# real estate as an investment?



## dvelecka (Oct 18, 2012)

Hi everyone,

I was just wondering if anyone has experience investing in real estate and could shed some light on real estate as an investment?

How can I get started, where should I invest, in what, how..?

Thanks!


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## Young&Ambitious (Aug 11, 2010)

Welcome to CMF. I would recommend going through old threads as this comes up frequently and a lot of great advice has been given on the topic.


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## Just a Guy (Mar 27, 2012)

I'd suggest checking out www.easysafemoney.com it's got a lot of resources for the beginner.


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## Quotealex (Aug 1, 2010)

Most people on this board will tell you don't invest in real estate other than REITs


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## Just a Guy (Mar 27, 2012)

I don't think that's true Q, I think most would say not every piece of real estate is an investment, and most in Canada are overpriced right now...


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## Mall Guy (Sep 14, 2011)

what kind of R.E. ? Condos, single family residential, multi-res, commercial storefront with walk up res, shopping centres, industrial condos ?


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## dvelecka (Oct 18, 2012)

With the housing correction taking place, do you think housing will still be overpriced in the coming months? I read that prices should drop by at least another 5% in 2013, increasing again in 2014. Based on these figures, is it best to invest in real estate now?



Just a Guy said:


> I don't think that's true Q, I think most would say not every piece of real estate is an investment, and most in Canada are overpriced right now...


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## Quotealex (Aug 1, 2010)

dvelecka said:


> I read that prices should drop by at least another 5% in 2013, increasing again in 2014.


 As landlord, those kind of general statistic doesn't mean much to me. There are good deals to be made regardless of the general market forecast...


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## phankinson (Oct 4, 2012)

My advice is to start as small as you can. You really can only learn by doing. If you've got an extra room in your house, try renting that out first. That will teach you how to write compelling ads, taking beautiful pictures, talk with potential tenants and go through the screening process. If that's not an option, I'd suggest opting for a small condo and going from there. I suggest investing local to where you are, don't invest in a town or city hours away from yourself for now. You can do that later when you have a better understanding of what's involved.

You'll hear lots about why you shouldn't invest in real estate, but if you look for economic fundamentals such as growing population, increase in income and general economic growth in the area you are looking to invest, you should be in an OK situation. Buy something that generates lots of cashflow, that way you're protected. It is possible to still find great deals, but it will take you a while to understand what is a great deal.


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## Young&Ambitious (Aug 11, 2010)

dvelecka said:


> With the housing correction taking place, do you think housing will still be overpriced in the coming months? I read that prices should drop by at least another 5% in 2013, increasing again in 2014. Based on these figures, is it best to invest in real estate now?


Everyone has an opinion. What makes this source more credible? It's impossible to tell the future. 

Get informed and be ready to jump on an opportunity if you see one come up that you believe in. That's my 2 cents.


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## iherald (Apr 18, 2009)

They key is cash flow. I'm from Toronto and not finding any reasonable return on my investment around here. So I'm currently looking for places in the US. The prices are 1/10 what I'd pay in Toronto and the rent is 1/3 of what I'd get in Toronto. So the numbers do make sense. But, like anything you need to do your due diligence.


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## HaroldCrump (Jun 10, 2009)

dvelecka said:


> With the housing correction taking place


What correction? Taking place where?
Are you speaking of the US?


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## dvelecka (Oct 18, 2012)

Phankinson,

I think that although learn-as-you-go is beneficial in some instances, I do not think that in mine it would be. The opportunity cost of learning all there is to learn in terms of property management (i.e., evictions, screening ect) is much too high.

