# House Hacking



## Juggernaut92 (Aug 9, 2020)

Hello All,

I have been getting into more and more investing since the beginning of this year. One thing I was planning on doing as well is getting my own property (House/condo). I had one idea and I wanted to run it by people here and see what they thought of it. 

Probably not this year but next year I am thinking of getting a property and currently am saving up for a down payment. My idea for a place was either a house or condo with 3 bedrooms and 2 bathrooms. Or 2 bedrooms and 2 bathrooms. I wanted a setup like this so I can rent out the other bedrooms for income and keep the master bedroom for myself. I am currently not in a relationship but the way I am thinking about it is that when I am in a relationship in the future or have a family or something (Way down the line) the property will work out in that way as well. I am probably going to look for something inside GTA or on the perimeter if the GTA is too pricey (which it may be). I just wanted to know if people here thought there are any flaws in this plan or if I am thinking too ambitiously or if I missed something.


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## MrMatt (Dec 21, 2011)

Check the laws for rentals/boarding. Be VERY careful, the governments are swinging ridiculously pro-tenant.


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## Juggernaut92 (Aug 9, 2020)

Hmm isnt the laws for tenants living in the house alone vs tenants living in the house with the landlord and sharing the same space different? In the latter I believe the landlord has most rights unless things have changed recently because of covid?


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## MrMatt (Dec 21, 2011)

Juggernaut92 said:


> Hmm isnt the laws for tenants living in the house alone vs tenants living in the house with the landlord and sharing the same space different? In the latter I believe the landlord has most rights unless things have changed recently because of covid?


Generally those are boarding rules, and they have different laws, also not all properties can get licensed.
I think there tend to be municipal restrictions.

It's important to understand if you have boarders or tenants as the laws are very different.


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## Mukhang pera (Feb 26, 2016)

Your proposal would be anathema to some. There are those on this board who say you should never share the place in which you live with anyone who may broadly be described as a "tenant", and to allow anyone in that category anywhere near you or your family will put you on the road to perdition. Those members here go so far as to say you should never own a duplex or triplex that you live in, while renting the other units. I have broken the latter rule on occasion, with no ill effects.

What you are contemplating is really bringing in a roommate or two. I have been a roommate in premises owned by others. Never in my own home. But I have seen it work out okay.

If you take in roomies, you are not creating a tenancy, but granting a license. I wrote more on that topic in response to another post, some time back. Instead of repeating it, you may read it here:









Landlord Living with Tenant - what happens if Landlord...


Hi all, I've done quite a bit of searching and haven't been able to find any information on this topic - hoping some here might have some knowledge. I understand that if you are a landlord who lives in the same home as the tenant (sharing kitchen and/or bathroom facilities) then the tenant act...




www.canadianmoneyforum.com





Mr.Matt refers to "boarding rules", but I doubt you will be taking in boarders. That usually implies providing services such as meals, etc. Certainly, local governments can have a say in creating boarding houses. I doubt you'll need a licence to take in a roommate or two.

Because a roommate situation contemplates a sharing of the premises apart from bedrooms, you need to exercise more care when selecting roommates over tenants. They'll be sharing kitchen, including refrigerator space, laundry, maybe a bathroom, the living room, etc. There needs to be a good measure of understanding, cooperation, accommodation, etc. if it is to work well with no interpersonal conflict. But it's done all the time and often works well.


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## sags (May 15, 2010)

I always wondered why low income seniors live on their own and barely scrape by every month, when they could share a place with another low income senior.


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## Mukhang pera (Feb 26, 2016)

sags said:


> I always wondered why low income seniors live on their own and barely scrape by every month, when they could share a place with another low income senior.


True. Often those seniors are living in a house they don't want to give up, yet keeps them broke. Sometimes a good solution is to bring in a compatible person to share.


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## MrMatt (Dec 21, 2011)

Mukhang pera said:


> Mr.Matt refers to "boarding rules", but I doubt you will be taking in boarders. That usually implies providing services such as meals, etc. Certainly, local governments can have a say in creating boarding houses. I doubt you'll need a licence to take in a roommate or two.
> 
> Because a roommate situation contemplates a sharing of the premises apart from bedrooms, you need to exercise more care when selecting roommates over tenants. They'll be sharing kitchen, including refrigerator space, laundry, maybe a bathroom, the living room, etc. There needs to be a good measure of understanding, cooperation, accommodation, etc. if it is to work well with no interpersonal conflict. But it's done all the time and often works well.


It matters what jurisdiction you are in. 
Typically the rules are different if the owner is also one of the residents for the shared accomodations. Picking a compatible person is key.

