Any landlords or wannabe landlords out there?

[Mr.Canada]

I have been researching this topic for the past while. I'm debating on buying an income property to diversify myself a little bit. Does anyone have any experience with this? I wouldn't want to have a bottom of the barrel low or super high end income property but something in the middle of the range.

I know that recently the Government passed bill 140 which allowed for secondary suites to be legal across the board as long as they were up to current building and fire codes.

I'm a fairly handy guy and currently work from home so I have free time to address any issues that may come up from time to time.

I'd be interested in hearing anyone's experiences with this or if you've been thinking about it as well and have some insights to share.

[dre]

I have been researching this topic for the past while. I'm debating on buying an income property to diversify myself a little bit. Does anyone have any experience with this? I wouldn't want to have a bottom of the barrel low or super high end income property but something in the middle of the range.

I know that recently the Government passed bill 140 which allowed for secondary suites to be legal across the board as long as they were up to current building and fire codes.

I'm a fairly handy guy and currently work from home so I have free time to address any issues that may come up from time to time.

I'd be interested in hearing anyone's experiences with this or if you've been thinking about it as well and have some insights to share.

Im a landlord... Best advice I can give you is dont buy realestate in Canada right now. We have a huge housing bubble and one of the most overvalued realestate markets in the world. We are going to see double digit devaluations over the next few years and THATS when you should buy.

[eyeball]

Im a landlord... Best advice I can give you is dont buy realestate in Canada right now. We have a huge housing bubble and one of the most overvalued realestate markets in the world. We are going to see double digit devaluations over the next few years and THATS when you should buy.

I hope now is a good time to be a landlord.(?) I'm almost finished the building out in the back 40 that my wife and I will move into. Then we'll rent out the house we raised our kids in.

[dre]

I hope now is a good time to be a landlord.(?) I'm almost finished the building out in the back 40 that my wife and I will move into. Then we'll rent out the house we raised our kids in.

Yeah thats a winning proposition. You already own the land, and now it will help generate a bit of an income to help with your mortgage payments.

[Mr.Canada]

Im a landlord... Best advice I can give you is dont buy realestate in Canada right now. We have a huge housing bubble and one of the most overvalued realestate markets in the world. We are going to see double digit devaluations over the next few years and THATS when you should buy.

I heard about this but I've been reading about this for a few years now and it has yet to happen. I know that there is huge surplus of condos now and they are still building them so that could be a problem in some areas. The prices have definitely leveled off the last few years. They say that whats goes up must come down. I doubt that we'll have the same problem like i n the US where some peoples homes went underwater but still...

Also I'll be buying the investment property in cash so I won't have any mortgage to carry. Just the extra income. How much do you set aside for repairs that may come up?

I'm thinking of a triplex or fourplex to start off with. I may add more down the road but want to get my feet wet first. Do you have to set up a separate business account? GST number? Business name and license?

I search Google every night after working. If you know of any good sites for me to check out I'd be most appreciative.

Anyways thanks for posting on the subject I appreciate you taking the time out of your day to do so.

[Mr.Canada]

I hope now is a good time to be a landlord.(?) I'm almost finished the building out in the back 40 that my wife and I will move into. Then we'll rent out the house we raised our kids in.

Sounds tight. I hope it works out well for you man.

[eyeball]

Yeah thats a winning proposition. You already own the land, and now it will help generate a bit of an income to help with your mortgage payments.

That too but the ultimate goal is to provide us a retirement income.

[eyeball]

Sounds tight. I hope it works out well for you man.

Me too but there's all these issues...I'm hoping to rent it out to a bunch of surfer chicks but my wife is holding our for surfer dudes so...your idea of a duplex might break that log jam, the house is big enough, and maybe even for a tri-plex...

There's definitely a few options. Go for a long-term year round renter at what seem to be falling market prices or go for the big bucks during tourism/fishing season when demand and prices are high. The latter appeals to me because I could still have the privacy I now enjoy at least 4 - 5 months of the year and a mix of different people over time to make life more interesting. The renovation costs of converting a house to apartments won't be trivial but I could finish one and start financing the next and so on. I could probably even squeeze a 4-plex out of it if I was really hungry.

