# Being a Landlord



## dBII (Mar 12, 2013)

There is a good article in the Vancouver Sun about being a landlord. http://www.vancouversun.com/business/landlord+Metro+Vancouver/8998914/story.html.


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## Jon_Snow (May 20, 2009)

I'd rather buy REITS (and I have bought several, yielding about 7%). I'd rather gouge my own eyes out than be a land lord. And to be forced to do it because you couldn't afford your mortgage otherwise - what a nightmare. Next time I won't hold back my feelings about the subject.


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## Ihatetaxes (May 5, 2010)

I've got lots of REITS and am also a commercial landlord (tenant signed a 3 year lease and was in the space over 3 years problem free before I bought it) and a vacation home short term rental landlord (house is ridiculously easy to manage and 76% occupied in 2013 and 29% reserved for 2014 so far).

There are other options besides Canadian residential.

Note: I wouldn't have done either of the above earlier in life when I had a mortgage on my home and lower net worth.


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## Berubeland (Sep 6, 2009)

Yes, agreed. I know people in this situation. 

Also I laughed about the part in the article where the real estate agents know about where the basement apartments are legal. Here in the GTA they also knew but didn't care. In Mississauga where it was illegal they were still advertising "mortgage helper" meanwhile I could have sworn that the City of Mississauga was watching the MLS. I had 3-4 brand new owners rent to people and then get set on by the city and have to kick them out. 

And i could be mistaken about this but doesn't CMHC limit the amount of income for a basement suite to 50%


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## SpendLessEarnMore (Aug 7, 2013)

Jon_Snow said:


> I'd rather buy REITS (and I have bought several, yielding about 7%). I'd rather gouge my own eyes out than be a land lord. And to be forced to do it because you couldn't afford your mortgage otherwise - what a nightmare. Next time I won't hold back my feelings about the subject.


+1 Totally agree. I'm currently a landlord for 2 rental properties and just received my first REIT dividend last Monday.

If I could I'd sell my 2 rental properties and invest it all in REITS and other stocks. Too much headache being a landlord despite 0 complaints from any of my tenants. I just blew $4k on a new furnace and a/c grrrrrrrrrrrrr... lol


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## Sherlock (Apr 18, 2010)

I have always wondered why so many people think being a landlord is such a great investment, when so many of them barely break even. I mean how many landlords are actually making serious money off of landlording, maybe < 5%? Investing in equities and especially reits is so much easier and safer.


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## Quotealex (Aug 1, 2010)

Sherlock said:


> I have always wondered why so many people think being a landlord is such a great investment, when so many of them barely break even..


 The same reason why so many people start their own business instead of working for someone else.


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## Berubeland (Sep 6, 2009)

Plus REITs do not offer the opportunity for you to add your own knowledge or sweat equity to the situation. A lot of people including myself have a hard time equating shuffling a bunch of papers around with work. So there is an immense personal satisfaction in seeing your work. If you are a plumber or an electrician, investing in the stock market may be a recipe for disaster while getting a good deal on a run down property, getting your work friends to help you fix it up for a case of beer, and renting it out thinking that in 25 years when the place is paid down, you'll have a pension that is indexed to inflation could be attractive.

Housing is a valuable service even if providing it doesn't make sense because of the crazy real estate market, still if you bought League REIT a few years ago, you wish you had bought a rental property right now.


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## Rusty O'Toole (Feb 1, 2012)

Sherlock said:


> I have always wondered why so many people think being a landlord is such a great investment, when so many of them barely break even. I mean how many landlords are actually making serious money off of landlording, maybe < 5%? Investing in equities and especially reits is so much easier and safer.


Everybody overlooks the leverage angle. I made good money out of rental properties starting with 0 money of my own, literally. I was doing nothing down deals before the first nothing down books and courses were written, did my first deal in 1972.

Have had more than one property with good positive cash flow of $500 to $1000 a month after all expenses and mortgage payments, on which I had a mortgage for more than I paid for the property.

If it cost me 0 for down payment and 0 for monthly payment and I had positive cash flow how many could I afford to buy?

It is also a safe investment if you know what you are doing. If you don't know what you are doing, or if you think you can put your feet up on the desk and watch the money roll in, not so good. It is really like running a business as much as an investment.


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## kcowan (Jul 1, 2010)

You need to run the numbers with Rachelle, and her team of handymen running the investment, including assumptions about empty periods. Then if the numbers work, you can do portions of the work yourself to increase your returns.


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## Sherlock (Apr 18, 2010)

Rusty O'Toole said:


> Everybody overlooks the leverage angle. I made good money out of rental properties starting with 0 money of my own, literally.


How is this possible, don't you need to put down at least 20% down on a rental property?


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## MRT (Apr 8, 2013)

Sherlock said:


> How is this possible, don't you need to put down at least 20% down on a rental property?