In some areas with severe student housing shortages they implement a lot of rules. 
For example they restrict rental housing, and lodging houses and how close they are, to prevent an overconcentration of temporary students.
So some wealthier parents buy a house and their child rents it out while remaining a resident. Which of course ends up with the same concentration problem, so they implement more restrictions.
Also they've implemented AirBnB targetted rules in some areas.

Roomate and rental laws do vary between jurisdictions,, and I think you need to be careful exactly where you're looking. Also be aware of Condo rules if you get a condo.
That being said, if you get a good roomate, it can be mutually beneficial. But be sure to budget enough that you can afford to reject second rate roomates.


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## Mukhang pera (Feb 26, 2016)

MrMatt said:


> It matters what jurisdiction you are in.
> Typically the rules are different if the owner is also one of the residents for the shared accomodations. Picking a compatible person is key.
> 
> In some areas with severe student housing shortages they implement a lot of rules.
> ...


Here, the OP is referring to the GTA and to having one or two roommates. So I won't resile from my comment that I do not think a licence will be required. Now, I'll go further and say I _know_ a licence won't be required. My authority for that bold statement is here:









Multi-Tenant (Rooming) Houses


A multi-tenant house, commonly known as a rooming house, is where four or more people rent rooms and share a kitchen and/or washroom. These are currently only permitted in certain areas within Toronto where zoning permits them. Multi-tenant houses are an important part of the affordable rental...




www.toronto.ca





Toronto says no licence required if under 4 unrelated people sharing and paying rent.

Vancouver draws the line at 3.









Get a long-term rental business licence


Rent a residential property you own, including an investment property, for 30 days or more at a time.




vancouver.ca





I suppose it might be possible to investigate every local government across the country and find one that says you need a licence to have even one roommate. If I lived in such a place and wanted a roommate, I am sure I would engage in an act of civil disobedience and not comply. That, to me, would represent a case of extreme overreaching, for some local government to purport to tell me I cannot share my home with one other person sans permit.

The advice to be wary of condo rules is sound. They can be harsh and oppressive, depending on one's own views, and the rules are subject to change quite easily. Condo ownership tends to be a minefield that I have always avoided, but some seem to deal with it quite well. 

Lots of stuff on YouTube these days about how condo prices and rents in Toronto are on the decline. I always love the florid terms used when the real estate naysayers get going. They talk about prices "plummeting", "skidding", "crashing", & c. All of that, and worse, is said to be taking place in the Toronto condo market. Might be time to swoop in and pick up a few 3 BR units at $45,000 a copy before you-know-who gets them all.


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## MrMatt (Dec 21, 2011)

Mukhang pera said:


> Here, the OP is referring to the GTA and to having one or two roommates. So I won't resile from my comment that I do not think a licence will be required. Now, I'll go further and say I _know_ a licence won't be required. My authority for that bold statement is here:


To be pedantic, he said GTA, not city of Toronto.
Many cities have quite unique circumstances and different rules.
I know he said one or two roomates, and up to 3 seems to be "okay", but I think they should be careful.

For example Mississauga.
2.1 "No Person shall own or operate a Lodging House unless the Person is licensed under this By-law. "
https://www.mississauga.ca/wp-conte...tial_Rental_Accomodation_Licensing_By_law.pdf



https://www.mississauga.ca/file/COM/Accessory_Dwelling_Units_Q_A__Guide.pdf


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## Mukhang pera (Feb 26, 2016)

Casting the net wide enough to capture Mississauga does not advance the thesis that a licence will be required. The material to which you make reference refers to "lodging houses" thus:

_“Lodging House" means a dwelling unit containing more than three (3) Lodging Units each designed or intended for the lodging of Persons in return for Remuneration._

So, unless I seriously misconstrue the import of those words, our OP, if in Mississauga, is permitted 3 lodging units (and, since he's not likely to collect "remuneration" from himself) in addition to his own lodging unit. Again, he was talking about one or 2 roomies, so he's still under the radar.

All I said in my post was that I doubted he would need a licence. I did not tell him no need to check. To me, the licence requirement seems an even more doubtful proposition now that your post has prompted me to do a bit of research. That has reinforced me in the no licence required view.

I'll get even more reckless here and say that, in a condo situation, I would not worry too much about a strata bylaw ordaining that thou shalt not have a roommate. Unless there is a valid and enforceable bylaw limiting the unit occupancy to one, I would not fret about bringing in a roommate. Not that the nature of the relationship and whether any money is changing hands has to be posted on the notice board in the lobby. I suppose an overzealous strata council could say that, if I got married, and my wife moved in and shared expenses, then she is a roommate and I face excommunication from the strata corporation.