I have done my research, and am considering investing in Alberta... the province fits all the criteria for a positive cash flow investment.
I read these two articles which helped me sort of direct myself... http://bestofourmarket.com/2012/09/real-estate-in-canada-how-difficult-is-it/
http://bestofourmarket.com/2012/09/4-factors-point-alberta-real-estate-investments/




phankinson said:


> My advice is to start as small as you can. You really can only learn by doing. If you've got an extra room in your house, try renting that out first. That will teach you how to write compelling ads, taking beautiful pictures, talk with potential tenants and go through the screening process. If that's not an option, I'd suggest opting for a small condo and going from there. I suggest investing local to where you are, don't invest in a town or city hours away from yourself for now. You can do that later when you have a better understanding of what's involved.
> 
> You'll hear lots about why you shouldn't invest in real estate, but if you look for economic fundamentals such as growing population, increase in income and general economic growth in the area you are looking to invest, you should be in an OK situation. Buy something that generates lots of cashflow, that way you're protected. It is possible to still find great deals, but it will take you a while to understand what is a great deal.


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## dvelecka (Oct 18, 2012)

Hi Harold, no I am talking about Canada and the housing corrections taking place here.


HaroldCrump said:


> What correction? Taking place where?
> Are you speaking of the US?


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## dvelecka (Oct 18, 2012)

Hi iherald,

I was advised not to even consider the US because the risk is too high... poor GDP growth, low employment rates and migration which therefor decreases the demand for housing. But, if you are looking for a holiday home for yourself that you will not be renting than it is a good investment. 

Do you think that Toronto is reaching a buyers market with sales down 27%?


iherald said:


> They key is cash flow. I'm from Toronto and not finding any reasonable return on my investment around here. So I'm currently looking for places in the US. The prices are 1/10 what I'd pay in Toronto and the rent is 1/3 of what I'd get in Toronto. So the numbers do make sense. But, like anything you need to do your due diligence.


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## dvelecka (Oct 18, 2012)

Young&Ambitious,

I don't know about being "ready to jump on" without a proper market analysis first... don't you think that would be a bit risky?



Young&Ambitious said:


> Everyone has an opinion. What makes this source more credible? It's impossible to tell the future.
> 
> Get informed and be ready to jump on an opportunity if you see one come up that you believe in. That's my 2 cents.


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## iherald (Apr 18, 2009)

It's difficult to be broad about real estate. You can't say "The Canadian market will rise" or fall. Can you say the Toronto market will rise or fall? It's difficult. 

Is Toronto reaching a buyers market with sales down? Well sales are down but prices are up. Usually this indicates that prices will soon drop, but who knows. I suspect that prices will drop further in certain neighbourhoods (I suspect cityplace will be hit harder than the Annex). 

Is the US a bad investment? We won't know for ten years. My worry about investing in the US isn't housing prices, it's actually currency valuation. Imagine if you bought a house three years ago for $10, and now the price has increased to $10.50. That's great, but the value of the US dollar has dropped 20%, so you're losing money. I will say this though, I have more worries about Toronto maarket dropping than the Miami market. The Miami market may not grow, but it's already down huge and seems to have found a bottom.



dvelecka said:


> Hi iherald,
> 
> I was advised not to even consider the US because the risk is too high... poor GDP growth, low employment rates and migration which therefor decreases the demand for housing. But, if you are looking for a holiday home for yourself that you will not be renting than it is a good investment.
> 
> Do you think that Toronto is reaching a buyers market with sales down 27%?


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## Just a Guy (Mar 27, 2012)

Having been a landlord a long time, I don't think I'd ever want to rent a room in my house. If you are going to start out, don't rent an old house of yours that you have fond memories in either. It makes it easier to deal with if there is less emotions involved when the place is trashed.

I'm not saying all tenants are bad, I found the number to be well under 10% ever cause any issues, but a fraction of the 10% can leave lasting memories...


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## dvelecka (Oct 18, 2012)

I couldn't agree with you more. Finding the best tenants for your rental property can be very hard... but I think in this instance, it really boils down to the right marketing. When you understand what your target market of tenants want to rent you’ll know what properties to buy, you’ll know why they like that area and that type of rental and as a result you’ll know what to say to your tenants to attract them to the property. (of course you want to first find the right target market, those who will respect the property!) I think that once you know this, you can find high quality tenants for your rental property and maximize the property value on a long-term basis. 



