All Forum Posts by: Matt McKee

Hi @Josh M.

@Jeff Wybo and I are doing an investor limo tour of London On. It's August 14th starting at noon. (likely take about 4 hours)

In essence the way it works is we look at 5-6 properties for sale (Last time I think it was 7, 5 from mls and 2 of which were pocket listings of Jeff's) and we walk thru one of my current project houses (last time it was a triplex I was BRRRRing, this time it will be a duplex I'm BRRRRing). Last time I think we had 10 investors and it was just really fun and informative looking at a handful of properties with like minded individuals. I think everyone took something away from the experience, and afterwards we debriefed at Jeff's office.  

@Kellan P. was one of the attendee's 

If you're interested feel free to contact Jeff or Myself. Otherwise if you ever find yourself in London and want to meet up with a local - feel free to reach out, and if I'm free I'd be happy to meet up. 

I agree with Luc, once going through the hassle of just moving, most tenants won't want to move back.

I've bought properties just conditional upon them being vacant (current LL providing me with N11's). Their agent (if on mls) usually comes back saying it can't be done - I then say: well if you can't get me vacant possession then I'll only pay x amount. 

This works so much easier with FSBO's I've found as you can talk directly to them and help walk them through it. (My experience is most agents don't want the extra work/complication/hassle) Often they'll say they don't know how to get the tenant out of the unit, I usually just tell them to ask if the tenant would be willing to move out (you'd be surprised, but this occasionally can work - worked once for me so far - where I said they could leave whatever crap/garbage they wanted and I'd take care of it - don't worry about cleaning unit etc). I've had it twice where I've got the seller to get N11s from tenants simply because the tenants were in arrears (by less than two months, and less than a month) and told the seller to just forgive the amount owing if the tenant signs N11. Both times it worked as the LL knew that once they sold it, the odds of collecting the arrears was unlikely and the tenants felt like they were getting back to 0 by starting over at a new property.

I've also forgiven 1/2 months rent to get a tenant out ASAP. From my perspective it was way faster than going through the usual channels and I knew I wasn't going to be getting blood from that stone anyways. (They were never going to pay me)

I've also asked seller to offer cash incentives/offer to pay moving costs to entice the tenant - and if they're unwilling, you can let them know you'll go through the usual channels and they'll end up having to move out eventually anyways if you decide to move in -at least this way their moving costs are covered and you're trying to find a win-win.

I've also heard of other landlords that have offered to move a tenant into one of their other buildings, or help them find their next home.

One added bonus (for me at least) is often the seller will then wish to extend the closing date (to get to vacant possession) allowing me more time to line up my trades people and solidify my reno plans and budget.

Just food for thought - Each situation is different and it really depends on the tenant. It sounds like the one's you're likely dealing with are very long term so are much less likely to be interested - but you literally never know until you ask.

In summary:

If Buying: I'd try to make it the sellers problem (make offer conditional upon N11's, if they refuse reduce offer price)

If my tenants, or I'm trying to help seller figure out how to do so:

1.I'd ask if any of the tenants are willing to move 2. Offer small incentive (cover moving costs and/or they can leave crap/garbage behind and not worry about cleaning; If in arrears consider forgiving arrears dependent on them signing N11. 3. I would remind them that you intend to proceed regardless of whether you get an N11 but you're just trying to speed up the process and create win-win, if you have to go through formal channels they'll receive no real benefit. 4. I'd offer them another unit in a property or help them find their next home if their still on the fence or if you think they'd be a good tenant. (If a good tenant you could even help someone in your network out by finding them a good tenant) 

P.S. is this the soho property? If so I could put you in contact with the seller directly. (He had strong relationships with his tenants, so likely could find a win-win)

My experience with student rentals has been different than those of other posters. 

I have 3 student rentals by Fanshawe College, and a fourplex near downtown that sometimes rents to students. 

I've had the 3 Fanshawe properties for 6,5, and 4 years. Student rentals can be management intensive, but like any rental property a lot of it comes down to the screening of tenants.

There are two very different student rental markets in London Ontario. Western and Fanshawe. Fanshawe is all about cashflow, where Western has greater potential for appreciation.

Note: for anyone not familiar with the London Ontario market, we have rental licensing... Unless otherwise stated (grandfathered in) assume a property is only allowed to have 5 bedrooms. If renting an illegal 6 bedroom student rental, you run the risk of fines etc.

Looking at Fanshawe first: there are a few different neighbourhoods that cater to Fanshawe students. 

