All Forum Posts by: Yousef Reda

Hello as everyone knows the new 15% foreign tax has affected Victoria BCs hot prices. Now it has been implemented in Ontario. My questions to everyone is 

A) How has it impacted BC homes. Could you discuss in terms of what type of real estate were effected most (For example luxury homes versus single family vs condos vs plexes) 

B) Can anyone forecast the BC market in the next 3 and 10 years. I know no one will be exact but does anyone have any insight 

C) Will Torontos market be any different or will it follow the same course as BC. I believe it may be more resilient as the epicenter of canada seems to be here. 

Any comments is much appreciated in advance. Thanks!

@Mark Watkins I did look into the market in calgary as my father is down there. Due to the large drop in oil prices around 2 years ago this has caused a lot of layoffs/job lossess in the area causing people to lose there homes as they are unable to afford it. This weakened there economy temporarily but it didnt spread to close by areas such as Edmonton yet. The prices you will see that dropped significantly are homes over 500,000$. Some have dropped almost 35%. Homes below 500,000$ probably hasnt dropped substantially. If your lucky maybe 5-10% decrease in some homes. I think someone like you coming from the USA buying in Canada is not a bad idea as right now the US dollar is standing strong against the Canadian. I have a bunch of sources that tell me the US dollar will fall in the near future compared to the Canadian. So to answer your question there may be some deals but you have to look deeply. Given historical data like in 2008 when the economy crashed house sale prices usually drop after 1.5-2 years. Its not been about 2 years in Calgary and im not hearing a lot of noise from that end of Canada.

@Mike Dymski trying to grow my portfolio as safetly as possible. I am going with option B. Thanks for your suggestion . The 0.1% interest difference will not make me pay significantly more over 5 years in interest. I actually went ahead and calculated out the difference in option A and B in terms of interest and its really only $1000 difference. This 1000$ will allow me access to 70,000$ more equity in my pocket. Plus it gives me a good buffer for cash reserves if needed on the property I will purchase. So I think its not a huge cost over a 5 year span. 

Getting a property through equity in my home. The new property I want to get is 300,000 I will be putting 20% down.

Option A) They will give me 80,000$ HELOC and 2.39% x 4 year term amortized for 30 yeaars for the 240,000$ mortgage after paying with downpayment.

Option B) They will give me 150,000$ HELOC and 2.49% x 5 year term amortized for 30 years for the 240,000$ mortgage after paying with downpayment?

My gut is telling me to go with option B so I can use that as leverage to get even more properties. However is that 0.1% interest a huge deterrent lol. I may be being a bit paranoid on this question I realize, but I rather ask then make a stupid mistake. 

@Allen Seto hey its in niagra-st catherines area. 

@Tom MacDonald without even crunching any numbers I can tell you just using the 50% rule in 2-3 seconds that this property will break even at best or negatively cash flow. Keep looking ! lol

@Alfredo O.usually someone will give money to an investor if they have a value to bring into the deal. If your friend can bring some type of value you cant like an ability to find excellent deals then its better to have 50% of a good deal then 100% of a bad deal.(Quote stolen from Brandon Turner). 

Otherwise if hes not briniging anything to the table you may just want to get that initial start up cost that you put in through profits then split the remainder 50/50. So overall you both paid the same amount. Many ways to skin a cat this is how I would consider it 

@Ron Cornwell you have to add on Capital expenditures of at least 5% but this is an older place so you can increase to 8% to be conservative given the age of the building. 

Your NOI is Gross Income - expenses. It does not include mortgage or any other financing option into it.

NOI = (650x 12 ) - (52 cap+ 112.5 vacansy+ 50 maintenance+ 109.5 tax + 56.5 insurance) x 12
NOI = 7800 - 4566
NOI = 3234

Cash flow will depend on your financing. As well as Cash on Cash return(ROI) you need to know how to finance it. Best bet is go to a local mortgage broker with experience in multiple property investments. They will give you a ton of information for free and dont get paid until deal is closed.

@Account Closed Thanks. I just watched a Podcast(Episode 61) with Ben Leboyvich and Brandon Turner. They discussed that capitilization rate is useless for fourplexes and anything smaller because these properties are not valued by there income but rather through local comps. They say capitalization rate is more a term for commercial products as they are judged by NOI. Judging from what your saying this is not entirely the case?

@Account Closed okay you seem to know capitlization rate well. So tell me this im investing in a triplex, has a good NOI, good cash flow, decent neighborhood that is appreiciating. I put the numbers into bigger pockers calcular and I got a Capitlization rate of 6.5%. Im a bit confused, do I care about this number given my property is only a triplex and not a commercial(Espiecially if all other variables seem to be good) or should I care and if so how would I go about tackling this.

Thank you for your time. Im hoping to close a deal this week so your help is greatly appreciated!