Just a Guy said:


> Having been a landlord a long time, I don't think I'd ever want to rent a room in my house. If you are going to start out, don't rent an old house of yours that you have fond memories in either. It makes it easier to deal with if there is less emotions involved when the place is trashed.
> 
> I'm not saying all tenants are bad, I found the number to be well under 10% ever cause any issues, but a fraction of the 10% can leave lasting memories...


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## andrewf (Mar 1, 2010)

Housing in the US is a much better proposition. It is possible to find houses that have cap rates of 10%, and house prices are well below long term averages relative to rents and incomes (per the Economist). In Toronto, neither of these things are true. As far as low GDP growth, there is not going to be an appreciable difference between Toronto's income growth and most of the US. We are not Calgary or Alberta, and the same things dragging down income growth in the US will affect us as well (except perhaps the fiscal tightening from governments reducing budget deficits in the US).


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## Just a Guy (Mar 27, 2012)

The states has it's own issues with taxation, repairs, estate issues...not a good place to start for the inexperienced.


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## dvelecka (Oct 18, 2012)

I don't really think that I would suggest investing in the states to anyone. If it is so secure, then how come so much international money is being parked in Canada for safety and ROI? It seems to me that Canada is becoming a safe-haven for international investors. 

I think many people have a misguided belief that cheap is good when investing in real estate, and many Canadian investors have turned their prospects south of the boarder to the US as real estate prices continue to plummet.

Canadian media has been flooded with the tales of investors chasing the cheap price of US real estate, as well as their deals and steals. However, what these investors failed to analyze is the market’s potential, such as currency risk, taxation, unemployment rate, vacancy rates, property supply and demand, and have taken the ‘buy cheap’ risk anyways despite this reality. An economy that shows a downward progression will eventually spillover to the real estate market as well, therefore creating a high-risk real estate market- this will not lead to long-term sustainable wealth.


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## iherald (Apr 18, 2009)

dvelecka said:


> I don't really think that I would suggest investing in the states to anyone. If it is so secure, then how come so much international money is being parked in Canada for safety and ROI? It seems to me that Canada is becoming a safe-haven for international investors.


Are these international investors buying condos to rent out, or condos to hold and have family live in either now or in the future? The articles I've been reading suggest that they are buying properties for themselves both for a place to stay and to pull money out of their own countries. 

Everyone has different ideas about the best place to invest, no one is right no one is wrong in my opinion, it's what you feel comfortable with.


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## andrewf (Mar 1, 2010)

The US market has already crashed. That makes it significantly safer from a valuation drawdown perspective than the Canadian market, which is very expensive on a fundamental and relative basis.

I'm not saying I would suggest buying in Detroit (ie, what is essentially a dying city), but Phoenix has promising fundamentals.


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## ddkay (Nov 20, 2010)

What's in Phoenix?


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## Young&Ambitious (Aug 11, 2010)

dvelecka said:


> However, what these investors failed to analyze is the market’s potential, such as currency risk, taxation, unemployment rate, vacancy rates, property supply and demand, and have taken the ‘buy cheap’ risk anyways despite this reality.


These same risks apply to expensive real estate. When all other factors are the same, go for cheap if it offers a better yield.


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## iherald (Apr 18, 2009)

I'm always reminded of that old quote of Buffet: “Be scared when others are greedy, be greedy when others are scared” I see people in Toronto (and perhaps Canadian) real estate being greedy in the sense that they just assume things will increase and the economy will be good, and people in the US are scared of the things mentioned above. 

I have very educated friends who are buying pre-build condo's in Toronto. They agree they will have a limited (if any) cash flow, but hope for a capital gain. I invest in the US and expect no capital gain but good cash flow. Different strokes.


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## dvelecka (Oct 18, 2012)

Since I am not a trained broker, realtor etc. most of the information that I do get is from the media - either CMHC, canadian real estate wealth as well as local and national news servers. Do you think that the media is painting a different picture than what the reality really is? Do you know of any reputable news servers where I can get more accurate information about the real estate market in general?


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## jcgd (Oct 30, 2011)

dvelecka said:


> Do you know of any reputable news servers where I can get more accurate information about the real estate market in general?