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## kcowan (Jul 1, 2010)

I think you need to run the numbers carefully. I have worked with people who owned Toronto property and rented rooms. Generally, the rent just covered costs and their aim was to eventually make capital gains on the property. To make money as a rental, you have to avoid any extraordinary costs.


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## Juggernaut92 (Aug 9, 2020)

@MrMatt : I see. I will look into that as yes the situation will be that I will be living on property with 1 or 2 roomates. I will also watch out for where I get a condo/house and keep in mind what you said about condo rules.

@Mukhang pera : I see. Well I am glad you did not have any bad experiences regarding that. Thanks for the link I will check it out. Yes if this scenario is one that happens then I will be very thoroughly going through prospective roommates and just choosing the best as I dont want things going bad especially in terms of money and having a good relationship.

Good tip about the condos. Also, I heard the same thing about the toronto condo market so I may take a look into that as well.

@sags : Who knows. Maybe they dont feel comfortable with that. 

@kcowan :Yes for sure. In this scenario I was thinking either way it would be good as the roomates can help pay toward the mortgage for a few years. I am not too sure if I am looking for capital gains from this scenario as I still live on the property but yes I am planning on keeping most costs down.


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## cm2u (Feb 6, 2019)

To make this work you need to maximize your revenue. Which means renting as much space of that house out as possible. Living/dining/recreation/laundry rooms can perhaps be rented if they have an opening window for a fire escape. If not, make a window. That is the real way to do this. Also you should be in the smallest room in the beginning to maximize revenue. People will be coming and going....you can always switch rooms later. Be very clear on the tax on that rental income and what deductions you can use. Like structuring the mortgage to be interest only so you can write off your mortgage payment. In the beginning you will make many mistakes and your revenue will be nowhere near what it will be later so be very pessimistic and forget your own space allotment and how nice it will be. Make the numbers work first. 
Consider attempting to rent each room to more than 1 person as well. Consider weekly rentals which bring in far more than monthly, often 50% more. Even daily if the room is empty anyways. Just do whatever it takes and swallow your ego. You can regurgitate it later when your revenue picks up. The main reason business ideas fail is ego. 

Look for houses with basement renovation potential and learn about egress door costs. Consider buying an excavator if there are a few doors to do. That way you won't be rushed like if you rented it or hired someone. Hallways waste a lot of space, same with stairs. Separate entrances can elliminate hallways and stairs. It sounds unconventional but the numbers speak for themselves. A basement can hugely augment your square footage. If the ceiling is low that's not the end of the world. Lots of shorter people won't care.


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## Juggernaut92 (Aug 9, 2020)

That is a very good point. I did not see it that way as I was thinking if there was a 3 BR 2 bath property then I would take the master BR with the washroom and let the other two people share a washroom but that makes sense from a comfort point of view but not from the view of getting returns.

I did not think about renting to more than one person per room but that also makes sense. Yes a place with a basement would be awesome as it would be more space to rent out. Thanks for the tips


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## cm2u (Feb 6, 2019)

Juggernaut92 said:


> That is a very good point. I did not see it that way as I was thinking if there was a 3 BR 2 bath property then I would take the master BR with the washroom and let the other two people share a washroom but that makes sense from a comfort point of view but not from the view of getting returns.
> 
> I did not think about renting to more than one person per room but that also makes sense. Yes a place with a basement would be awesome as it would be more space to rent out. Thanks for the tips


Remember the key to profit is identifying value that others miss. Someone looks at a 3 br home with an unfinished basement and sees whatever those type of homes rent for in that area. Huge mistake. A determined investor looks at each part to maximize. Always segregate things in your mind otherwise its too complex for your mind to analyze. How to maximize a living room is to rent it out, not for everyone to wander in and out of it whenever they want. LR's are where people socialize and make noise as well. Not good for shared accommodation. Ideally you want people to barely talk to each other!  Private entrances (learn about egress basement doors) help hugely. I would also look into portable toilets used in RV's where people can dump them periodically. It sounds strange but toilets are a private thing and something not connected to plumbing can be kept in a shelf or cupboard and pulled out and used when needed. They are sealed well - no smell. Girls might especially like the idea of keeping things "in house".
If water can be plumbed in for a mini kitchen this adds a lot of value and that kitchen sink area can double as a vanity with a mirror. RV/trailer people do this all the time. You can get a lot of ideas from camping websites actually because they are always battling space. If you can figure out how people can live comfortably in a smaller space you will be rewarded by way more renters/revenue. Combining the desk space and bed is also excellent. They're called loft bed/desk combos. 


