# Commercial/Residential investment property resources?



## Rob Ford's Ghost (Mar 24, 2016)

Hey guys/gals;

Long time lurker, figured it was time to register as I've got a bunch of questions. 


I'm pretty enamored with the idea of throwing some money and time at some income-generating property, and it looks like lots of people here have some great experiences so far. I realize there's lots of challenges and hurdles to overcome, so I'm wondering if there's some good resources that I can read over and start studying to get a good understanding of the process and requirements. I'm currently in the middle of nowhere in northern Saskatchewan, so anything online would be ideal. 

I'll be moving back to BC at the end of the year, so any specific stuff pertaining to the BC market would be awesome. I've been watching MLS daily for commercial/multi-family listings for the past few months in the bigger markets in southern BC, reading through some blog posts and REIN, and trying to find info about rates/qualifications/requirements for multi-family and commercial mortgages - the latter proving to be difficult. Any other resources I should be looking into? 

Any recommendations, advice, warnings for a beginner investor in terms of what I 'should' be looking at (ie. SFH, duplex/triplex/4plex or more, retail/office commercial)? I realize this is pretty vague, but I'm trying to get a grasp on the pros and cons for each; as of yet, I don't know where I'm going to end up in BC as my work will dictate where I'll be moving in 8 months or so. 

Thanks!


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## Beaver101 (Nov 14, 2011)

:stupid:


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## Just a Guy (Mar 27, 2012)

Avoid REIN, they'll get you all hyped up about the "opportunities" and then enable you to get in to the wrong thing. Plus, they'll charge you a small fortune (which is where they make their money in the real estate system) to do it. 

Personally, I like easysafemoney.com as a starting point. It's one of the few Canadian options. 

You also need to decide which way you want to invest in real estate. Flipping, rentals, commercial, rent to own, etc.

The biggest challenge right now is finding something that you can buy at the right price. Most of the market is so overpriced that it won't cash flow properly (unless you juggle the numbers and lie to yourself).


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## marytres (Aug 24, 2015)

Have you tried Ask Avenue? Maybe it's not precisely what you're looking for but as far as I know its the only real estate app that lets yo talk to a bunch of agents at once. It's probably designed for home buyers looking to live in the property (which is why I downloaded it) but its free and the agents signed up really do answer your questions very fast. If you trust them as experts its definitely worth it. 

The app works like a text message. I type a general real estate question, then (I assume) agents get pinged and can respond. Been messaging with one woman for a few days now and might end up buying through her. If you're looking for a low cost way to access expert real estate info, can't recommend Ask Avenue enough. You can download it from their website askavenue.com/ or the app store itunes.apple.com/app/apple-store/id1018398640?mt=8


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## Rob Ford's Ghost (Mar 24, 2016)

Just a Guy said:


> Avoid REIN, they'll get you all hyped up about the "opportunities" and then enable you to get in to the wrong thing. Plus, they'll charge you a small fortune (which is where they make their money in the real estate system) to do it.
> 
> Personally, I like easysafemoney.com as a starting point. It's one of the few Canadian options.
> 
> ...



Yeah, REIN definitely seems a little cult-ish and a lot of the blog posts are a little overly optimistic. Their ebooks are ridiculously expensive.

I'm definitely looking more at long-term, cash-flow positive properties in multi-family and smaller commercial units; I had been looking at SFH, but it's proving difficult to locate them in most of the bigger BC markets in terms of cash-flow criteria.

I'll check out easysafemoney - thanks!


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## Just a Guy (Mar 27, 2012)

Patience is the key in this economy. I see too many people buying 500k properties to make 2k/month. That's not sustainable. Don't be to despirate to get into the market, there aren't a lot of deals to be had. Maybe, if the economy takes a turn, something may come up (there are always exceptions in real estate), but in general the market is at the top right now, so it's a bad time to buy.


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## Rob Ford's Ghost (Mar 24, 2016)

Just a Guy said:


> Patience is the key in this economy. I see too many people buying 500k properties to make 2k/month. That's not sustainable. Don't be to despirate to get into the market, there aren't a lot of deals to be had. Maybe, if the economy takes a turn, something may come up (there are always exceptions in real estate), but in general the market is at the top right now, so it's a bad time to buy.



Out of curiosity, what numerical criteria do you use or look at to determine if a property is 'worth it'? Total ROI? Cap rate? And where do you set the bar in terms of your rate of return? 



Also, it seems like many of the multi-family units on the market (4 and 5+ door units) are a bit detached from the housing frenzy in BC, but they typically cater to lower-income and more transient tenants, which tend to come with more issues, repairs and vacancies - yet are extremely tempting. What are your thoughts on these versus single-family detached, as well as attached townhomes?

