# Opinions/advices on investment property



## dbw (Dec 8, 2011)

I'm in the process of purchasing an investment property just outside the GTA.
I've narrowed down to 3 properties: a condo, a townhouse and a semi-detached house.
The semi would cost the highest and I don't think I can get the rent amount to cover all my costs, but it's in a good location, so I would have to struggle short-term for long term gain.
The townhouse costs a bit less, with existing tenants and rent is just barely enough to cover all my costs.
The condo costs the lowest, also with existing tenants and rent covers all costs with a few dollars to spare, maintenance fee is more than the townhouse but not by much.
Even though the semi would have much more potential but it will be a struggle if I don't have it rented right away with decent monthly amount, so I'm steering away from it. The condo seems to be most logical, but not sure about long term.
Any tips or advices to consider for the selection would be greatly appreciated.


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## tygrus (Mar 13, 2012)

Much easier to control and monitor your tenants in a condo. The other residents and the condo association will all be allies in keeping the tenants in line if you get a bad bunch, and you will. In a detached or semi-detached, they could be doing anything in there and not be noticed. Also, concrete in condos limits the damage they could do in the rental.

Sorry this is a bit negative, but renters aren't always flowers and rainbows. Lots are renters for a reason.


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## dbw (Dec 8, 2011)

tygrus said:


> Much easier to control and monitor your tenants in a condo. The other residents and the condo association will all be allies in keeping the tenants in line if you get a bad bunch, and you will. In a detached or semi-detached, they could be doing anything in there and not be noticed. Also, concrete in condos limits the damage they could do in the rental.


Thanks for this tip, that's a good point.


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## the-royal-mail (Dec 11, 2009)

sigh.

Read these threads:

http://canadianmoneyforum.com/showt...ved-out-early-paid-in-full-stole-an-appliance

http://canadianmoneyforum.com/showthread.php/16099-Government-programs-covering-tenants

But yeah, great idea.


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## tygrus (Mar 13, 2012)

Royal is right when he sighs. There are lots of problems with tenants and the chances of finding one that is good for their entire lease is low. I had one that just one day didn't pay the rent and dared me to evict him while he squatted in the place. We I had no choice cause he was costing me money. It cost me hundreds of dollars to file claims and have hearings and get assistance from the property manager and all he had to do was show up once at the arbitrator and cry his story. At the end of it, it took more than 3 months to get him forcefully removed by a bailiff. Then when I tried to get a collection firm to go after him or at least slap his credit score, I found out all his assets were based in the U.S. and untouchable.

If I was to be a landlord again it would be under different circumstances. I would either have to be living right next to the tenents like in a duplex or something or have an onsite property manager.

If you want to be a landlord, a better strategy would to set up a senior care home. You can make a lot more money offering after market services to seniors. We have one of these down the street and it has 6 or 8 rooms, a common area and a little backyard. The owners have a live on site caretaker that cooks cleans and makes sure basic medicines are administered. Its a little more responsibility but more money too. Some of these people are paying $2,000 per month for this. The unit is about the sized of a 2500 sqft bungalow. As far as I know, no special zoning was required either, its just a house with roommates.


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## Cal (Jun 17, 2009)

I don't know why you would consider a rental property that breaks even or is guaranteed not to be profitable. The whole point is to make money.

Rule 1, don't lose money.

I like a 10% margin of profit, to allow for extra money for repairs, vacancies etc.

Otherwise, I would just go buy a good blue chip company that has a dividend yield, taxed less harshly than rental income.


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## MorningCoffee (May 8, 2013)

Also make sure to read up on the condo's rules. Some don't allow units to be turned into rentals.

I would stay away from any property that doesn't cash flow. Who knows what the real estate market will do - it may turn into a long-term struggle. Even if the value of the property goes up, if rent doesn't cover your expenses, you'll still come up short every month. And selling costs could eat up any potential profits.


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## Chris L (Nov 16, 2011)

With recipes like this, there is sure to be a lot of sellers if prices begin to falter. Why would you buy a rental that breaks even and requires you to manage it for 25 years??


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## My Own Advisor (Sep 24, 2012)

If no "guaranteed" cash flow, stay away. That's not an investment.


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## andrewf (Mar 1, 2010)

I don't understand the mentality of buying a highly levered investment that barely yields enough to cover the financing costs while interest rates are at historic lows. I'd rather own bank stock than a condo....


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