http://homesfeed.com/wp-content/uploads/2015/07/simple-and-minimalist-loft-bed-combo-furniture-with-workstation-and-storage-underneath-a-simple-black-chair-a-grey-rug-for-floors-a-table-lamp-a-laptop-a-globe.jpg


Most have the bed on top of the desk but some have it on a slide below. This takes up much less space but you need that space behind the desk to slide it out. This is a lousy example but it gives you an idea.


https://i1.wp.com/makezine.com/wp-content/uploads/2014/07/bedroom5.jpg?resize=1200%2C670&strip=all&ssl=1





https://diyprojects.ideas2live4.com/wp-content/uploads/sites/5/2015/12/Pull-out-Bed-Under-Platform-03-Copy.jpg



The space above the bed is always wasted during the day. Another option is to have the bed on cables and lower it to the floor from the ceiling. This is actually a lot easier than it may seem because the platform the mattress is on doesn't have to be strong because when you're using it its being supported by the floor. Pulleys make it easier. It can also be motorized for not much money. Single beds are 39" and doubles are 60" wide so keep that in mind when mapping your room out. 

Doing an image search for bed pulley will show you lots of examples that people are employing to get rid of the bed during the day. Use no boxspring and it can be easily accomplished with an 8' ceiling unless you're a professional basketball player. 






bed pulley at DuckDuckGo


DuckDuckGo. Privacy, Simplified.




duckduckgo.com





The main thing is to think like the renter and realize renters come from all different backgrounds. Just because we wouldn't do something doesn't mean others wouldn't. What matters is if others are doing it right now. Too often we let our own opinions and prejudices color our decisions and this costs us dearly. 

Your renters must be quiet, clean and respectful. Without those 3 traits all is lost. 
Clearly know your legal boundaries in your area.
Do anything to be on good terms with your neighbors. They are crucial to your success. There is nothing worse than worrying about the opinions of disgruntled people nearby, often because they are jealous of your revenue and resent you for doing unorthodox things they wouldn't consider and are struggling financially because of it. Little considerations pay big rewards. Often it takes so little to be the guy everyone likes. And when doing favors always do a little extra. It will be remembered.


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## Mukhang pera (Feb 26, 2016)

Juggernaut92 said:


> That is a very good point. I did not see it that way as I was thinking if there was a 3 BR 2 bath property then I would take the master BR with the washroom and let the other two people share a washroom but that makes sense from a comfort point of view but not from the view of getting returns.
> 
> I did not think about renting to more than one person per room but that also makes sense. Yes a place with a basement would be awesome as it would be more space to rent out. Thanks for the tips


You're getting into the spirit here Juggernaut92!

I can see you now, with that 3 BR condo with about 20 renters at $500 a month or so per head. Beds that lower from ceilings or rise up from floors are good. Find renters who work different shifts and maybe each bed can be occupied by different persons for 8-hour shifts. Someone can sleep in a bathtub by night. Hammocks can probably be suspended in 3-level tiers. cm2u mentioned using desks as beds, which is eminently sensible. Don't overlook kitchen counters. And they can be extended for taller persons by putting a cover over the kitchen sink. If your condo includes a parking spot, don't waste it. Park something like a Westfalia van there and you should be able to accommodate about 6 more happy campers.

The honey bucket idea sounds good to me. In fact, it could be another revenue source...fertilizer sales! Be creative.

And sure, if a window is needed to constitute a fire escape, it's still a fire escape even if 20 storeys up. Anyway, your accommodation will appeal mostly to young people and they are pretty pneumatic. They'll bounce when they hit the sidewalk and be fine.

All of the ideas cm2u has put forward here and on his other recent thread on this topic should simply be a primer. Use your imagination. Don't be pusillanimous!

Pls. report back in the fullness of time, wth photos. I trust cm2u to do same, very soon.


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## cm2u (Feb 6, 2019)

Mukhang pera said:


> cm2u mentioned using desks as beds, which is eminently sensible.


Actually I mentioned using desk/bed combinations. Not to interrupt your very hilarious flow there though....
Had to look up pusillanimous. 
You write with the authority of a lawyer. Especially with that term "fullness of time". Are you one? I'm curious!


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## Mukhang pera (Feb 26, 2016)

cm2u said:


> Actually I mentioned using desk/bed combinations. Not to interrupt your very hilarious flow there though....
> Had to look up pusillanimous.
> You write with the authority of a lawyer. Especially with that term "fullness of time". Are you one? I'm curious!


Guilty as charged. I am a lawyer.


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## cm2u (Feb 6, 2019)

Mukhang pera said:


> Guilty as charged. I am a lawyer.


Thanks  And thanks for the time and advice you impart to these groups. We don't deserve it but sure appreciate it.