1. Thurman/Fleming/Prosperity&Farnsborough (Roehampton could be included in this as well). These are newer properties (all but Roehampton are around/under 30 years old - not sure on age of Roehampton). These properties usually sell for 35K-55K a bedroom (Though I'd suggest if buying, you want to buy under 50K/bedroom). These neighbourhoods are almost exclusively houses that are used as student rentals. (5 or 6 bedrooms). The rents for a bedroom are 375-525/mo. In addition to the R1 Building (Residence on Frist - purpose built apartment building for students, that's directly across the street from Fanshawe) These are the first tier properties. Easy walking distance, newer buildings etc. 

The R1 building (purpose built student rental) has created significant competition for Fanshawe rentals. However it is priced at the higher end of the spectrum (all rooms are above 575/mo and I believe go upto 650 each). They have onsite security/front desk and have a feeling very similar to living in a residence. A significant portion of students find that restrictiveness undesirable. (They want to be able to have parties, smoke quasi legal substances, they want to have bbqs and a backyard to call their own etc) Also believe it or not some are still price sensitive (if they don't have an unlimited student loan or bank of mom&dad).

My 3 Fanshawe rentals are all in this neighbourhood. Renting for 435-495/mo on average. So far I've had no problems finding students to rent my properties.

2. The secondary area/tier I consider to be the Hartlet/Dale/Hansuld st's as well as the homes north of cheapside (ie Mark,Micheal,Beckworth) These houses are likely older and have more deferred maintenance and our likely smaller homes. Most do still have 5-6 bedrooms. These home often rent for between 350-475/mo. Again these homes sell in that 40k a bedroom room range. I believe these homes have been harder hit as tier 1 started attracting tier 2's normal target market.

3. The fringe area, this is homes west of Highbury or near Dundas/Huron/Quebec st. These are the neighbourhoods I'd be most concerned about owning. These homes traditionally rent in the 300-400/mo and sell for 30-40K a bedroom usually.

What I call the fringe area - is where I think the highest risk is. You're no longer easy walking distance, neighbours may/may not be student rentals. Those properties closer to the school can always cut their rent prices to match yours to ensure they fill. In these fringe area's you may need to resort to operating as a (illegal) rooming house where you're taking non students to fill your vacancies. (Note I'm aware of several properties/owners that do this, but it does run afoul of the city's bylaws etc) and I think you end up with significant tenant management issues.

Western University has a similar structure (Just with higher per bedroom prices for purchasing and same rent per room - which is offset by potential for more appreciation), however counterbalancing it is the fact that if you're close to the downtown you can also attract new grads/young professionals (which creates a more resilient rental property).

Hopefully the above helps give you a better idea of student rentals in London. I think (and my experience supports) that student rentals can be very profitable if managed correctly.

From my experience/perspective, the most important thing about student rentals, is keeping them rented. You need to have your tenants/students commit to 12 month leases (I strongly suggest May-April), there is also significant scales of efficiency by owning multiple student rentals. I would not suggest buying one, if you're intention is to only ever own one. My partner and I have been discussing how we likely need to acquire a couple more or consider selling to make our operations more efficient.

Another key to student rentals is advertising them early. If you're looking in late March/April to rent out your student rentals for May 1st. You're too late and will be sitting with a vacancy for May-Aug or end up with sub-par students.

I've always managed my properties myself. I do know of student landlords with 20+ units that have been able to implement effective management systems so that they can be as hands off as they wish. To do so with one property though, again I don't think is as effective/practical.

If you're patient, you can even just wait for the next 'riot' and buy then when student rentals go on sale. It's been a few years and seems like we're likely over do. (I'm only half kidding with that comment)

TL:DR

I'd say if you're going to be hands on with management (at least until you get scale of operations), and plan to acquire multiple properties, student rentals can be a great way to generate income, assuming you purchase in high demand areas and know you're numbers and make filling them you're number 1 priority.

@Matt Smith Thanks for the offer of giving a tour of St.Thomas - I would love that, I haven't spent nearly enough time in the area and would love to get a tour from someone familiar with the area. There seems to be lots of old building that need some TLC in the area. 

@Matt Geerts  Tuesdays work for me. I think there's enough value in these meetups that if you set a date people will find a way to make it work for their schedule. I know I would.

Welcome @Derek Allen

Another London RE investor here. I'm very excited by the recent activity on BP's related to our little corner of the Canada! @Matt Geerts get on organizing a meetup for all us BPers! Also thanks for the heads up the LPMA tradeshow, and congrats on signing your first tenants!

I know @Shawn Allen has a local meetup in London monthly, I haven't been to one yet, but plan on going to the one at the end of March. He seems happy to invite others - so you should reach out to him and I'm sure he'll provide you with the details.

@Samuel Sedore 's investor/realtor buddy Jeff is a great guy too, and if you're looking for a friendly & honest realtor in the forest city, I recommend him. He really needs to join BPs.

@Chad U.

lol. 

I bought my first investment property on Thurman shortly after the "Halloween Riot" in 2009. I bought another in 2011 on the same street. I also bought a house on Fleming right before the 2012 "riots".