I think he's referring to a point in the past.

Today, you do need 20% down, or else you go through a private lender (or you commit fraud by lying on the mortgage application and lying when signing docs with your lawyer).


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## andrewf (Mar 1, 2010)

People fraudulently obtain mortgages? Say it aint so!

The government apparently doesn't consider this to be 'real' fraud.


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## My Own Advisor (Sep 24, 2012)

I'm with Jon_Snow.

I'd rather buy REITS, and do. I like the 6+% yields right now. No cranky tenants to deal with, been there, done that.


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## Just a Guy (Mar 27, 2012)

You don't need the down payment in cash, you can borrow that part as well, or you buy below value and when it appraises higher you actually get it for free. 

As for REITs, if you see the financial shenanigans that happen in some, if not all of them, you may feel better about just burning your money.


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## andrewf (Mar 1, 2010)

^ I think that last comment requires some justification. Are you conflating RioCan and certain litigious private REITs that have been described as alleged Ponzi schemes? (please don't sue me!)


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## Synergy (Mar 18, 2013)

One can leverage 100% of a "rental property" by using a LOC, obtaining a private loan, etc. as a downpayment.

After doing a lot of reading and talking to others I've decided to stay away from rental properties, being a landlord, etc. It's just not for me. REIT's are helping to satisfy my urge to own real estate.


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## OnlyMyOpinion (Sep 1, 2013)

We'll throw our lot in with the 'been there done that' group. Guess we're just not cut out to be real estate tycoons of the land lord type. We prefer driving by "our" *Boardwalk* townhouses that we don't maintain or manage (but $90k ($120k drip'd) is now $260k) and then pulling into "our" *Calloway* or *RioCan* mall to try to find a place to park so we can go into "our" *Walmart* and have a coffee at "our" *Tim's* or *McD's* paid for of course by the dividends along the way


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## Rusty O'Toole (Feb 1, 2012)

Sherlock said:


> How is this possible, don't you need to put down at least 20% down on a rental property?


I won't bore you with a lot of stories but here are 2 examples, both true. I leave it to you if I did anything illegal or immoral!

#1) The first rental property I ever bought. At this time I knew nothing about real estate, so I asked my father for advice (I was 21). He offered to go in on the deal with me. We bought a newly renovated, Victorian mansion that had been converted by a contractor into 8 apartments. Price $65,000. $45,000 of that came from a first mortgage at Victoria & Gray Trust Company. The $20,000 down payment my father got on a signature loan (no collateral) from the Royal Bank.

So I was half owner of the property, my down payment was 0

My father owned the other half, his down payment was 0 (he borrowed the whole thing)

The rental income stream paid all expenses, paid the payments on both loans and left a small positive cash flow.

After 18 months we sold for $110,000, a profit of $45,000 or $22,500 each. Actually about $21,000 apiece after expenses.

At the time I had the best job I ever had, making $3.85 an hour (this was good money in the early 70s) so I made about $8000 a year before taxes. Compare $8000 a year for working 40 hours a week vs $21,000 in a year and a half of spare time work. This sold me on real estate investing.

#2) Years later I bought a duplex for $60,000. I got $45,000 by refinancing another property I owned and $15,000 advanced on 2 credit cards. I had to move fast on this deal because the seller was leaving town due to being transferred which accounted for the low price, the same price he paid 5 years earlier.

Now get this. Here is where it gets interesting. 2 weeks after closing I applied for a mortgage. Because I already owned the property when I applied for a mortgage, the size of the mortgage was based on the appraised value, not what I paid.

The Bank of Nova Scotia offered to loan me up to $69,000 based on an appraised value of about, $86,250.

(remember I paid $60,000 cash)

So I got the building for nothing plus got back $9,000 change. Mortgage payment, taxes and insurance were about $600. Tenants paid their own heat and hydro. Rental income $1150 per month. So I had a free and clear income of over $500 on an investment of less than 0 and payments of 0.

I kept this one for about 5 years and sold it for $109,000.

Have done other deals involving vendor take back mortgages, remortgaging one property to buy the next etc. but those 2 stick out in my mind.

I leave it to you if either of these deals involves anything illegal, immoral or impossible.

If you don't believe the above account is true I will show you the actual closing documents, deeds and mortgages registered at the registry office etc. on a $1000 bet just to make it worth my while.


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## dBII (Mar 12, 2013)

I think I'm gonna have to take you up on that bet Rusty. I'll send you the $1000 as soon as we all see the proof. No really! You have my word as a responsible, trustworthy, hard working individual! :biggrin:


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## tyson12 (Aug 20, 2013)

It is very difficult nowadays to get a good tenant for your home.


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## Jungle (Feb 17, 2010)

I will be selling my rental when the mortgage term is done. I just can't be bothered anymore. Also if rates increase a lot, I won't be making enough money for the hassle.


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