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## Plugging Along (Jan 3, 2011)

@


Juggernaut92 said:


> Hello All,
> 
> I have been getting into more and more investing since the beginning of this year. One thing I was planning on doing as well is getting my own property (House/condo). I had one idea and I wanted to run it by people here and see what they thought of it.
> 
> Probably not this year but next year I am thinking of getting a property and currently am saving up for a down payment. My idea for a place was either a house or condo with 3 bedrooms and 2 bathrooms. Or 2 bedrooms and 2 bathrooms. I wanted a setup like this so I can rent out the other bedrooms for income and keep the master bedroom for myself. I am currently not in a relationship but the way I am thinking about it is that when I am in a relationship in the future or have a family or something (Way down the line) the property will work out in that way as well. I am probably going to look for something inside GTA or on the perimeter if the GTA is too pricey (which it may be). I just wanted to know if people here thought there are any flaws in this plan or if I am thinking too ambitiously or if I missed something.


Are you doing this as ian investment or a cost share so you can buy a home? Before you answer’both’. What’s the forst goal, so you can get into the housing market or to just make as much money as possible.
One is a lifestyle choice,the other is an investment choice, they are evaluated differently.


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## Juggernaut92 (Aug 9, 2020)

@cm2u : The desk/bed combo is something I totally forgot existed but would work really well for smaller spaces. There are some other interesting ideas in there as well but am ambivalent about buying a portable toilet for the room  . However, I definitely hear you about maximizing how much space is being rented and thinking a bit outside of the box for it.

@Mukhang pera : hahaha. I am afraid I am not quite as ambitious as cm2u. I will definitely report back with how things go when I do end up getting a property.

@Plugging Along : I would say I am doing this as a cost share to buy my first home and get some help initially paying it down. Yes I am wanting to get into the housing market. Some people say there is a "Correction" coming but timing stuff is never great so I am thinking of getting my first home and then getting help initially paying it down. Down the road I would not mind getting a bit more into real estate and buying a second property just for rental purposes.


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## cm2u (Feb 6, 2019)

> but am ambivalent about buying a portable toilet for the room


Yeah well as soon as I wrote that I realized it would sound just a wee bit strange! 



> Some people say there is a "Correction" coming


Corrections often differ so widely depending on the area. Most of us probably thought that COVID would have a much larger impact than it has. Not to say it hasn't been devestating for some but for the vast majority of people they've changed some things and adjusted with no huge impact. A lot of it depends on the effectiveness of the vaccine. As the numbers stay high or climb in so many places its obvious that we're going to have to close down society much more if we really want to eradicate this problem (if the vaccine doesn't work so well). If you look around the world, hard lockdowns really did work. And the situation in Wuhan was probably many times worse than China let on and now they have a moderately normal society though masks are still often worn. We'll never know of course. But when crematoriums are suddenly operating full tilt and they never did before you can surmise that just maybe death rates have climbed a lot. And there were the reports of the huge increase in body bag orders as well. 

Think about renting an entire house if you're not in some high priced area of Toronto (I think you're in the Toronto area) to rerent it to others. You'll get an idea of what its like managing people in a home situation. No need to go extreme cramming people into rooms. In many rentals if you can just get 1 or 2 more rooms rented as bedrooms you will be living for free or making a small profit. Remember that the rental income is taxable but your house payment would be deducted from your income obviously. (Unless there is no sanity left at CRA.) Find out if your own space needs to be worked into the figures or if you can leave it out. And check zoning laws to see how many people you can legally house in a single family dwelling in the proposed area. Ask several people to make sure you are getting the same answer! 

And find out if you can structure a mortgage for interest only in the beginning or as much as possible so you can write off as much as possible of your mortgage payment. 

You have probably seen/read about BRRR. If not its an interesting tactic that addresses capital gains taxes in selling vs refinancing. Probably a lot depends on your present tax bracket/income. But for most people it sounds like its a better way to "flip". Basically you're flipping to your next mortgage holder.


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## Mukhang pera (Feb 26, 2016)

Hey cm2u, your mention of Covid and lockdowns, etc., got me to thinking about your stuffed flat model of renting accommodation. There won't be much social distancing going on in-house. But, maybe that's okay. If the place becomes a hotbed of Covid contagion, maybe just another opportunity to diversify. You could advertise, for example, as "cm2u's Flophouse & Crematorium". 

Btw, I appreciate your sportsmanship in not getting too testy about the ribbing I and others here have meted out. All in the name of good clean fun. 

I tend to remain of the view that you will have a hard time finding a locale where you do much of what you propose and still remain within local zoning, health and safety and other bylaws and provincial regulations. I also remain of the view that, even if legal, your concept would not appeal to me, but that does not mean others should not do it if it's permitted and they can attract renters.