I wouldn't go through news outlets of sorts. I would find the raw numbers and reach your own conclusions. A newspaper will often do something like say "Home sales rise 2.5%". If you dig in a little you will learn that home sales rose 2.5% month over month, but were down 27% year over year. Two completely different things, but the title says things are looking up. The reality is things are looking very grim. Conflict of interest is a huge issue as well. My local paper has a lot of real estate ads. I'm sure these ads wouldn't be nearly as lucrative if the paper, on the next page, said real estate is looking grim.


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## dvelecka (Oct 18, 2012)

Thanks! From what I have been reading, I have found some useful information. For instance, many investors really seem to be focusing on the importance of location. Coupled with this, if I were to purchase real estate as an invest I would need to find renters, but since GDP in the states is not so hot, there is not as high a demand for housing, which in tail pushes down rental rates. 

So I feel like it is really a double-edged sward... buy in the US because Canada is too expensive, but the economic outlook in Canada seems to be much more stable.


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## jcgd (Oct 30, 2011)

dvelecka said:


> but the economic outlook in Canada seems to be much more stable.


It does right now. The party in the US looked pretty good until it went to hell. I'm not saying anything similar will happen here, but basing my conclusion off my limited experience with valuation... Canadian real estate looks pricey to me.


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## dvelecka (Oct 18, 2012)

Well it is pricey! But I worry about investing in the US just because I know how the political-cycle works... during elections the economy is always boosted! So sure consumer confidence, job growth, etc., may be up right now, what happens when the political-cycle comes to an end? I don't think that the economy is strong enough to sustain long-term growth, especially with the situation at present.


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## Just a Guy (Mar 27, 2012)

Start out in an area you know. Look around, do you see "Help Wanted" signs everywhere or are people afraid for their jobs? Do you live in Alberta where people want to be or PEI where they don't? is something coming down the pipe which would encourage people to move there (Hybernia?)? Then you have to look at the numbers. I found this to be an interesting article...

http://www.easysafemoney.com/good-deals-for-the-market-dont-always-mean-good-deals/


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## Berubeland (Sep 6, 2009)

Really ??? Just a Guy you already posted that link in this same thread. 

Landlording is a business and to be in that business you need a house/condo/building to rent out. For any business to be sustainable you need to make money. If you are a landlord you need to make money on rental income. If you are a specuvestor you will make money when you sell your property. If the second is your business plan you are not really in the landlording business but rather the renting out until you can sell business. 

In Toronto, it has been very difficult to find properties that you can rent out for a profit, in a lot of Canada it's the same situation. However as public sentiment has shifted and real estate is seen as lucre or the pot of gold at the end of the rainbow, people don't care. There is a desperation and it will not end well. 

I really miss the professional old time landlords.


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## Just a Guy (Mar 27, 2012)

Berubeland,

Do you ever read the postings, or just stick your foot in your mouth first. The first time I referenced the site in general as a resource which I quite like, the second was a specific article which talks about a property that the poster was evaluating which, for the market, looked like a good deal, but turned out could not cash flow.

Once again your bias is showing...other people do agree with you, and you don't even know it. Maybe you should read before commenting.


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## kcowan (Jul 1, 2010)

Just a Guy said:


> Berubeland,
> 
> Do you ever read the postings, or just stick your foot in your mouth first. ...


I find this offensive. If you have something to say, attack the post not the poster!


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## dvelecka (Oct 18, 2012)

Berubeland, do you believe that it is possible to maximize your properties value through rent increases? I subscribed to an online magazine recently where I get most of my information... someone recommended it so I could access some interesting articles written by property investors themselves, and the article basically said that one of the easiest ways for landlords to increase income, at no cost and little effort, is to ensure that they hand out their annual Rent Increase Notifications in a timely manner. Do you think that this is feasible in order to cover expenses?? here is the article: http://bestofourmarket.com/2012/10/maximize-property-value-through-rent-increases/




Berubeland said:


> Really ??? Just a Guy you already posted that link in this same thread.
> 
> Landlording is a business and to be in that business you need a house/condo/building to rent out.
> 
> I really miss the professional old time landlords.