Thanks for your input!


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## Just a Guy (Mar 27, 2012)

It depends on the area where I'm looking. Each area has a different rental rate and price for the property. 

Generally, I use the old 1% rule of thumb, where the rent generated has to be around 1% of the purchase price. 

Personally, I like small apartments or multi-housing units however, in the last few years I haven't found many that are asking less than 100k/door and those usually have a number of bachelor suites. Paying 100k/door for a bachelor is pretty dumb. I recently picked up a 3 bedroom place for less than that. So I buy based on the property's ability to generate income. Why pay a premium just to have a building?


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## Rob Ford's Ghost (Mar 24, 2016)

Just a Guy said:


> It depends on the area where I'm looking. Each area has a different rental rate and price for the property.
> 
> Generally, I use the old 1% rule of thumb, where the rent generated has to be around 1% of the purchase price.
> 
> Personally, I like small apartments or multi-housing units however, in the last few years I haven't found many that are asking less than 100k/door and those usually have a number of bachelor suites. Paying 100k/door for a bachelor is pretty dumb. I recently picked up a 3 bedroom place for less than that. So I buy based on the property's ability to generate income. Why pay a premium just to have a building?



I see; yeah, I initially started looking with the 1% rule in mind...and found maybe 3 properties across the entire province that met that criteria! And they had other issues that were pretty big red flags. Do you think it's still a realistic rule to go by in this environment?

In terms of multifamily, are you holding/looking at 4 door units, or 5 and up? What has your experience been with financing for the 5+ door units? Lots of the attractive ones I've found that are around the $125-$150k per door are 6 or 8 plex units, and from what I've read, those would all need commercial-residential mortgages. What sort of terms and rates are you looking at in that arena?


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## lost in space (Aug 31, 2015)

This might be worth checking out

http://www.margotbai.com/


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## Just a Guy (Mar 27, 2012)

I've bought 3 properties in the last three months that all fell well over the 1% rule, of course I'm looking at a much larger area than you are. Two were three bedroom places and one was a two bedroom place. Spent less than $250k for them. One of the three bedroom places was being sold by a Toronto "investor" who paid $250k for it back in 2008, but is now going through a divorce. The two bedroom place was a foreclosure, it had sold three years ago for $160k. I don't have the details on the third place. They all needed the interiors redone. So far, I'm running below my standard $5k in materials to redo them, labour on top of that.

The three bedroom places are being rented for $1250 & 1400. The first 3 bedroom appraised at $130k after renovations, The second one was appraised this week, I should hear what it's worth Monday or Tuesday for financing I expect it to appraise higher than the first one (different city, much higher values, plus it was worth a lot more), but you never know. The two bedroom I get at the end of this month, it should rent for around $1250 when it's done I expect and appraise closer to its last sale price looking at comparables in the area. 

Don't get me wrong though, these properties are not very common...I only made about three offers all of last year and didn't buy anything. Two years ago I bought 5, but nothing the year before that. It's rare to find stuff in this climate, and when you do you need to be ready. All mine are unconditional offers which helps a lot, but may be very risky for the novice investor. I also know how to do my research. I know what questions to ask the property manager for instance, I know how to read the financials, I also have trusted people who can tell a good building that's just ugly from a building that's about to fall down but looks good. I know the areas, the politics, the rents, the selling prices, etc. This isn't some "hobby", this is investing. Few people can duplicate my results because I'm not like most people in this industry. 

As for commercial, if you stay below 4 (or 5 in some banks) doors, you can usually qualify for residential rates and mortgages. So these are, by far, the easiest and cheapest ways to go.above that, you need to go into commercial lending (prime plus) and, depending on the province, you may need all sorts of engineering, environmental, and other reports (which all cost a lot of money to obtain). The process is much slower and much more expensive, nothing like buying a house. Closing costs are over 10k at best.


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## Rob Ford's Ghost (Mar 24, 2016)

Thanks for the writeup! 

I realize I'll eventually have to broaden my market horizons if I want to take this seriously, but for now, I think I should focus on my home market (however overpriced it is at the moment) as I'd like to be somewhat close to any potential properties to deal with issues in person, until it makes sense to have property management involved.


Regarding your properties - how do you find the 'deals'? Do you just scour MLS, or do you work with investment-focused realtors to identify these properties (or something else entirely)? Are these units detached homes or townhomes? Are you screening tenants or do you have a property management firm take care of this?