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## cm2u (Feb 6, 2019)

> Hey cm2u, your mention of Covid and lockdowns, etc., got me to thinking about your stuffed flat model of renting accommodation.


I should have premised that with the stipulation of either rapid testing that is really reliable and free or overall numbers at an extremely low level. My examples were for a normal world. Though that may be quite far off. 



> Btw, I appreciate your sportsmanship in not getting too testy about the ribbing I and others here have meted out. All in the name of good clean fun.


Not a problem! I've learned a lot in this discussion from far more experienced people in this industry like yourself. This is one of the best financial forums I've ever found. 



> I tend to remain of the view that you will have a hard time finding a locale where you do much of what you propose and still remain within local zoning, health and safety and other bylaws and provincial regulations.


Yes. Its quite apparent to me that I was being a little presumptive about those petty laws we all have to abide by. The probable solution is to go farther out of urban areas which will make rental of rooms far more challenging. Its pretty hard to make this work if you're not around either a university/college or employers. Another problem may be the only people that would live with another in the same room would be highly unlikely to be living far from urban areas. When you get out into the country it gets very, very "white" Canadian. Immigrants just aren't drawn out of cities very often. The zoning issues are definitely the biggest challenge to doing this. 



> I also remain of the view that, even if legal, your concept would not appeal to me, but that does not mean others should not do it if it's permitted and they can attract renters.


Quite understandable. It doesn't appeal to me much either! Thankfully I'm retired and don't have to worry much about money. I'm just pondering the options for others starting out. There may be some doing it now and flouting zoning laws but admittedly it is a tiny sliver of the total. A minute number. What I need is a website that compares zoning laws region by region in terms of maximum occupancy. Never seen that before. Its easy to find rules for specific regions. But that would take forever.


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## Mukhang pera (Feb 26, 2016)

cm2u said:


> ... There may be some doing it now and flouting zoning laws ...


You earn bonus points for saying, correctly, "flouting" the laws. Far more often than not what gets said/written is _flaunting_ the laws. Even some of Her Majesty's justice make that error.


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## cm2u (Feb 6, 2019)

Mukhang pera said:


> You earn bonus points for saying, correctly, "flouting" the laws. Far more often than not what gets said/written is _flaunting_ the laws. Even some of Her Majesty's justice make that error.


Well it seems I've been guilty of stating things with not as much clarity as I could have. I didn't want to give the impression that the people packing renters into rooms, ignoring zoning regulations, are admirable. What I do admire is their determination to find a solution but in this case its simply illegal and what's illegal is probably not going to work out for them very long so its really not a solution. They would probably argue that the zoning laws are unjust, unfair, etc. But that's a different discussion. Another outcome is because of the pressure the city feels its under to find more rentable space they ignore those ignoring these laws. Not sure if that's happening or not. As I easily found so many ignoring the law it could definitely be possible. Any search for rental accommodation sorted from low to high will quickly find them. Or a search for rentals between $200-$400 in high priced areas like Toronto and Vancouver since that is way below current room rentals. They often word their ads to make it look, at first, that its just a typical room rental, 1 to a room. But often other parts of the ad give it away. Also you can simply message them and ask. As I have an Anglo Saxon, male name its a wonder they even replied given that they stated in their ad it was for their own culture. Maybe they were replying to many and didn't even bother to notice. What I found interesting was how similar the characteristics of the rental situation was. 

AREA: Lower middle class but suburban.

INTERIOR: Neat and clean but very spartan. 

EXTERIOR: Little effort to make the place look attractive from the outside, very utilitarian. 

TENANT: Always their own culture - every one I found was Indian or Pakistani. Many only accepted females which makes sense as women do much better in closed quarters. Men seem to get irritated by others more easily than women. Men are far more combative by nature. Men are far less obedient of rules. 

LANDLORD: Almost all were in school so obviously the property was bought by their parents; possibly this helps in their immigration process. In some the parents obviously lived there. That's probably the norm and would account for them wanting tenants that speak their native language so the parents can communicate with them. How do you manage people you can't even talk to??? 

The consistency of this picture was striking.


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## Juggernaut92 (Aug 9, 2020)

@cm2u : What I am also hearing is that the government is pumping money into the economy and into the hands of a lot of people who are unemployed and this is raising house prices. Making it a bubble that may pop soon. Again I am not sure it will happen that is why I am making some plan to get a property either way. Yes for sure I agree with you on China hiding their real numbers.

