Real Estate Quotes

It's very hard to live off the cash flow from buy-and-hold property unless you have the mortgages paid off. Most real estate investors create their "cash today" using one of the following five strategies: 1. Wholesaling or assignments; 2. Flipping; 3. Becoming a realtor; 4. Creating a property management business; 5. Adding a strategy like rent-to-own that will increase your cash flow on a monthly basis. [2013] - Julie Broad

Ditch the idea that you have to find a perfect investment market. It doesn't exist. It's not in Edmonton. It's not in Phoenix. Every single market has positive and negative aspects. Some are better poised for capital appreciation. Others are more stable. And still, some markets are declining. You can make money in all of these markets if you know what you're doing. So it's not necessarily about the market. It's more about matching your strategy with the market and the stage of the real estate cycle that market is in. [2013] - Julie Broad

If you're finding deals with motivated sellers and massive cash flow, you're finding problem properties. If you have a property that can cash flow positively $1,500 per month, why would you ever sell it unless it's challenging to manage? [2013] - Julie Broad

Here is our formula for only buying properties with a CAUSE: 1. Convenience (near schools, hospitals, shopping, public transportation, a university) 2. Attracts families 3. Under the average price (10% below the average price in our chosen market) 4. Starter home (entry level home tends to be the most liquid, the most price stable, and generally the easiest to rent out) 5. Economic fundamentals (people are moving there, more jobs are coming, amenities and infrastructures are growing, government is pro-business, rent rates are stable or increasing) [2013] - Julie Broad

Your best bet is to go to google.com and type in "population growth your city" or some variation of that. You will likely find all sorts of interesting stats and figures about your chosen market. It takes a while to sift through the information; but once you've found some good sites with useful information, bookmark them on your computer or write the website address down and keep it in an easy-to-find place for future reference! [2013] - Julie Broad

Generally we find FSBO (for sale by owner) homes are overpriced and the owners not that motivated to sell, but every once in awhile you can find a great deal. [2013] - Julie Broad

Don't worry about the city's property assessment or about what the sellers paid for it. Those numbers are mostly irrelevant. You may be able to use them in your negotiation if it comes to that, but for the purposes of evaluating the property they're not important. [2013] - Julie Broad

If two properties are comparable in size and location, yet one property (on a dollar per sq. ft. basis) is much more expensive or much cheaper, it's your job to figure out why. The cheaper property may be in a slightly worse location. Or it could be on a noisier street, or near a garbage dump, or in a position where it gets less sun, etc. These are some of the things you'll need to determine to figure out value and possible rent rates. [2013] - Julie Broad

Most rental properties have expenses of at least 35% of the rental revenue. This can include property taxes, house insurance, property management, maintenance, materials, water/sewage/garbage, etc. If you are doing a rent-to-own, your expenses are lower because the tenants are responsible for more of the expenses. About 20% is more accurate for a rent to own. You'll still pay for house insurance and taxes, but you probably won't have a property manager. You'll have less maintenance, and your tenant will typically pay for water/sewage/garbage. [2013] - Julie Broad

Income/Financing Ratio: 65% of income should be the maximum financing (mortgage principal and interest) cost. E.g., if rent is $2,000/month, financing should not exceed $1,300/month (2,000 x .65 = $1,300). [2013] - Julie Broad

If you're investing in a smaller market (i.e., markets like Barrie, Red Deer, Medicine Hat, Weyburn, Port Alberni, etc.), make sure that the folks in the property management business in your area will take on a property like the one you're about to buy. [2013] - Julie Broad

After thoroughly researching comparable rents in the area, does it look like the rental income will support a Gross Rent Multiplier (GRM) of around 10 (or up to 12)? The GRM Formula: Asking/purchase price = $150,000; Monthly rent = $1,100; $150,000 divided by ($1,100 x 12) = 11.36 (CRM) [2013] - Julie Broad

Typical rent to won tenants are folks who are new to Canada and haven't established credit; or they are going through a divorce and their assets are tied up; or they've beaten up their credit because of a health reason; or they haven't saved enough for a full down payment to qualify for financing; or just one setback has kicked their credit down to a point where the banks aren't interested. You need to review their debt load to make sure a bank is likely to work with them in the future; and you need to review their plan to correct whatever issue they have - to make sure they know what steps they have to take to qualify for future financing. [2013] - Julie Broad

We typically get $100-$150 more per month than a "normal" rental in our area because our properties are the best quality on the market. Test an ad out - if you don't get much response in the first 48 hours and you've created an interesting ad with great pictures, drop the rent quickly by at least $50. Typically, you will rent unit faster, have a larger tenant base to pick from, and have a better chance of retaining a tenant for a longer period of time if you have lower rent. [2013] - Julie Broad

We e-mail all our tenants and friends and family that live near the unit that is for rent and let them know about it. If someone refers a good tenant to you, it's a good idea to thank them in some way. Depending on the effort that went into the referral, we may just send a thank you card with a small gift certificate (say $25 for a restaurant or bookstore), or we'll send a nice gift basket that costs somewhere between $50 and $100. If you're near a large facility like a university or hospital, check around and see if they have a housing board. [2013] - Julie Broad

We generally try to schedule all our showings for the same time. You could show your unit to one tenant at a time. This is a great way to get to know the applicant a bit more, but it is also very time-consuming and inefficient, especially if you don't live nearby. Also, an open house-like environment creates an air of demand, which helps get applications completed much quicker. Encourage the prospective tenants to complete the application before they leave. [2013] - Julie Broad

Most provinces and states have services where you can do credit checks. There is also a company called TVS (Tenant Verification Services) that run credit checks (tenantverification.com). There's always a fee for credit checks, and we typically pay somewhere between $7 and $15 per applicant. If you go through a one-time service like TVS you'll pay twice that. If you have two people moving in make sure you check the credit of both. It will be twice the price, but knowing the credit and history of both tenants is crucial. [2013] - Julie Broad

We generally don't call current landlords for reference checks - we call the one before the current one. A current landlord might be anxious to get rid of a not-so-great tenant and therefore might not tell you the entire truth. If the tenants did not live together previously, call references for both tenants. When you have selected a candidate, call them immediately and ask them to sign the lease and provide their security deposit. Don't allow them more than 48 hours to get this to you, and don't call the other interested candidates to tell them it's rented until this is done. [2013] - Julie Broad

The Sauder School of Business is a great source of up-to-date information on population and demographic trends across Canada. The Canadian Mortgage and Housing Corporation also regularly updates its website with current information on population and demographic information for would-be buyers. In large cities, such as Toronto, Montreal and Vancouver, population appears to grow very slowly if one only looks at percentages, but the actual numbers are in fact consistently high. In these cities, this means that population growth typically exceeds the total building capacity that can be delivered, thus causing prices to appreciate significantly as demand far outpaces supply. [2012] - Brian Persaud

Walkable neighbourhoods are safer. Crime rates are much lower on busy city streets because there are more eyes preventing crime. Emergency vehicles take longer to travel to neighbourhoods with suburban cul-de-sacs than to those streets in a traditional urban grid. If health-care facilities are within walking distance of people's homes, they are more likely to be used for preventive care. Walkable cities also bring in more high-paying technology-based jobs. [2012] - Brian Persaud