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## ddkay (Nov 20, 2010)

Unless you are the market (i.e. own several buildings in a specific desirable area), you are very limited in how much you can increase rent prices. Most places I know in Toronto have had flat rent prices for 5 years or more while the property value doubled, nothing the landlords can do about it.


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## dvelecka (Oct 18, 2012)

Well i know that many property investors believe that the vast majority of rental units are subject to rent control, when, in reality, they are not- newly built condos are largely exempt from those limits.

I have made myself aware of the Residential Tenancies Act, especially in terms of the latitude I have to increase rents beyond rent control, if I were to go this way. But what I have noticed is that many small property investors are counting on the financing costs that rents can command. The rental market is coming to a point where this may not be feasible, especially given mortgage rates increases, it seems like a tricky business to get involved in.


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## Mall Guy (Sep 14, 2011)

dvelecka said:


> Well i know that many property investors believe that the vast majority of rental units are subject to rent control, when, in reality, they are not- newly built condos are largely exempt from those limits.


I think the point was that it has nothing to do with rent controls, and everything to do with the market for rentals . . . but don't want to speak for ddk


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## ddkay (Nov 20, 2010)

Yea I'm not talking about rent controls just market prices. If you go above average ask existing tenants will want to move out the minute their lease expires and new ones that did some research won't even consider. Your only hope is having something extremely unique/special that people would pay a premium for but there's still a cap on that.


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## dvelecka (Oct 18, 2012)

Well yes, of course. That is why location is so important! If your investing in an area with little resources around, you cannot ask for a higher than average price in that particular area. I think that proximity to the downtown core is essencial in this respect.


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## ddkay (Nov 20, 2010)

The places I'm talking about with stagnant rent prices are downtown. $1300-$1500 for a furnished studio condo with 24/7 security, hotel like amenities etc has been the accepted norm for a very long time. I've seen very few listings ask above and even less consistently able to sustain higher prices. There is only a bit of pressure now, since the CMHC rules were changed more people are in the rental pool.


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## Sherlock (Apr 18, 2010)

How about investing in commercial real estate instead? You'd obviously have to start very small unless you have a lot of capital. Anyone here have any experience in that area?


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## ddkay (Nov 20, 2010)

Like buying strip mall's and such? There are probably some REITs that give you exposure to that. The costs are magnitudes higher. You need very good anchor tenants with long leases to make up for vacancies of high turnover specialty shops. The buildings and land are expensive to maintain and you could find after 30 years and a lot of stress you've only broken even. There is a strip mall near my grandma's house in North Toronto, there was a grocery store there (Garden Food's). As they got close to the end of their lease the owner tried to jack up the rent price, and now it's been sitting empty for almost 15 years. The owner must have had a lot of properties that cash flow to let it sit empty that long, but it would kill an investor with that as the only property in their portfolio. Another example I can think of is at Islington & Dixon Rd. in Etobicoke. They had Loblaw's anchoring the mall for at least a decade, lease expired, the place sat boarded up and empty for about 5 years and since some kind of of liquidation warehouse and then a discount clothing business moved in.


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## Sherlock (Apr 18, 2010)

Even a small strip mall in toronto would cost millions, you'd have to start even smaller than that, I'm thinking of some building with 2 or 3 units that you could rent out to a convenience store, hair salon, etc. Why would the maintenance on this type of building be any higher than on residential buildings? I think the taxes would be higher but that would be reflected in the rent. I would also think that a tenant who is running a small business would be less likely to give you trouble than someone renting a place to live.


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## donald (Apr 18, 2011)

Storage units(not sure if the market is flooded,it is en-vouge,with so many popping up)Find a semi rural commercial lot in a industrial area.
I have a locker and in the compound i rent in there are @least 200 units(each being rented for between 200-300.00/mth,all maxed out/waiting list,according to the front desk)That is some serious mthly cash-flow...I'm sure there is way more than meets the eye.(seems like a complete money making machine though)and way ''less'' stress than traditional commercial investing/managing-and not as capital intense(there concrete cells,no human element)

You could start small with something like this and scale into it(maybe on a mixed commercial/residential lot,testing it)


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## dvelecka (Oct 18, 2012)

I think that the best for you, if you are planning to invest in commercial real estate would be to invest in a building that can be used as a multi-purpose property. For instance, find a space that can be used as a restaurant, or as a gym, grocery store, studio, warehouse etc. This way, you shouldn't run into too much trouble when seeking renters for your property as demand will be strong. Also, consider location. Location is key to any real estate investment so you should plan your purchase based on this.