For a beginner like myself - who would you recommend working with initially to identify and close on a solid property? I'm assuming a good home inspector, investment-experienced realtor and a CA? I guess finding a reliable area contractor for basic renos as well? 

Thanks again for all the info!


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## Just a Guy (Mar 27, 2012)

First off, I agree you should start with places close to where you live, however I wouldn't buy it "however overpriced", a property will either make you money or it won't. If you overpay then it won't. What happens if the market does a major correction? You lose your shirt. Patience in waiting for the right deal is important. You don't want to be like the Toronto "investor" I just bought from who lost $155k on his "investment" plus about 10k in unpaid fee and lawyer bills. He bought to get into the market, I bought to make money. 

As for how I find the deals, I work with a realtor I trust...hard to find. I've heard of realtors who buy the property out from under you, guys who talk you into buying places that are too much, Pressure you, etc. Most realtors will try to sell you a place (as that's how they make money). My guys usually couldn't see the value in the properties I wanted initially, they were also low commission. I don't need them to find me properties, I just need their services.

Personally, I don't like most realtors. Mine know to leave me alone as I know more about this than they do. Ive rarely heard of ones a novice could trust. 

I get them to put me on a variety of email notification lists. I supply them with my criteria, they punch it into MLS and then, as properties get submitted to MLS that meet my criteria, I get an email about the property. I've got a bunch of different lists on the go, and get a lot of emails to read. most aren't of interest as my search criteria is broader than my purchase one. I don't buy slums either.

If something of interest does appear, I do my research on the area and the property.

I don't like home inspectors at all. There are some good ones, I'm sure, but most are a waste of money. If you know someone who knows houses (engineering, electrician, plumbing/heating, etc.) then great use them, but most home inspectors are ex-realtors or guys off the street who are less than clueless. I've been doing this long enough to know what I'm looking at. 

Don't be fooled by ugly messes either. I love walking into filthy places with shag carpets and maybe even holes in the walls...as long as the building is solid. I'm going to pull out the flooring and repaint the place anyway, patching a hole is no problem...but it drives away "novice" investors. 

I would get an accountant, but I'm not sure you need one when you're starting. Personally I hate accounting, so I'd rather pay an expert, plus he's a tax deduction once you own 3 or more I believe (the number of properties you need to own before CRA treats you like an investor and gives you more deductions may have changed, but it used to be 3). 

When you're starting, it may be best to do the renovations yourself if you're handy. First off, it'll give you an appreciation for what contractors will do, and also understand where they may be ripping you off later (things like installing a floor is a lot easier than it looks and shouldn't cost $3/sq ft to install for example). Finding a good contractor is fairly important though. Better to know your materials though. I've got a standard model for my properties. I use the same good quality paint and colour, the same brand of flooring, cabinets, fixtures, etc. Don't go with cheap stuff (I use a 15mm flooring for example, not the 7mm junk), but don't overspend either (tenants trash places). 

The most important person to work with is the bank. It's pretty hard to borrow money these days. I spend a lot of time talking to my bankers. If you want to buy a cheap place, you need to be able to move quick and have all your ducks in a row. For example, if I come in with an unconditional offer and you need a couple weeks to approve financing, an inspection, and other things but are willing to pay $10k more on a foreclosure, I'll probably win the property because the bank would rather have the property off its books than have the deal fall through and have to relist it.


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## Just a Guy (Mar 27, 2012)

First off, I agree you should start with places close to where you live, however I wouldn't buy it "however overpriced", a property will either make you money or it won't. If you overpay then it won't. What happens if the market does a major correction? You lose your shirt. Patience in waiting for the right deal is important. You don't want to be like the Toronto "investor" I just bought from who lost $155k on his "investment" plus about 10k in unpaid fee and lawyer bills. He bought to get into the market, I bought to make money. 

As for how I find the deals, I work with a realtor I trust...hard to find. I've heard of realtors who buy the property out from under you, guys who talk you into buying places that are too much, Pressure you, etc. Most realtors will try to sell you a place (as that's how they make money). My guys usually couldn't see the value in the properties I wanted initially, they were also low commission. I don't need them to find me properties, I just need their services.

Personally, I don't like most realtors. Mine know to leave me alone as I know more about this than they do. Ive rarely heard of ones a novice could trust. 

I get them to put me on a variety of email notification lists. I supply them with my criteria, they punch it into MLS and then, as properties get submitted to MLS that meet my criteria, I get an email about the property. I've got a bunch of different lists on the go, and get a lot of emails to read. most aren't of interest as my search criteria is broader than my purchase one. I don't buy slums either.