Yes I am in the GTA. Renting my own place that is 30 mins away from Toronto. Isn't renting a house and then renting it out to others illegal? Or maybe I am thinking of something else. Don't you mean the interest payment would be deducted from the income? As I think the principal cannot be deducted.

Yes for sure. I am planning to ask around for sure how many people can be in one unit for condos as well if I go that route.

If I am paying interest only for the first few months then would the principal not change and thus I would continue paying the same interest?

Sorry for all the questions. Just trying to understand. 

Yes I have heard of brrr but have not read it. I am reading a similar book right now. Can i ask exactly what you are referring to?

I definitely get your point on your last post. There are a lot of landlords that only want people of similar backgrounds and it is unfortunate but I see the practicality behind it.


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## Eclectic12 (Oct 20, 2010)

Juggernaut92 said:


> ...I did not think about renting to more than one person per room but that also makes sense. Yes a place with a basement would be awesome as it would be more space to rent out.


It makes sense to the house owner ... whether there are enough people willing to live that way for any length of time is a different question.

I'm reminded of when sharing an apartment in university with another fellow, each with their own bedrooms. The other fellow thought he knew a mutual friend well enough to be sure he could share the bedroom for about year. The split costs were great but their relationship came just short of blows with a lot of frustration.




Juggernaut92 said:


> ... Don't you mean the interest payment would be deducted from the income? As I think the principal cannot be deducted.


Correct ... though if you are living there as well then your personal use portion for some expenses can't be deducted. I don't remember if interest was pro-rated or not.




Juggernaut92 said:


> ... If I am paying interest only for the first few months then would the principal not change and thus I would continue paying the same interest?


Yes ... though usually the mortgage is structured to have some of the principal paid off. 




Juggernaut92 said:


> ... I definitely get your point on your last post. There are a lot of landlords that only want people of similar backgrounds and it is unfortunate but I see the practicality behind it.


It certainly cuts down on the miscommunication issues!!

Cheers


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## cm2u (Feb 6, 2019)

> What I am also hearing is that the government is pumping money into the economy and into the hands of a lot of people who are unemployed and this is raising house prices.


Oh definitely. Without those handouts our world would look vastly different. People with the money would have gobbled up distressed properties for a song. They are hoping that the vaccine will lower the numbers so they can open things up more and more so no more CERB's will be necessary. People tend to be very irresponsible with "free money" and rarely spend it prudently. They gave out way too much way too soon.



> Again I am not sure it will happen that is why I am making some plan to get a property either way. Yes for sure I agree with you on China hiding their real numbers.


I think we'll have a good idea by the end of the month. Hopefully all the Christmas socialization won't spike the numbers up much and hopefully the vaccine will bring them down. Maybe end of February would be a better indicator. I was counting on a minor collapse with people foreclosing all over the place. What a disappointment....LOL. I know....its horrible gleely anticipating the financial impalement of others.



> Yes I am in the GTA. Renting my own place that is 30 mins away from Toronto. Isn't renting a house and then renting it out to others illegal?


Basically its like taking the roommate idea to a more ambitious level. Check "maximum occupancy" limits for prospective areas in regards to the number of bedrooms and total sq footage of the house or however they do it. It may be better to just phone the city there. Finding it online can be quite a task. Its almost impossible in my city. Using their search almost took me to another planetary dimension.



> Or maybe I am thinking of something else.


Utter squalor? 



> Don't you mean the interest payment would be deducted from the income? As I think the principal cannot be deducted.


Exactly. Its usually mostly interest in the beginning but they probably wouldn't mind if it was interest only. If this could cause other problems hopefully someone here will let us know. The only problem I see is if you default. It should pose less risk to the lender.



> Yes for sure. I am planning to ask around for sure how many people can be in one unit for condos as well if I go that route.


Just remember in a condo you are at the mercy of a condo board. A socialistic board that is used to getting their way and usually do because of the tremendous leverage they have. Also the condo fees are usually ridiculous compared to what you get. Are they paying their snow shoveler $100/hr? I wouldn't be surprised. Repairs are often corrupt with the people higher up on the board sometimes giving the overpriced work to friends and relatives. Its just so ripe for ripoff. And think of how much it would cost to get a qualified appraiser in there to examine the whole gigantic building!



> If I am paying interest only for the first few months then would the principal not change and thus I would continue paying the same interest?


