All Forum Posts by: Taylor Servais

Check out the "Your Life! Your Terms! Show" podcast. There was an episode with Spencer Brown recently where he's done this in Ontario. You'll definitely pick up a few good ideas. 

Good luck!

Definitely a big task if you have no experience in the field (I don't). There are a bunch of posts on this website highlighting different things to look out for. For valuation, a quick one I've seen is to multiply number of units by 60 and then by 12 months (# units x 60 x 12). It doesn't take into account expenses, which may be difficult to make the economics work if there are only 10 pads. Another thing to look out for are city vs. park owned utilities. Having to replace a septic tank would make it difficult to make any money over the long run. 

There was a park in Belleville ON listed for sale a few years ago. It was listed for $595k with $114k gross income, 3.6 acres, 18 trailer sites, triplex and duplex on the property. Private septic needing replacing ($40k+). Hope that helps as a comp.

Best of luck!

@Devon Cornwall

I used Google maps aerial view and measured the outline of the building. Not the most accurate way of measuring the property, but it provides a quick guideline. I divided the asking price by sf.

The conversion would essentially be 3 to 4 new kitchens, bathroom, wiring, permits, etc. Very uneconomical.

Best of luck on your search!

The true management fee should be higher (10-15%+). You'll have 2x the turnover, pest problems, maintenance, and deal with more bs. 

The return is not good enough to justify your time. Long-term financing of this asset is a pain. Liquidity is also an issue (as highlighted by the seller's willingness to do a VTB.

The asset seems like it was or could be a 4-6 unit building (most likely highest and best use). What's the stabilized cost of this type of asset in the market?  $300k? Deduct the cost to convert to this use... Pretty soon becomes uneconomical.

Another quick way to look at it is on a price per square foot basis. Doesn't tell you the full picture, but provides a quick benchmark. 41 fourth is ~4,600 sf or $100/sf. 151-157 is 11,000 sf or $45/sf. Why the big discrepancy? Just some things to think about.

Unless you can get minimum 20% cash on cash with attractive term on your financing I wouldn't even entertain it. 

Hi Micah,

Two general comments about your inputs: (1) Use 5% vacancy or at least 1 month of rent; and (2) your insurance would probably be closer to $1,500. 

With regards to the area, I would double check you are comfortable with it. It's known as "Ford City", which isn't bad because it's supposed to be gentrifying, but it's no Tecumseh and not great. Next time you are in the city, drive down Drouillard to get a feel for the area. For your first out of town investment it would probably be better to pay a little more for quality.

Best of luck,

T

Congrats! Keep on adding those doors. 

Any vacancy, maintenance, and management (your time is worth money) leads to negative cash flow. The rent to value is 0.5%, which is very low. You have to ask yourself if spending $185,000 (assuming $10,000 in closing costs) and earning $2,000 (assuming all goes well) is the best way to deploy your capital. You could buy some REITs at a 6% tax-free (TFSA) income yield and go to sleep. I would walk and/or consider investing in other areas to generate a superior return.  Canada is a big country and there are quite a few under-loved cities where you can deploy $185,000 and earn a far superior return.

Kijiji or Realtor for finding deals using a similar method as flippers do (x% ARV)

Cornwall is tough because there isn't a lot of inventory and the product that appears affordable is in the east end (usually government assistance). The other product is usually fully priced (in my opinion) because investors from Montreal and Ottawa view it as a discount to their local markets. That doesn't mean you can't find a deal - it might have more hair on it. For example there was a decent side by side duplex (3+3) in a decent area listed a few months ago (4-6?) that needed new everything on the inside (paint, bathrooms, kitchens, doors, most flooring) and had foundation issues. It was listed at $120k and was gone under two months. Not necessarily a great deal by any means. There are a few large buildings on the market owned by the same owner that are fully priced with no movement to little movement on sale price.

When refinancing, the banks/appraisers usually undercut your value to be conservative. I've had substantially renovated properties (kitchens, baths, wiring etc.) appraised over a 1% RV when the one 2-3 blocks over (or on the same block) was under 1% RV.

Happy hunting! Feel free to DM me for any other questions.

I've used Martin Gecelovsky from First Class Home Inspections. He was good and reasonably priced.

Welcome to BP! Good luck along your journey.