If something of interest does appear, I do my research on the area and the property.

I don't like home inspectors at all. There are some good ones, I'm sure, but most are a waste of money. If you know someone who knows houses (engineering, electrician, plumbing/heating, etc.) then great use them, but most home inspectors are ex-realtors or guys off the street who are less than clueless. I've been doing this long enough to know what I'm looking at. 

Don't be fooled by ugly messes either. I love walking into filthy places with shag carpets and maybe even holes in the walls...as long as the building is solid. I'm going to pull out the flooring and repaint the place anyway, patching a hole is no problem...but it drives away "novice" investors. 

I would get an accountant, but I'm not sure you need one when you're starting. Personally I hate accounting, so I'd rather pay an expert, plus he's a tax deduction once you own 3 or more I believe (the number of properties you need to own before CRA treats you like an investor and gives you more deductions may have changed, but it used to be 3). 

When you're starting, it may be best to do the renovations yourself if you're handy. First off, it'll give you an appreciation for what contractors will do, and also understand where they may be ripping you off later (things like installing a floor is a lot easier than it looks and shouldn't cost $3/sq ft to install for example). Finding a good contractor is fairly important though. Better to know your materials though. I've got a standard model for my properties. I use the same good quality paint and colour, the same brand of flooring, cabinets, fixtures, etc. Don't go with cheap stuff (I use a 15mm flooring for example, not the 7mm junk), but don't overspend either (tenants trash places). 

The most important person to work with is the bank. It's pretty hard to borrow money these days. I spend a lot of time talking to my bankers. If you want to buy a cheap place, you need to be able to move quick and have all your ducks in a row. For example, if I come in with an unconditional offer and you need a couple weeks to approve financing, an inspection, and other things but are willing to pay $10k more on a foreclosure, I'll probably win the property because the bank would rather have the property off its books than have the deal fall through and have to relist it.


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## Newby1983 (Apr 9, 2015)

From a new investor to another...I prepped so much and only when I was knee deep did I learn. 

Don't get scared off by what others tell you.


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## Rob Ford's Ghost (Mar 24, 2016)

Just a Guy said:


> First off, I agree you should start with places close to where you live, however I wouldn't buy it "however overpriced", a property will either make you money or it won't. If you overpay then it won't. What happens if the market does a major correction? You lose your shirt. Patience in waiting for the right deal is important. You don't want to be like the Toronto "investor" I just bought from who lost $155k on his "investment" plus about 10k in unpaid fee and lawyer bills. He bought to get into the market, I bought to make money.
> 
> As for how I find the deals, I work with a realtor I trust...hard to find. I've heard of realtors who buy the property out from under you, guys who talk you into buying places that are too much, Pressure you, etc. Most realtors will try to sell you a place (as that's how they make money). My guys usually couldn't see the value in the properties I wanted initially, they were also low commission. I don't need them to find me properties, I just need their services.
> 
> ...



Thanks for all the info, this is awesome! Have you found the 1% rule to be realistic across different property types? Are those ones you mentioned in your previous post singe-family detached or something else? It seems like it's a lot easier to meet the criteria with a multi family, based on the listings I've seen, but those tend to limit prospective tenants and have other issues.


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## Just a Guy (Mar 27, 2012)

I've got everything from houses, town houses and apartments...but they've been bought at different times...sometimes you find houses, other times apartments...as I said, I haven't found a entire commercial property in ages, but I have picked up individual units. The 1% rule is really hard in the last 15 years or so, but then there has been an unpressidented rise in real estate prices during that time. People think that everything is worth a fortune because money is so cheap, but watch out when interest rates start to rise...the "cash flows" will suddenly disappear.

Personally, I'm not a big fan of the high end rentals either. Too much money tied up in a single property. Why have one place worth 500k when I can have 5, 100k places. High end renters can be just as bad as any other, and when the place is vacant, it's harder to fill. With 5 places, it's unusual for them all to be vacant at the same time and the earning power is usually greater.

I'm very conservative when it comes to my investments...when I started, I couldn't afford to be wrong. Now, I don't "need" to get more, so I can afford to not buy if I don't find what I want. That being said, I'd never recommend buying at these prices because I'm old enough to remember that prices can and have gone down just as much and as fast as they can go up. Many people have only lived through the last 15 years of the boom prices, they can't even imagine a bust cycle.


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## AnnaDanishek (Apr 21, 2016)

I would recommend you to check https://tranio.com/. They post a lot of useful information about investing in a residential/commercial property, trends in real estate markets and can consult you on your options for free.


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