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## andrewf (Mar 1, 2010)

Self-storage is a good way of capitalizing on human's irrational dislike of throwing things away ('loss aversion').

From what I understand, some self-storage companies have a hard time if they do not have scale (more than a handful of locations). I agree though, 200/month*200 units = $480,000 in gross rent per year. There is certainly overhead ($100k-$150k in staffing, plus taxes, maintenance, utilities and debt service), but there are also opportunities to upsell, such as packing supplies, moving services, insurance, etc.


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## Sherlock (Apr 18, 2010)

I think the capital required to start a storage facility is too high for an investor like us starting small. Would a storage facility be zoned commercial or industrial? In either case a commercial/industrial-zoned lot big enough to accommodate 200 storage lockers in any big city with demand would cost millions of dollars to buy. Of course it might be feasible in a city with cheaper real estate, but then you will have a lot less customers. And if you locate it outside the city, again you'd have a lot less customers, as I'm sure people who store their crap are more than willing to pay a premium to store it closer to where they live. I think it's actually a good investment, but the capital required to start it is well beyond what I have available (and I suspect most here).


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## andrewf (Mar 1, 2010)

Failing that, there are storage REITs, like PSA and EXR.


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## Sherlock (Apr 18, 2010)

Yeah although those are American, and the dividend yield is considerably lower than what I expect from a REIT.

After some quick googling I can only find one Canadian storage REIT, InStorage ( http://instoragereit.ca ). But it appears to be a private REIT, and their website has tons of broken links and doesn't look like it's been updated since 2006 which doesn't give me a lot of confidence in them.


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## donald (Apr 18, 2011)

I'm certian it would cost millions up front(@least to back your leverage,and i'm sure to be approved for financing it would require a very detailed plan......and you would need a bank to ''take'' a chance(provided they demed you a calculated bet)

The hardest part would be to get lending(i've always wondered when/what level your net worth/assets/background has to be when a bank will step in-----say if your looking for a million(if you had 400k,in liquid.would they back you?,with positive cash flow every mth that would cover there interest)I know the big-five,would likely kick you out the door.but maybe regional banks/credit unions)Canadian western ect

Another thing with the storage area i rent in(for got to mention)has outside storage also(boats,campers,rusted-out cars,even guys storing pipes/plumbing scrap ect(that is under tarps)I also rent a spot for one of my dump trucks(50.00,a mth)they have about 50 of these too-Ive only seen one receptionist(in front office)and it looks like maintance ect ect is contracted out----not sure what the profit margins are but the group that is running this one is opening up another----seems intelligent--and lucrative.


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## Mall Guy (Sep 14, 2011)

ddkay said:


> . . . Another example I can think of is at Islington & Dixon Rd. in Etobicoke. They had Loblaw's anchoring the mall for at least a decade, lease expired, the place sat boarded up and empty for about 5 years and since some kind of of liquidation warehouse and then a discount clothing business moved in.


Small point, but I would suggest to you that the lease did not expire . . . Loblaws relocated to a larger store (somewhere in the trade area), and Loblaws never lets their real estate (leased or owned) go to the open market. Old leases have low rents, lots of options to renew (5 or 10 x 5 year options not uncommon) and they sublet the space to keep a competitor out (or leave it vacant). BUT the affect on the owner is the same . . . a vacant or sub-par anchor kills the balance to the shopping centre.


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## Mall Guy (Sep 14, 2011)

Sherlock said:


> . . . I would also think that a tenant who is running a small business would be less likely to give you trouble than someone renting a place to live.


Correct . . . because you don't have to put up with all the BS a residential tenant can give you. They don't pay the rent, you change the locks !!!