Would it be worth the hassle though? I've heard the horror stories about tenants from hell...I'm quite easy to get along with myself so I have a hard time imagining I'd be a cause of any undue renter rage, but that said, I might have to learn how to be more hard assed than I'd really care to be.

There's more issues here than meet the old eyeball alright.

Good thread topic by the way.

Edited September 25, 2012 by eyeball

[Guest Derek L]

Im a landlord... Best advice I can give you is dont buy realestate in Canada right now. We have a huge housing bubble and one of the most overvalued realestate markets in the world. We are going to see double digit devaluations over the next few years and THATS when you should buy.

The wife and I have been humming and hawing over the possibility of another recession, hence another steep devaluation in housing prices not only here, but in the States………..We’re really close on pulling the trigger on house (with a big spread of land) in North Scottsdale (Carefree) Arizona……Like you pointed out though, I’d hate to purchase it now, then a further devaluation happens a few years latter……….

[Jiblethead]

My uncle is a landlord. He was able to attain his property for a very cheap price, which is currently very rare. The main thing is, are you willing to deal with tenants? Collecting rent and keeping them from destroying your property is a lot more work than one might think. Last year a tenant in my uncles place decided to put holes in the walls in the kitchen, so they could insert nails and hang all of their cook ware. They moved out a few months later, and he had to re-finish the whole kitchen because they left it a complete messy disaster. He calls it the PITA factor (pain in the ass)

[Mr.Canada]

I plan to hire a real estate agent to screen for my potential tenants. I plan to rent to professional people. All post dated cheques upon signing lease. I know that nothing is a sure thing but I feel that taking these steps will at provide me with as much information as possible before allowing someone to rent one of my apartments.

I will put conditions in my lease that all damages need to be repaired before leaving or they will be billed on a per hour basis to fix the property. I will then sell this to the collection agency of they don't pay. It will hurt their credit so I will get some revenge and a little of the money back.

[Jiblethead]

if you can find a tenant willing to live under those conditions, more power to you. I have never heard of post dating rent cheques. If you are really cautious about who you let live under your roof, than im sure you could make it worth your efforts.

[jacee]

I plan to hire a real estate agent to screen for my potential tenants. I plan to rent to professional people. All post dated cheques upon signing lease. I know that nothing is a sure thing but I feel that taking these steps will at provide me with as much information as possible before allowing someone to rent one of my apartments.

I will put conditions in my lease that all damages need to be repaired before leaving or they will be billed on a per hour basis to fix the property. I will then sell this to the collection agency of they don't pay. It will hurt their credit so I will get some revenge and a little of the money back.

I think you'd better check the laws on that and get your agent's advice. Damage and normal wear and tear are different.

Also people should be aware of just how long it can take to evict someone for nonpayment of rent, with notice periods, court orders, appeal periods, etc. ... and court costs too.

Good luck!

[Mr.Canada]

I think you'd better check the laws on that and get your agent's advice. Damage and normal wear and tear are different.

Also people should be aware of just how long it can take to evict someone for nonpayment of rent, with notice periods, court orders, appeal periods, etc. ... and court costs too.

Good luck!

No wear and tear is normal. I'd paint between tenants and/or renovate depending on how long the tenant lived there.

Yeah, I know it can take months to get someone out which is why I am going to hire a real estate agent to find a renter for me and check them out closely. Credit check, previous landlords, job, the works.

I think that poor people may give me more problems so I will avoid that if possible but would gladly take a single mom even if she was on assistance. I dont think a single mom would put her child in crisis and would pay the rent on time. I have a soft spot for single moms, maybe cause my mother was one.

Edited September 30, 2012 by Mr.Canada

[GostHacked]

I plan to hire a real estate agent to screen for my potential tenants. I plan to rent to professional people. All post dated cheques upon signing lease. I know that nothing is a sure thing but I feel that taking these steps will at provide me with as much information as possible before allowing someone to rent one of my apartments.

I will put conditions in my lease that all damages need to be repaired before leaving or they will be billed on a per hour basis to fix the property. I will then sell this to the collection agency of they don't pay. It will hurt their credit so I will get some revenge and a little of the money back.