I've had 3 student properties for 6,5, and 4 years respectively. (15 years of ownership total) Not once have I had an insurance claim - will that continue on in perpetuity - probably not - but at the same time if you manage your properties appropriately a great deal of the issues other land lords have can be minimized/mitigated.

The Fleming property was perhaps the only one where the students activity did sting a bit. We had waived all conditions and were just waiting to close when the 2012 one happened. (Happened a month before we closed, a week after we waived all conditions) we probably could have got the property for 5-10% lower than what we paid had we bought after instead of before. (If I hadn't been strapped for cash I would have tried to buy one right afterwards - as house prices were impacted for a short period of time on those streets). Regardless though the house still cash-flowed, had the same return as projected etc regardless of whether the disturbance happened or not. (Though it is a strong reminder of the importance of having proper insurance)

Honestly though - I'd look at these disturbances as a great buying opportunity when they do occur. It's just part of the being a student landlord experience. You can find similar "riots" have occurred at Queens University etc. In General I'd say every 5 years or so there's some sort of major disturbance in London related to students. Things just get a lot more publicized now between social media and mainstream media's desire to inflate these issues.

http://www.lfpress.com/comment/columnists/dan_brow...

I invest in London Ontario. 

Finding 1%+ Turnkey is possible in London, Ontario... 

The property will likely be a student rental. By Fanshawe college you can buy a 5-6 bedroom home for between 200-250K that will rent for 400-500 a bedroom. a 5 Bedroom on Thurman Circle for example will likely rent for $475 a bedroom and you can likely acquire one for 230-250K if you're patient and vigilant. Let's say you purchased for 250K so 2375/250000= 0.95% - pretty close to 1%. Or properties can be found just south of the college for 200-240K and some have legal 6 bedrooms. Likely rent range for a property in that area is 400-450 a bedroom. So 6 bedroom @ 400 = 2400/240000 = 1% (Note this is the landlord paying for utilities - so may not be an apples to apples comparison with US counterparts that are getting 1% in rents with tenants paying utilities). The obvious caveat being that student rentals can be very management intensive and a very hands on investment. (I have 3 student properties all by the college that are generating greater than 1% in monthly rents). 

There are also multi-family units in some of the rougher areas of London (King Edward, Argyle etc) where you can potentially find rents in excess of 1%. 6plexes on King Edward can frequently be had in the 350-500K range and are often getting 600-800/unit in rents. (Note there's nothing on the market at this exact moment fitting this profile, but I'd say a couple buildings go up for sale every year based on my experience). This would be close to apples to apples - as the tenants would be paying their own utilities. There are also frequently fourplexes in Argyle for sale (MLS 574470, 574466) Assuming you could get them below asking (my opinion quite possible) you could get these properties in that 1% range as well. The caveat being, you're not getting grade A tenants in these locations, but you can get Ok-Good tenants if you're very thorough in your search.

My personal preference is finding properties in need of TLC that are adjacent to downtown. These older properties when you initially buy, are unlikely to meet 1% rule but if you update the units, buy a building with character and market to right demographic (young professionals) you can get in excess of 1%. I most recently did this with my fourplex in Woodfield. Purchase price 385K (at that time it was getting 3300/mo in rent - so  0.86%) however upon completion of renos (40K) I'm now getting 4,720 a month in rents and my total cost for the property is 425K so 1.11% and I am getting good tenants in that building. (young professionals etc). This type of property though obviously isn't turnkey from the outset, but does benefit from potential appreciation. 

So in summary, in London Ontario you can get in excess of 1% rents, but finding 2% (In my experience) is unlikely, and the property will certainly not be turnkey from the outset. (There are some mixed use buildings that do approach 2%, but if you ever had a vacancy in the commercial unit - it may be hard to fill). 

Playing devils advocate for London though - with student rentals and the multi's that are in less than desirable locations... It's not advisable that you hold your breath while waiting for significant appreciation. (unless you're forcing appreciation through strategic renovations etc)  

I believe @ShawnAllen would be a great resource if you're interested in investing in Woodstock Ontario. 

I've heard (second hand) that Sarnia and Windsor both can frequently get 2% with their student rentals. Anyone have experience in those markets they'd like to share?

Congrats on your first investment rental Matt! Care to elaborate more on your first rental investment? Where is it located - is it turnkey or will you be rolling up your sleeves to improve it? What made you decide it was going to be your first rental?

If you end up creating a fantastic lease template that's specific to Ontario - I'd love to see it/use it.

Hi Matt, I'm always happy to meet up with other RE investors. Sent you a quick PM. Dylan & I, have met up a few times now - it;s, and it'd be great to meetup with more locals! 

Also any other south western Ontario lurkers out there - feel free to post or send me a PM if you'd like to meetup sometime.