Yes the principal would not change. But interest rates can change if its a variable mortgage. Some people work like banshees funneling all their income into the mortgage along with the rental income just to pay it off fast. I cited a $200,000 home with a 20%/$40,000 down payment renting 5 bedrooms at $500 each for $2500/month. A 30 year mortgage on $160,000 is well under $1000/month. Way less. But pay that off in 5 years? Its almost $3000/ mo. Very doable for almost anyone in a high demand rental area. This protects them from hugely increasing interest rates. We know they'll be low for a while but over 5 years? Things could change drastically and this can catch many unaware causing a crash in the market making their property impossible to sell at a reasonable price. But guess what? The rents won't come down nearly as much as that selling price. That's one of the wonderful things about low end real estate rentals. There's nowhere else to go! One of the perks of scraping the bottom of the barrel! Looking back at that example changing that mortgage to just 3 years bring it up to about $4700/mo. A lot of people could afford to part with $2200 a month from their salary. Also if you pay it off fast you simply pay a whole lot less interest. And we all hate interest!



> Yes I have heard of brrr but have not read it. I am reading a similar book right now. Can i ask exactly what you are referring to?


BRRR means Buy, Renovate, Rent, Refinance. The main attraction to this, besides the tax picture which is huge for most, is that its way easier to get a mortgage when the rents are rolling in than selling it to some picky buyer. What is not clear to me is how they then pay this huge mortgage. Sure the rents are higher after the reno but are they really high enough? Or do they use the cash they extracted from the refinance to pay it every month? Others here probably know the answer to this riddle. BRRR is definitely embraced by many.



> I definitely get your point on your last post. There are a lot of landlords that only want people of similar backgrounds and it is unfortunate but I see the practicality behind it.


They are determined investors. Or maybe they got kind of conned into the property and didn't realize all the costs and are willing to do most anything not to lose it. A lot of immigrants are well educated but they haven't gotten accreditation yet which can take so long, often several years, and are forced into ridiculous jobs for the education/skill level. So their income just will not cover it. Factor in extended families and non-working seniors and it gets even more desperate as so many people they care about depend on them. If the kids are working/going to school, which it seemed they all are doing of the ones I saw, its the parents that have to manage the house. Not many companies are going to hire a non English speaking person that is 80 years old after all. So they get renters that speak their language. It makes a lot of sense actually.

Remember that the more people that are there the more carefully it needs to be managed. It helps if you're big and tower over most of your renters....LOL. (Wish I was!)

Forgot to mention the necessity of understanding exactly how rental income is calculated for taxes and what can be deducted in expenses. If it was a 3 bedroom house and you stayed in 1 bedroom would that mean 2/3 of the expenses could be written off? What if it was a 3 bedroom house but you were also renting the living room? Would it still be 2/3 of the expenses or would it be 3/4? Does it go by number of people or the space they occupy? What if it was a big basement that goes for twice the cost of a bedroom and just 1 person was there? Or is the sq footage each occupies or is it the sq footage of the entire house divided by the people living there? Taxes on rental income can really mess you up and can easily change a potential small profit scenario to a significant loss. Be sure.


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## Juggernaut92 (Aug 9, 2020)

@Eclectic12 : Yes for sure. If I think some suitable arrangement could be made then I would only have more than one person in a room. I believe interest is prorated to paying just the SF landlord is using but will check with an accountant. I think I understand the point about the mortgage and interest but will look more into it.

@cm2u : Yes I saw a few articles that said the CERB program and stimulus package in the states as well paid a lot of money to people who are not entitled to it either so it was not done well at all.

LOL yes I know. I feel a bit bad about it too but gotta strike while you can. Also, the banks are the bag guys in that scenario 😅

I see. I will call my city then to get info on the max occupancy thing.

Hmm so you are saying if it is interest only at the beginning then I can just keep deducting it every month and not have to worry about the principal for a few months?

Yes I hear a lot of stories about condos and how they can be a bit lame with their condo boards. I hear that if you do have a condo then you should get onto the board meetings asap and because the levels of apathy are high and no one else wants to join.

I see what you mean about the interest rates changing over time. That is a good point about paying off a mortgage fast to avoid the changing interest rates. 

Hmm you lost me a bit. Would not the buy process incur a lot of fees? Also if I renovate and then rent our to tenants then what exactly is happening at the refinance part? Is the assumption that at that point the mortgage is paid off? or are you refinancing near the beginning of the mortgage?

Yes I am planning to go to an accountant who knows about rental properties and also what I am trying to do which is live in the rental property with 1 or 2 other tenants. I did check the CRA website and it gave me some answers. One was explicit and said you can only then deduct the expenses of those tenants and the square feet they occupy. Yes I believe the square footage is the main thing that is used to calculate deductions. 


BTW since we are already in this topic. Does anyone know if it is better to provide utilities to tenants in their rent or should i charge them separately? I ask because if i include it in their rent then I will be able to deduct it but if i charge them on top of rent then that will be more income for me which will be taxes more i believe.


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