Dealing with delinquent payments can be a hassle. My sister is still trying to recover about $15,000 from previous tenants that had to be evicted for non payment and damage to the unit. So you will want to make sure you have enough cash flow to cover those times where you are in trouble.

Mind you after all said and done and the work she has put into that place it is now making money for her. You are not always going to get great tenants, even if you go through an agent. Shit happens, and happens all the time. Also she has been a lot more careful in the screening of tenants. One that was promising was a student who had the financial backing of his parents, and helped sign the lease, and yet it turned sour.

It's a lot of work if you have not done anything like this before.

Also in some cases hiring someone else to do some repairs will set you back more than you think you will gain. In once case where a tenant was evicted I helped repair the place. They took a utility knife and made nice big X's on every and any wall in the apartment. That alone took a day to fill and sand, then another day to paint.

Another thing to suggest is to hire someone to look after the building. That way you don't get calls at 3am for whatever reason.

Hope that helps some.

[wyly]

once a landlord, never again...pain the F***ing ass, if you're lucky you won't have your property converted into a grow-op...

[dre]

once a landlord, never again...pain the F***ing ass, if you're lucky you won't have your property converted into a grow-op...

If youre even luckier youll get a cut

[Bonam]

I think there are better, safer, and more hassle-free ways to invest excess money to produce income or growth.

[wyly]

If youre even luckier youll get a cut

it had better be a good cut to make up for the permanent loss of property value of about 50%...

[Mr.Canada]

Not every renter is going to create a grow op. As I've said I'm going to use a realtor to find potential renters. Nothing is a sure thing but it's better then advertising in the paper and doing the checks yourself.

I don't plan to sell the property. I plan to buy more properties and keep them until my death. To use it as passive income for the rest of my life. My poker career is going well and I have the ability to buy a property right now mortgage free, paid in full, cash. I plan to put 20% of all rent collected into an escrow account for any repairs , maint, etc.

The target property is a fourplex with established renters. These are hard to find because people hold onto them forever but none the less I will wait til I find the perfect property. I am thinking about the K/W area as I see it as a growing area for years to come.

Rent is a steady income of easy money. All I have to do is keep the property in good repair and take cheques to the bank for the rest of my life.

[Jiblethead]

rent is not easy money. don't forget the PITA factor!

there are ALWAYS problems, no matter what

[Bonam]

rent is not easy money. don't forget the PITA factor!

there are ALWAYS problems, no matter what

Yep.

Anyway, one just has to think of the rate of return. If you pay cash for a home and then rent it out, how many years does it take to get back your investment? If you have to sell it to recover the original investment for any reason, you've probably lost about 10% of its value just in transaction costs (assuming no appreciation/depreciation). And, in comparison, how much money could you make if you invested that same amount of cash into something else? There are low risk income generating instruments that you can invest in and generate a 4-8% yearly rate of return in the form of dividend income, with risk that is certainly much lower than owning a rental property. If the residence you purchase costs, say, 300k, and you rent it out for, say, 1500/mo ( 18k/year or 6% annual return), then subtract expenses, you will be making less than if you simply put the money in the markets. And don't forget, investing the money is FAR less hassle.

Anyway, that's my advice. Unless you plan to make it your main business, it just doesn't seem worth it.

Edited October 1, 2012 by Bonam

[Mr.Canada]

Yep.

Anyway, one just has to think of the rate of return. If you pay cash for a home and then rent it out, how many years does it take to get back your investment? If you have to sell it to recover the original investment for any reason, you've probably lost about 10% of its value just in transaction costs (assuming no appreciation/depreciation). And, in comparison, how much money could you make if you invested that same amount of cash into something else? There are low risk income generating instruments that you can invest in and generate a 4-8% yearly rate of return in the form of dividend income, with risk that is certainly much lower than owning a rental property. If the residence you purchase costs, say, 300k, and you rent it out for, say, 1500/mo ( 18k/year or 6% annual return), then subtract expenses, you will be making less than if you simply put the money in the markets. And don't forget, investing the money is FAR less hassle.

Anyway, that's my advice. Unless you plan to make it your main business, it just doesn't seem worth it.

