All Forum Posts by: Stevo Sun
Stevo Sun has started 12 posts and replied 319 times.
Post: Purchasing my first two units - Not sure how to maximize approach
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Nicholas Aramouni:
Hello Community.
This is my first post on BP, and I am excited to be here to contribute and learn from the community! I am beginning my investing journey soon and I know this is a great place to start. I've really had no real guidance in real estate investing outside my own pursuit of knowledge. So, I come here with a question, hoping for some additional guidance. Here is the scenario.
I have enough capital to put down payments on my first two properties, which I plan on buying in early 2023. I am weighing my options between (1) putting a larger downpayment on my first purchase, to gain equity quickly and help ensure cash flow - then of course buying the second unit to follow. Or (2) putting a smaller downpayment on my first unit to maintain a 20% downpayment on my second unit. For (2) I would be able to lay down about 13-18% on my first unit. To summarize some essential elements.. It's important to mention that I live in Canada, and here, they tack on "default insurance" if you own less than 20% of a property. For the type of property I am looking at, it would tack on about 9-10K extra across the mortgage term. I'm not using any creative financing techniques for these first two units, which means I will certainly be leveraging my income for my mortgage loan (this is why I am debating the importance of a 20% downpayment on the second unit, and eating some insurance costs in the process).
I'm curious, which option would you choose, and what do you think the pros or cons would be of both?
Excited to get some perspectives here. Thanks so much in advance for your thoughts!
Btw in Canada, investment properties usually require 20% down from the big banks. Not sure about credit unions. I'm a fellow Canadian.
Quote from @Anthony Therrien-Bernard:
Quote from @Stevo Sun:
Quote from @Anthony Therrien-Bernard:
Quote from @Stevo Sun:
Quote from @Anthony Therrien-Bernard:
Quote from @Jason Yong:
@Stevo Sun but you think it's possible with 2 doors then?
Does this sound accurate for a legal duplex?
"Basement suites must have a separate kitchen, living, sleeping, and bathroom areas from the main residence. However, they may share the same laundry area, backyard, parking spaces, and storage area with your main residence."
What about basement ceiling height? Is there fire door requirements? or anything else?
Hi Jason,
This is absolutely possible to rent a ~$500k property for $3000-3500 with 2 units and maybe a separate garage in Calgary right now. There are a lot of considerations with basements suites and legalizing an existing illegal suite is very different from building a new one, if you have questions about the processes you can reach out to me, I've been through the process a few times.
For your own reading you can find information about the illegal to legal conversion process here: https://www.calgary.ca/develop...
Or for a new suite here:
https://www.calgary.ca/develop... type of neighborhoods are the 500k properties that can rent for 3000 for long term rentals. Assuming with two suites (1750 + 1250) in a single detached. I can't think of a neighborhood on top of my head in Calgary that fits that bill. Is it closer to downtown or varsity area?
I feel like I'm completely missing the market/neighborhood you are describing here.
Pretty much any B and C neighborhood nice clean renovated units. These are not hypothetical, these are the numbers myself and my investor friends are actually getting. We have properties in areas like Huntington Hills, Bowness, Southwood, Airdrie etc
I will definitely keep an eye open but I didn't think rents would be that high in those neighborhood. I know a friend that rents a renovated 2br basement suite for 1150 in Bowness. I think the main floor suite is only 1450 or so. Has the market rent moved that much?
It's hard to argue with the actual rents are are getting though... You guys must be charging way under market rents. Rents have indeed increase by 25% over last year in Calgary
Appreciate the insight, looks like I need to do a bit more work around market rents these days. I typically have longer term renters and I don't raise rents that aggressively. So maybe my expectation is just off for what the market is doing.
Quote from @Anthony Therrien-Bernard:
Quote from @Stevo Sun:
Quote from @Anthony Therrien-Bernard:
Quote from @Jason Yong:
@Stevo Sun but you think it's possible with 2 doors then?
Does this sound accurate for a legal duplex?
"Basement suites must have a separate kitchen, living, sleeping, and bathroom areas from the main residence. However, they may share the same laundry area, backyard, parking spaces, and storage area with your main residence."
What about basement ceiling height? Is there fire door requirements? or anything else?
Hi Jason,
This is absolutely possible to rent a ~$500k property for $3000-3500 with 2 units and maybe a separate garage in Calgary right now. There are a lot of considerations with basements suites and legalizing an existing illegal suite is very different from building a new one, if you have questions about the processes you can reach out to me, I've been through the process a few times.
For your own reading you can find information about the illegal to legal conversion process here: https://www.calgary.ca/develop...
Or for a new suite here:
https://www.calgary.ca/develop... type of neighborhoods are the 500k properties that can rent for 3000 for long term rentals. Assuming with two suites (1750 + 1250) in a single detached. I can't think of a neighborhood on top of my head in Calgary that fits that bill. Is it closer to downtown or varsity area?
I feel like I'm completely missing the market/neighborhood you are describing here.
Pretty much any B and C neighborhood nice clean renovated units. These are not hypothetical, these are the numbers myself and my investor friends are actually getting. We have properties in areas like Huntington Hills, Bowness, Southwood, Airdrie etc
I will definitely keep an eye open but I didn't think rents would be that high in those neighborhood. I know a friend that rents a renovated 2br basement suite for 1150 in Bowness. I think the main floor suite is only 1450 or so. Has the market rent moved that much?
