All Forum Posts by: Stevo Sun
Stevo Sun has started 12 posts and replied 319 times.
@Theresa Harris gave you a pretty good playbook. There's no rocket science or crazy schemes. It's really just work. Fixed rate mortgage in Canada just doesn't have the long terms like the US. Most typical term is 5yr fixed (although people are taking shorter term right now betting on interest rate would be lower in a few years).
Post: Canada, negative cashflow rental property to reduce income taxes?
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Damikaz Tormen:
Hi everyone,
I am currently living in Canada and I'm in a position where I am getting eaten completely from taxes on my salary income. I'm maxing my RRSP, TFSA & FHSA but taxes are still eating way too much...
As such, I've been looking at ideas to try to reduce my taxes and I thought it might be worth it to get started with a negative cashflow rental property (1 door) to deduct the interests on the mortgage, services, etc. My goal with this would really be to reduce my taxes while investing in a vehicle that can take value over time. I think this could also give me some exposure to the market.
While there are no positive cashflow single-family home around me, there seems to be quite a few where the annual cost forecast isn't too far from breaking even, although still negative.
I was wondering if anyone here might have any insights on this approach and if it's advisable?
Thank you
Let's assume your tax rate is 45-50%, that mean every dollar you lose you save 45-50 cents on the dollar. Do you think you will make more than that in appreciation after capital gains tax? If you do then maybe it's a viable strategy, but personally I try to afford that scenario.
Post: Building Contacts In Calgary Alberta!
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Sam Chicquen:
Hey, everyone! Any real estate investors from Edmonton or Calgary here? I'm based in Ottawa and eager to connect with like-minded individuals for potential partnerships and deals. Feel free to send me a private message if you're interested!
Not a professional real estate investor or realtor, but I am in Calgary 😄. Happy to chat!
Post: Rental Arbitrage - Apartment/Home in Alberta, Canada
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Hardik Patel:
Hi Bigger Pockets Family,
My wife and I work corporate jobs in finance and marketing.
We’re looking to rent properties in the greater Alberta region and post on Airbnb in hopes of generating modest short-term rental income.
I understand the importance of maintaining the property's integrity and ensuring the safety of the surrounding community. My wife and I will take all necessary precautions to ensure a positive experience for all parties involved.
Do any of you know of landlords and/or property groups that allow for this? If you/they have any specific requirements, conditions, or concerns related to the subletting arrangement, please let me know, and I am more than willing to address them. I am also open to discussing this matter further at their convenience.
If you have done something similar I’d love to connect and learn about your journey.
Best,
Hardik
I'm not sure how you plan on managing this without been local. The reason I say this is that if you use a management company they would probably eat up all your profit.
If you think about it the only reason someone that would allow for rental arbitrage is for higher profits. It's true that short-term stays can generate 2-3x the rental revenue than a long term rental, but at the same time management companies usually charge 20-30%. If you do the math the margin for arbitrage is pretty tight and you would be on the hook for the volatility. The other thing is if you are just looking to use a management company there's nothing that would stop the property owner to do the same.
As someone who owns a couple long term rental properties I would never say no to someone that wants to do arbitrage but I would charge at least twice the rate for the additional wear and tear. I personally don't think there's a huge upside in that model at least where I am.
The other thing you expose yourself to is regulatory risk. If you are in Canada you probably saw BC has introduced legislation to ban airbnbs in a lot of areas and those are general areas where arbitrage had the most margin. If this happens while you are doing arbitrage you still have to pay the long term rate to the landlord while you have no income coming in.
These are just some personal thoughts I had about this business model. I could totally be off base and there could be a lot of money to be made, but I'm just not seeing it.
Post: Buying Pre-construction in Calgary
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Neil Gin:
As the title suggests - thoughts on pre-construction in Calgary in 2023?
Pre con assignment market is not really a thing in Calgary. You can certainly buy pre construction, but it's unlikely you'll be able to flip it. No hard limitation on supply in Calgary like Vancouver. So people can always just buy the next new build.
Post: Buying a rental house in Calgary 2023 December
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Theresa Harris:
I have places in BC and AB and live in AB. Be aware of some of the differences between the provinces. BC closing costs are a lot higher with the property transfer tax and then there are rent caps. AB insurance and property taxes are higher. I'm surprised if on a place worth $450K, they'd only be $2800 a year. I'm south of Calgary and our property taxes are about 0.8% of the assessed value of the home-so they'd be closer to $4000 a year.
I'm in Calgary and we have a calculator haha. https://www.calgary.ca/property-owners/taxes/calculator.html
Calgary current rate is about 0.65%.
Post: Buying a rental house in Calgary 2023 December
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Jai Kalsi:
Hello Everyone,
I have $100,000 available for downpayment. I live in Abbotsford, BC, and looking to get a house in Calgary.
The goal is to have a positive cash flow of around $500-$1000 every month. Looking for a house with a basement. The budget is in the range of $450-500k. The monthly mortgage payment would be $2500+ 150 (property tax)
2 months ago the plan was to get a property in Vancouver downtown and run it as Airbnb as it is closer to my house. But thank god I didn't buy a property there as recently the law has been changed by which we can't do Airbnb anymore except than our primary residence.
Is anyone doing something similar?
Or is there any better idea than this? I am open to exploring more options.
Any advice would be helpful. Thanks.
I would be quite impressed if you found a property in Calgary that can generate that much positive cash flow right now. A house in the 400-500k range usually rent for 2500 or so. Our rents in Calgary are much lower than what Vancouver is.
Also assume your house is assessed to be 450k for property tax purposed then your tax would be around 2800 annually which is 200+ a month. Your insurance maybe another 100 or so.
So mortgage 2500 + tax 200 + insurance 100 + management 10% of rent (assume you need this if you are out of town?)
You are probably looking at 3,000 cash outflow a month. To generate a 500-1000 positive cash flow, your rent would need to be 3,500 to 4,000. That is quite high for the Calgary market.
Post: Resources for investing in Canada
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Aaron J Breitung:
Canada needs something BiggerPockets but for Canada. It would be a great thing to have a database and website for the Canadian market.
I am very interested in creating a group of real estate investors to build a business, so we can build a good and honest business and secure our futures, and not live paycheck to paycheck.
if anyone serious enough to want to build something like this, please message me.
Love to see it. Count me in.
Post: First rental property in Calgary?
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Neil Gin:
Hi,
First time looking to buy a rental property in Calgary alberta canada!
Any tips, for someone with no experience and where to start?
Are you local or out of province? If you are local you probably know the areas you want. If you are out of province then you probably should get a good real estate agent that can guide you. @Anthony Therrien-Bernard is an agent you can reach out to, he's in Calgary and quite knowledgeable.
Once you get some idea of the areas you want and the type of property you want, I would visit them in person to get a feel for the neighborhood and stuff. Then you can go from there.
Post: Temple multifamily home
- Calgary, AB
- Posts 326
- Votes 175
Quote from @Sangeet Mahat:
Investment Info:
Small multi-family (2-4 units) buy & hold investment.
Purchase price: $395,000
Cash invested: $125,000
I've always wanted to get into real estate investing and the Temple markets are selling at affordable rates. There are challenges with this market (crime, students in eLearning) but I am excited for my first rental.
Good luck!