then you should definitely consider Windsor, Ontario. Recently featured in the Canadian Real Estate Wealth Magazine, Windsor is following a very similar path to Hamilton a few years back, very affordable and now on the rise. It still has very high rents compared to the purchase price. 

All of my properties were bought at a 9% Cap Rate - which is still doable if you know where to look now. This gives me consistently high cashflow ($300/unit/month) - albeit I manage the properties myself. 

If anyone has any questions about the Windsor and Essex County market, including where to buy/not buy, reach out and we can talk! 

@Matt Geerts

You're completely correct - there is definitely a lot of grey in the rules of lending - as a certified canadian mortgage agent myself, the rules seem a bit funny.

The lender will ask where the money is coming from, and it needs to be "reasonable" that you could have $20k in your account. Depending on your main source of income, some lenders will want to see a few months of bank statements, some at least a year, and others will just take your word for it. 

So theoretically you could take a $20k unsecured debt and hold it for a few months, and then use it as a down payment - it happens all of the time, and is definitely a form of "creative" finance. Lenders typically use the 3% rule for these type of loans: $20k x 3% = $600/month counting towards your debt. As you mentioned, that would definitely affect the TDSR, so that would need to be factored in.

I advise playing by the rules as much as possible, these loopholes do exist though. If you or anyone else has any further questions about loans/financing in Canada and/or Ontario, feel free to PM me. 

Hi everyone,

I definitely agree, Windsor is a profitable place to be buying property. As Mike mentioned, there's a lot of growth coming to Windsor, and the fact that Detroit is on its way up definitely adds value. Also, if the proposal for a high-speed train from Windsor to Toronto goes through next month (http://www.cbc.ca/news/canada/windsor/ontario-gove...), we could see some huge appreciation in the market here. With average home prices less than 50% of the provincial average, the city has tons of room for growth, even after a 14% rise in prices since last year. 

Currently owning a few multi-family properties and closing on a duplex soon, I'm definitely grateful to be an investor in Windsor.

P.S. I really like working with Cassidy Logsdon as my Realtor - thanks Cass!

Awesome!

Hi Bigger Pockets Community!

It is my goal over the next few months to purchase a 10 - 20 unit apartment building in Southwestern Ontario with a Joint Venture partner or two. 

I own a few multi-family properties that are doing well, and have gathered a bit of interest from friends and colleagues. I also have some connections in my market to finding good private deals and funding. I'm a bit unsure as to what to do next though.

My question is: What steps should I take in order to go from this conceptual phase to having a syndicated in hand? 

All replies are appreciated! 

Hi Brandon, way to go for thinking of investing this early on in your life. The earlier you get started the better!

You're right, the further away you go from the GTA, the better returns you'll get. My key metric that I look for when determining any income property is CapRate, which essentially is how much money does the property earn (before factoring in the mortgage), compared to the price of the property. CapRate = Annual Net Operating Income / Purchase Price, where Net Operating Income is your income minus your expenses. 

I look for to see that a property has a CapRate of at least 8%, and preferably closer to 10% before spending any time considering a property. I purchased both my triplexes in Windsor for an 11% CapRate. In Toronto you'll be lucky to find a 5 Cap with prices being so inflated, and many other cities offer between 6-8. That's why I turned to Windsor; the economy is recovering and the city is getting better each day, however the average price is still well below Ontario's average, leading to a bigger ROI than most cities out there.

I am close with a Realtor that works with out of town investors and property managers. Feel free to reach out if you want her contact info and she can help you out further. 

Hi fellow investors,

I've invested in Windsor for the past 2 years, and am making some excellent returns. I currently own 3 properties in the Windsor area, 2 triplexes and a single family home. These are the numbers on a triplex that I purchased 2 years ago:

Cost: $255,000

Gross Income: $36,000 + utilities

Net Income: $27,000

Cashflow: $15,500

Cash on Cash Return on $56,000 investment: 27.7% per year

I would definitely recommend multi-family, as your cash on cash return is almost always higher than single family for a variety of reasons (more income, lower vacancy, CCA, etc.). Check Kijiji and MLS. My Realtor down in Windsor gives me the pocket listings before they hit MLS, so that's usually where some good money-makers are to be found.

If you are open at all to looking at some potential deals Windsor, I'd highly recommend it! The market and economy has really started to pick up, with house prices still well below Ontario's average - lots of potential growth for sure. I can connect you with my Realtor and put in a good word for you if you'd like. 

Also my investing partners and I are purchasing a larger apartment building this year, something similar in size and CapRate as this one: 

https://www.realtor.ca/Commercial/Multi-family/17040993/525-WYANDOTTE-Street-West-WINDSOR-Ontario-N8Y2Z8  If you're interested in learning more, please message me. 

Would love to hear from some fellow Windsorites and investors, looking forward to connecting!

P.S. Stay away from Sandwichtown, far away. Walkerville is where it's at! 

Hi Priya, 

Welcome to Bigger Pockets! I'm in a similar boat as you, have a few properties and looking to do a re-fi, and invest the equity in a large apartment building. I currently own properties in Windsor, Ontario, and down here it's pretty common to find 8cap properties, possibly more. 

Here's an example: https://www.realtor.ca/Commercial/Multi-family/170... (numbers are approximated based on my experience and knowledge of the area)

Income: 31 units x $700/unit = $21,700/month

Expenses: 45% of Income to be conservative = $9,765/month

Net Operating Income: $11,935/month = $143,220/yr

Cap Rate = $143,220/$1,750,000 = 8.18%

With a $550,000 downpayment, and a mortgage at 5% interest: 

Cashflow = $57,300

Equity paydown = $25,300

Appreciation (3%) = $52,500

Total Year 1 Profit = $135,100

ROI on a $600,000 investment = 22.52% 

This is being pretty conservative, on an MLS listing. Windsor got hit hard in 2008 along with Detroit, but now the economy is doing well and market starting to pick up, especially with all the interest from outside investors. Prices are still well below average though so you can find great ROIs as seen above.

As for even better deals, I've been connecting with local property managers that have access to all the owners and know when they are planning on selling - that's a huge source of quality deals there, I'd recommend doing the same. 

If you're interested at all at looking closer at some deals together, I'd be more than happy to talk and crunch some numbers!

Hey David, great question! My 3 properties are around 45min away from where I live, but when I do go there I end up making an event out of it, and hanging out in town. A great way to have a little "business trip".

Now the engineer in me: If I were you I'd factor in at least 2 trips per month to the property (from experience). So you're looking at 4 hours + gas (say $40). I would then subtract the $40 from your cashflow and divide by 4hrs. 

eg. If you have $400 CF: ($400 - $40)/4hrs = $90/hr    Not bad.

If you only have $200 CF: ($200-$40)/4hrs = $40/hr   Smaller return on time investment. 

Maybe a little analytical, but that's how I think about the value of my time. Hope this helps!

Hi Megan and Daljeet,

It sounds like you both have great vision when it comes to student rentals. I'm currently invested in the Windsor area, a market that's just starting to pick up. Because the jobs and economy got hit hard in 2008, the market tanked and has a lot of room to go to catch up with the rest of Ontario. It's not too uncommon to find a student house at $20,000/room purchase price, which will bring in $4,800/room/yr. eg. http://www.kijiji.ca/v-house-for-sale/windsor-area...

There are some great property management companies here too that are a pleasure to work with and will make it truly hands-off. If you'd like to consider Windsor as an addition to your portfolio, I'd highly recommend it. I've made some good money investing here in the past few years. 

Cheers!