Quote from @Anthony Therrien-Bernard:
Quote from @Jason Yong:
@Stevo Sun but you think it's possible with 2 doors then?
Does this sound accurate for a legal duplex?
"Basement suites must have a separate kitchen, living, sleeping, and bathroom areas from the main residence. However, they may share the same laundry area, backyard, parking spaces, and storage area with your main residence."
What about basement ceiling height? Is there fire door requirements? or anything else?
Hi Jason,
This is absolutely possible to rent a ~$500k property for $3000-3500 with 2 units and maybe a separate garage in Calgary right now. There are a lot of considerations with basements suites and legalizing an existing illegal suite is very different from building a new one, if you have questions about the processes you can reach out to me, I've been through the process a few times.
For your own reading you can find information about the illegal to legal conversion process here: https://www.calgary.ca/develop...
Or for a new suite here:
https://www.calgary.ca/development/home-building/new-secondary-suite.html
What type of neighborhoods are the 500k properties that can rent for 3000 for long term rentals. Assuming with two suites (1750 + 1250) in a single detached. I can't think of a neighborhood on top of my head in Calgary that fits that bill. Is it closer to downtown or varsity area?
I feel like I'm completely missing the market/neighborhood you are describing here.
Quote from @Jason Yong:
@Stevo Sun but you think it's possible with 2 doors then?
Does this sound accurate for a legal duplex?
"Basement suites must have a separate kitchen, living, sleeping, and bathroom areas from the main residence. However, they may share the same laundry area, backyard, parking spaces, and storage area with your main residence."
What about basement ceiling height? Is there fire door requirements? or anything else?
There are some other details on legalization. Check the city of calgary site. I'm not sure about 3k. I will just tell you my half duplex rents for 2300ish /month for both suites and utilities included. The property cost me 342k or so and this is on a 2.99% interest rate.
I think it would be hard pressed to find a 400k property in Calgary that can generate 3k in rent for long term rental.
I don't even think a lot of single family homes in the 500-600k range rents for 3k a month.
Quote from @Jason Yong:
So at around $400k for a property...
Mortgage calculators are showing ~$2k monthly payments.
Not sure of the exact way to estimate expenses for: Vacancy, CapEx, Management, Property Taxes, Repairs, and Insurance...
But I guess my question then is can a $400k property in Calgary rent for ~3k?
Quote from @Anthony Therrien-Bernard:
Quote from @Stevo Sun:
Quote from @Jason Yong:
Thanks for that @Stevo Sun, sounds like with the interest rates, Calgary will be very hard to cashflow then? Time for me to move on to Edmonton, Halifix or the US?
@Anthony Therrien-Bernard
What would a semi-detached with a legal basement suite in a B neighborhood go for?
Does it make sense to look into ones that I can convert into a legal suite to try to get a deal?
Cashflow had always been challenging I'm Calgary I think. Some investors are willing to forgo cash flow for the first 5yrs on a property. That means they can go cashflow negatively (a bit) for a while. This means they can offer higher prices and wait for properties to turn cash flow positive (rent increase, lower leverage, etc.). This makes the market is pretty competitive. I don't know if it's super different in Edmonton.
I completely disagree with you on this, I never bought a property in Calgary that didn't cashflow in 10 years of investing here...
Fair, maybe I'm not looking hard enough haha. But I have only found 3 (2 roughly break even/bit positive and 1 pretty good) in the 5yrs I have invested.
No arguments here, you can find them for sure. But I also know some folks that are not looking for cash flowing property right out of the gate so they can afford to go higher price point than what I'm willing to pay.
Quote from @Jason Yong:
Thanks for that @Stevo Sun, sounds like with the interest rates, Calgary will be very hard to cashflow then? Time for me to move on to Edmonton, Halifix or the US?
@Anthony Therrien-Bernard
What would a semi-detached with a legal basement suite in a B neighborhood go for?
Does it make sense to look into ones that I can convert into a legal suite to try to get a deal?
Cashflow had always been challenging I'm Calgary I think. Some investors are willing to forgo cash flow for the first 5yrs on a property. That means they can go cashflow negatively (a bit) for a while. This means they can offer higher prices and wait for properties to turn cash flow positive (rent increase, lower leverage, etc.). This makes the market is pretty competitive. I don't know if it's super different in Edmonton.
Quote from @Jason Yong:
That said I did buy a property (half duplex, legally suited) in 2022 March that's generating about $400 or so cash flow. That was purchased for 350k, in like a B/C neighborhood. I think I lucked out a bit and haven't seen anything like that since. Also the rate I got was 2.99%. At the current rate of 5.45% for 5yr fixed it would not work as well.
Post: Choosing an entity for protection of property in Ontario, Canada
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Tejaswi Khanna:
Hello,
I am soon to buy a property in Ontario, Canada as a way of investing.
In order to protect my asset, I wanted to register for an LLC here but it turns out that Canada does not have any such entity structure. As per my research, there is a structure here called ULC but I don't know if that offers the same benefits as an LLC.
I was wondering if anyone here could help me gain some clarity. I am after an entity that provides me charging order protection as the property will be rented out to tenants.
Your help is greatly appreciated!!
But without knowing your situation it would be hard to give you any suggestions. A ULC is an Unlimited Liability Company which means the shareholders are personally liable. This is probably the opposite of what you want.