You make good points. But the property itself is also going to appreciate over time as well. I am now rethinking this and thinking about putting 20% down and having the renters pay my investment off. I want to buy a fourplex with 4x 2br apts that rent for around $1000-$1200+ a month each. I want to make sure they are expensive enough so that people on welfare cannot live there. The welfare people are the ones who are more likely to stiff me for rent and drag it through the courts forever. OCAP and ACORN types.

I plan to add more properties and keep them until my death. To have them paid off by the time I'm retired and provide positive cash flow until my death. I have RRSPs and bonds as well as stocks, GIC's, gold, silver, my house, cottage and am looking to add some income property to my portfolio.

The thing that scares me the most is having a bad renter because it can cost me thousands to get rid of them legally. Iam still in the research phase and haven't made any decision yet. I wouldn't mind buying into a restaurant or bar either ,that's something else I'm looking at but that's even riskier.

[dre]

Yep.

Anyway, one just has to think of the rate of return. If you pay cash for a home and then rent it out, how many years does it take to get back your investment? If you have to sell it to recover the original investment for any reason, you've probably lost about 10% of its value just in transaction costs (assuming no appreciation/depreciation). And, in comparison, how much money could you make if you invested that same amount of cash into something else? There are low risk income generating instruments that you can invest in and generate a 4-8% yearly rate of return in the form of dividend income, with risk that is certainly much lower than owning a rental property. If the residence you purchase costs, say, 300k, and you rent it out for, say, 1500/mo ( 18k/year or 6% annual return), then subtract expenses, you will be making less than if you simply put the money in the markets. And don't forget, investing the money is FAR less hassle.

Anyway, that's my advice. Unless you plan to make it your main business, it just doesn't seem worth it.

(assuming no appreciation/depreciation)

Its true that if you made the assumption there would be no appreciation or depreciation it would not be worth owning a rental property. But why the hell would anyone assume that? The entire point of investing in realestate is APPRECIATION. Rental income will just cover your monthly costs, and not even that usually.

I bought my rental property in 2005... It rents for 1200 dollars, but my costs (mortgage + property tax + rental insurance) are about 1500. So I have a negative cashflow of $300. At this point each month that goes by adds about $500 dollars to my network worth (thats how much the principle on my mortgage decreases each month). So Im coming out ahead by about 200 dollars per month... not even worth the effort.

Except... I bought the property for $170k and now its worth over 350k.

I cant imagine why you assume no appreciating given the history of home prices...

http://www.theeconomicanalyst.com/sites/default/files/u3/house_prices_canada.jpg

you will be making less than if you simply put the money in the markets.

That entirely depends on the market but its not necessarily true at all.

For example... Between 1999 and 2004 realestate prices grew by 56%. The S&P composite index DROPPED 6% during that same period.

The reality is that its really hard to tell if realestat is a better investment vehicle than stocks or vice versa. Theres a huge ammount of factors to consider. Strictly in terms of appreciation the stock market has outperformed realestate by about 5% per year, but that doesnt tell the whole story. You need to look at leverage, liquidity and a whole pile of factors, the ammount of personal time you have to put into a project, and a whole host of other things, and there is no clear winner.

[dre]

You make good points. But the property itself is also going to appreciate over time as well. I am now rethinking this and thinking about putting 20% down and having the renters pay my investment off. I want to buy a fourplex with 4x 2br apts that rent for around $1000-$1200+ a month each. I want to make sure they are expensive enough so that people on welfare cannot live there. The welfare people are the ones who are more likely to stiff me for rent and drag it through the courts forever. OCAP and ACORN types.

I plan to add more properties and keep them until my death. To have them paid off by the time I'm retired and provide positive cash flow until my death. I have RRSPs and bonds as well as stocks, GIC's, gold, silver, my house, cottage and am looking to add some income property to my portfolio.

The thing that scares me the most is having a bad renter because it can cost me thousands to get rid of them legally. Iam still in the research phase and haven't made any decision yet. I wouldn't mind buying into a restaurant or bar either ,that's something else I'm looking at but that's even riskier.

Keep in mind, theres other ways you can expose yourself to the realestate market that dont involve as much effort.