All Forum Posts by: Vincent Pelletier

Hello BP!

I just got the final appraisal done on my first real estate deal. I bought a SFH with unfinished basement, Suited the basement and rented it out. Upgraded services on the property.

I will break it down quick then ask some questions. Looking for some advice. 

Bought SFH for $360,000

Down payment of 72,000(%20)

16,000 of down payment was from my Line of Credit

I put $42,000 (+/-$300) in renovations and made a seperate basement suite in the house

Rented out the basement for $1500/month on a signed lease

Rented out one Bedroom upstairs(where I live as well) for $500 month-month.

Planning on renting entire upstairs out once I purchase my next property. Will get approx. $1900-2200 for the upstairs 

My after repair appraisal came in today @463,000

My Current mortgage is for 280,000

The bank approved me to take out %80 of equity with a new mortgage of 370,400

A cash out of 92,600 leaving me with approx. 12,000 of my own money in the property + holding costs up to date(Approx. 10,000)

New mortgage of 1,754/month

Now my question is should I pull out the full 92,600 or should I take less (60,000-70,000?) in order for my P&I to be lower? I do not have another property in site as of now so if I take less out on the Re-mortgage I can pull the rest of my equity out with a HELOC when I find my next property(although that will be a higher interest rate).

This is my first investment and the Appraisal came in higher than I thought it was going to, so I am just wondering if it is wise to pull out as much as I possibly can here or not. What are other people doing in this situation?

I guess what I am really trying to know is what is a safe limit?

Any and all advice is appreciated! Thanks BP!

Vince Pelletier

Hello fellow Canadians,

I am just finishing up my renos on my first investment. I am wondering how the other investors in Canada, specifically in BC are structuring their lease agreements and how are you screening tenants? I haven't found a discussion about this yet. Any advice/help is greatly appreciated as I am a bit nervous finding my first tenant and I also want to make sure my agreement is legal with the provincial regulations. Thanks, I am also going to share my whole deal once I have it rented. 

Vincent Pelletier 

Pretty much any of the BP published books. Richest man in Babylon is a great book as well. Not exactly real estate but great financial knowledge. 

So are people still buying buy and hold properties that aren't meeting the 1% rule and/or the 50% rule? 

As I have seen in the above posts, several people are having a hard time finding properties that meet these rules. After running numbers on a property that I am viewing this afternoon I have:

Cashflow of $544.65

ROI of 14%

1% rule of 0.83%

50% rule of -$160. 

So I guess the question is how reliable is it to base all investments in our current market off these rules? Or are these rules telling me even though the ROI and Cashflow look good, it is still not a good investment?

That being said, with the market cooling off currently in BC as well as most of Canada and still a high demand for rentals, shouldn't an investor be able to find great deals that meet the rules of thumb?

Hello BP,

Looking for some advice.

I have been looking for a property to house hack as I need a residence but also want to invest. The area that I am buying in either has negative/low cashflowing properties or it is out of my price range. Searching for deals in multiple ways but keep ending up at the same roadblocks. Would it be wise to buy a property that is only going to have an ROI of 2-5% and cashflow of $100-300? Or would you wait until you could find a more opportune property. I don't want to purchase something because it is all that I can find, but I also don't expect to be hitting a home run on my first purchase(although that would be awesome).

I will give a short example of a property I analyzed today as it is about average for my area with rough estimates:

Single family home w/basement suite;

Cost - $389,900

Rent of main floor - $1600-1700

Rent of bsmt Suite- $1000

Mortgage - $1850

Hello BP When looking for a conventional mortgage from a local bank, would you bring Comps with you? I am still working to purchase my first investment and when talking with the lender it seems like it could reduce the amount of work that they have to do and possibly portray a higher level of character and organization on my part. Thanks for any advice Vince

Hello,

I am looking to buy my first property. I need a place to live but also want an investment. So I am looking for a single family home w/ basement suite(live in the suite, rent the main part of the house).

Right now in BC the housing market is at an all time high and many people are saying it is not the time to buy. Will this strategy work at this time? Is the market only going to climb and should I get in now? I am sure everyone would love the answer to those questions, but I am going to ask it anyways. 

Thanks.