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## ddkay (Nov 20, 2010)

I think Arcturus REIT owns the place now (or they might just be the brokerage) http://arcturusrealty.altusinsite.c...branding_search_buildingdetail&spaceid=616475

It's possible they subleased it, but the new tenants are definitely low quality and it seems like a waste of an otherwise good shopping centre

There's some discounts grocers like RCS/NoFrills around but the closest Loblaws is over 5km away in the Kingsway, 10 min drive/30 min by bus. A lot of the older folks in this area can't drive anymore so they have to stick with the discount grocers.


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## Mall Guy (Sep 14, 2011)

. . . I'll go one step further (I forgot which property this was) . . . Loblaws owns this property! Arcturus (the brightest star in the sky) are property managers, not owners, and one of their main clients is . . . wait for it . . . Loblaws!!! Actually, I'll go two steps further, it will never be a grocery store again, unless Loblaws decides to re-open . . . some day it will be sold to a condo developer . . . with a restrictive covenant on title that no other supermarket can ever operate from this location . . . just saying 

As info, Loblaws owns RCS and No Frills.


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## ddkay (Nov 20, 2010)

So they're going to cash out on condos like the Mr. Christie factory lol.. The Humbertown shopping centre where the other Loblaws sits is also only a few years from being dozed and built over with new condos


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## ddkay (Nov 20, 2010)

Seems like the best thing to do is buy land in a country with fast sprawling cities and sit on it for a few generations until its a goldmine


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## Mall Guy (Sep 14, 2011)

Exactly!!! Although in the case of Humbertown, they could end up as the ground floor tenant of the residential development.


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## andrewf (Mar 1, 2010)

Mall Guy said:


> . . . I'll go one step further (I forgot which property this was) . . . Loblaws owns this property! Arcturus (the brightest star in the sky) are property managers, not owners, and one of their main clients is . . . wait for it . . . Loblaws!!! Actually, I'll go two steps further, it will never be a grocery store again, unless Loblaws decides to re-open . . . some day it will be sold to a condo developer . . . with a restrictive covenant on title that no other supermarket can ever operate from this location . . . just saying
> 
> As info, Loblaws owns RCS and No Frills.


Loblaw Companies has a large real estate portfolio. They play the long game.


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## Berubeland (Sep 6, 2009)

If this is the case, it may very well be that the property is already under planning and development for condos or even a new mall. Morningside Mall not too far from me was like this, Walmart was an anchor and they moved. For 5 years I was wondering what the heck the managements problem was. The last time I was in there as a shopper, it looked like some strange third world bazaar, with vendors actually sitting on the floors of the hallway selling shoes. 

Now it's shiny and new and full of franchises.


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## Mall Guy (Sep 14, 2011)

Morningside Mall likely had to wait for Walmart's lease to expire before they could do anything. And they had to give up on the "prayer" method of leasing/re-developing . . . It was built just at the end of the cycle for smaller community sized enclosed malls, that eventually were found not to be large enough to compete with the large, dominant fashion malls. They are more expensive to operate then open air plazas, so cheaper for a tenant to relocate to a plaza. Once Walmart declared that they wanted to replace all their former Woolco location, that was that ! 

Fun fact :chuncky:. . . when Vaughan Mills opened a few years ago, there had not been an enclosed shopping centre built in the GTA in 25 years!


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## marina628 (Dec 14, 2010)

To OP ,
My husband and I have five rental properties .When we originally purchased our first rental property it was really to have a extra income producing vehicle for when we retired.We are currently both 45 years old.Our idea was to have somebody else pay the mortgage off for us.We are lucky as we bought our first home in 1991 and after 3-4 trade ups realized quite a bit of gains on our personal residence which allowed us to buy the other properties.
When we looked at the first house to purchase the rental .We did look at older homes and town homes but we did not like what we seen around the streets so we decided on looking for single family homes for one family.In 2009 we were able to purchase A home for $169,000 which at that time was only 5 years old.Today that home is worth $250,000 but most importantly we have kept the same tenants all this time.It is your basic 3 bedroom 1.5 bathroom about 1300 sq ft ,my husband is quite handy so he finished the basement to add another full bath plus a rec room with fireplace for modest $7000.Our tenants found us the tenants for our next rental ,we bought a similar house in same city but for a bit more money.
It is NOT easy and we also have put down 35% plus closing on all the properties so we have a good cushion if things fell back.The worst thing you can do is get into investment properties and not have the cash flow behind you when tenants do not pay the rent or you have unexpected expenses come up .
I personally would not buy anything I would not live in myself ,my tenants all have front end loading washers and dryers on pedestals, I have seen many appliances from the 70s on MLS photos and they wonder why tenants wont stay around with their harvest gold and avocado mismatched appliances lol.
As for rental increases ,we have not raised any rents in 3 years for the simple reason our costs are fixed and I rather keep the great tenants I have than get that extra $500 a year or so in a increase.We also give our tenants a $100 gift card once a year to go out for a meal which they really appreciate .


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## summer (Jul 7, 2011)

Marina, are you planning to buy more?


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## Jocose (Nov 12, 2012)

Marina628,
thanks for sharing your own experience. It's very valuable. 

Since you have 5 rental properties, you probably bought some of them in 'bad time', when prices were high. Do you regret about it?
I'm asking because a friend of mine has 3 rental properties and he says that even last one, which he bought when prices were at the top before the recession, is still paying itself off (mortgage, property taxes, maintenance). Do you have similar experience?


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## Just a Guy (Mar 27, 2012)

In my experience, you can find good properties even in bad times, you just need to look harder, be patient, and be ready to pounce when something arrives. 

There are always people who need to sell quick, or below cost for various reasons. Then there are occasional downturns in the market. You can also look outside your usual area for deals. Over the last year I picked up three properties, but it was probably 3 or 4 years since I'd bought one before, there just wasn't something that met cash flow requirements. 

Of course, I know plenty of "investors" who bought all along, many of those are underwater now...

I might also point out, to get those three, I made offers on probably 20-30...not everything works out because we want them to.


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## Jocose (Nov 12, 2012)

Just a Guy,
could you explain in simple words what you consider as "good properties"?
Location would be one of the first I assume, what else?

However please don't say something like 'the conditions of a house compare to its price'. This is so hard to identify for a guy like me - with no experience in construction or real estate.

Thanks!


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## Just a Guy (Mar 27, 2012)

Good properties are ones that make you money, even in a downturn. 

So, you need to pull in enough, in the bad times, to cover all the costs at least.

What this means can vary on a number of levels, there is no formula per se.


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## marina628 (Dec 14, 2010)

We didn't buy any of them in 'bad times' and we actually sold one this year about 2-3 months agriginally we thought we would buy 10 but when we had a opportunity to sell one this year at a great price we took it.The rest we will keep long term 10+ years .We have homes built 2004 or later in our portfolio so have yet to get to the big money stuff like new roofs and windows.Our first home was right after the big down in price in 1991.The home we bought was sold the summer before for $80,000 more than we paid for it so we have always been lucky at our timing.The first home we didn' make much profit ,only $28,000 but we were able to save in that house as it had a rental suite and was very affordable for us.


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## Jocose (Nov 12, 2012)

Just a Guy and Marina628,

which type of property is more profitable: condo, town-house, house? 
Yes, all of them have own pros and cons. Let's say in a house upper level, basement and garage could be rented as separated units, which will bring the total income up. However, condo in general will cost less and could be paid off faster and then start generating way bigger income.

What does your personal experience say?

Thanks!


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## marina628 (Dec 14, 2010)

I don't think I can give one answer as there are so many other factors such as location , condition of the property ,if they are done to code to have multiple units.The list can go on from there.


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## Just a Guy (Mar 27, 2012)

I'd agree. Plus there are other benefits/drawbacks. For example a condo means less maintenance, but it can also mean problem neighbours. It can also depend on location, some places the garage is expected to be included, other places you can charge more. You need to evaluate each property on its own merits.

You may want to email the guy who wrote that book, he's very responsive I've found, and may offer you another opinion.


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