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looking for investment advice over Waterloo area like Student multiple units

23994

Inspired Forum Member
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Apr 30, 2015
Messages
67
Hi,

My name is Sue and I am fairly new to REIN, but eager to learn and put into practices in the near future...

here is my information:
We live in Toronto and we have bought our principal property and paid off...we bought our investment property 2 years ago and rented out although we did not have any knowledge about Real Estate Investment...Recently I have read a few books of Don Campbell. e.g. How to invest in real estate and Real estate cycles, 97 Tips etc...and I started join a few events of REIN and reading all the useful information here!

I am very interested in Real Estate investment now and would like to put the knowledge into action very soon...one of the idea came up to me is to buy some student multiple units to rent in Wterloo area...

I need your advice as:

1. whether the student multiple unit rental is Same as regular resident rental or not? as we have experience with our regular rental now...in particular,
do we need special licence for it?
do we need special knowledge or skills for it?
any pitfall to be aware?
Any extra cost/expenses comparing to regular resident rental?
Will we always have Vacancy during the Summer and Winter break?
Whether the Mortgage will be the Same or higher criteria than regular resident rental property?

2. If we want to try with it,
Any suggestions to start with?
Any good realtors to contact?

Really appreciated for your advice and help!
 

SVS

Realtor/Investor K-W-C and surrounding area
REIN Member
Joined
Jul 28, 2013
Messages
211
Hey Sue
If you would like to shoot me an email or text/call, I could help you get an answer to these questions I'am a licensed Realtor in the Waterloo area. As a few quick tips. I would suggest a student rental in Kitchener as they are just lucrative in regards to cash flow but the prices are cheaper and so are taxes, not to mention they don't require the same rental licenses as Waterloo. As far as vacancy I do know several strategies to avoid it, or you can always hire a property manager i also know some that will guarantee no vacancy.
 

DonCampbell

Investor, Analyst, Author, Philanthropist
Staff member
REIN Member
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Aug 22, 2007
Messages
2,005
Sounds like you are beginning your journey outside of your local region. So it would make great sense for you to ensure you are digging deep on the research.

For instance get a copy of the REIN Research team's Transportation analysis for the KWC region ( http://info.reincanada.com/kwc-transportation-report-0 ). Understand that historically, when LRT gets put in place in other cities, it changes the locations for student housing demand. Allowing students to live farther away (cheaper and quieter) from the campus itself.

Next, go to the Waterloo Region to get the details on the "Landlord Licensing" laws in place, so you FULLY understand what rules and regs you will be playing under.

Now, grab a copy of the latest REIN Score report on the region (http://s.reincanada.com/www/store/detail?product_id=521 ), so you fully understand the dynamics, economic and politics of the region.

4thly - go there. Spend some time staying in the regions, driving around, observing, meeting fellow REIN Members. Do a LOT of listening, observing and learning. One of the biggest mistakes investors make is in NOT visiting and spending some significant time in a region before they buy. Just like you have intimate knowledge of the neighbourhoods around you - the same is true in other regions. What you DON'T know becomes a risk factor.

Trust this helps get you on your way!

Don R Campbell



.
 

23994

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Registered
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Apr 30, 2015
Messages
67
Hi Don,

Thanks very much for your reply,as always, reading your book and your reply can always find some very useful instructions as How to and I am always encouraged by your advice and tips although there are still quite a lot unsure...looking at GTA Toronto area, it almost could not find any investment properties that can fit into the system, so I am puzzled and wondering what the cycle it is now...

Anyway, I will do a good search and put the system I have learned into practices in the near future!
 

23994

Inspired Forum Member
Registered
Joined
Apr 30, 2015
Messages
67
Hey Sue
If you would like to shoot me an email or text/call, I could help you get an answer to these questions I'am a licensed Realtor in the Waterloo area. As a few quick tips. I would suggest a student rental in Kitchener as they are just lucrative in regards to cash flow but the prices are cheaper and so are taxes, not to mention they don't require the same rental licenses as Waterloo. As far as vacancy I do know several strategies to avoid it, or you can always hire a property manager i also know some that will guarantee no vacancy.

Hi SVS,

Thanks for your reply and advice...could you please give me an email as [email protected] as I could not find your email information...

Thanks a lot!

Sue
 

JavierProp

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Oct 24, 2014
Messages
1
Hello Sue,

I also live in Toronto and I have a couple of income properties in Kitchener and I have been doing some research in Waterloo.

So far what I learnt is:

1) Some studies shows that there is a student housing surplus in Waterloo,

2) A lot of professional investors arrived in the last few years (buildings from 30 to 150 rooms) and what worked in the past (old house 5/7 rooms 1/2 washrooms) is not working as previous years, to get a full occupancy you need to lower your rent.

Send me an email and we can compare notes.

Regards,

Javier
 

Mike Milovick

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Mar 15, 2008
Messages
510
Hi Sue;

I have sold close to 600 student income properties in Waterloo - many to REIN members.

In fact, I posted my current listings to the Ontario Classified section on MyReinSpace yesterday.

I am also a student housing landlord.

I would be happy to help.

Cheers,
Mike

Mike Milovick
Broker
Royal LePage Grand Valley Realty
519 745-7000
www.teammilovick.com
 

23994

Inspired Forum Member
Registered
Joined
Apr 30, 2015
Messages
67
Hello Sue,

I also live in Toronto and I have a couple of income properties in Kitchener and I have been doing some research in Waterloo.

So far what I learnt is:

1) Some studies shows that there is a student housing surplus in Waterloo,

2) A lot of professional investors arrived in the last few years (buildings from 30 to 150 rooms) and what worked in the past (old house 5/7 rooms 1/2 washrooms) is not working as previous years, to get a full occupancy you need to lower your rent.

Send me an email and we can compare notes.

Regards,

Javier


Hi Javier,

Thank you for your reply and information...my email address is [email protected], please feel free to shoot me an email...
 

Matt Crowley

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Dec 14, 2013
Messages
980
Some great answers above. I'll address a couple of your questions I didn't see addressed above.

[EMAIL said:
[email protected], post: 156506, member: 23994[/EMAIL]]
1. whether the student multiple unit rental is Same as regular resident rental or not?
do we need special knowledge or skills for it?
any pitfall to be aware?
Any extra cost/expenses comparing to regular resident rental?

Student rentals are very different. Repairs and maintenance are substantially higher as is PM fees. I have operated rooming houses before and I really don't think they are worth the extra $200 - $300 / month per house.

Special knowledge: expect personality issues in the home. Dealing with kids who know nothing about maintaining a home, even basic things like cleaning. You may need to hire a cleaner on a regular basis just to ensure the property doesn't become too disgusting. This will drop your tenant profile in a real hurry. You may need to invest more money up front to protect the home from water damage / neglect: lino floors; reinforced doors; industrial door locks; toughen up the entrances, stairs, and nosings. Expect that parties are going to happen in your house so try to limit the areas that can be damaged. On most campuses, the closer you get to the university the easier time you will have filling it, the less vacancy, the higher price you will have to pay, and the greater attraction for university partiers. Maybe check out Samuel's PM fees above and see how much it costs to get "guaranteed tenants". The student housing game is not as simple as putting a bunch of people in the rooms of the house. If you want the house to last, you need to redevelop the property so it can withstand a less concerned tenant. Oh, and it will be substantially more difficult to pinpoint who to collect common-area damage from. A tenant who knows their rights will basically say they are 0% responsible and will pay 0% towards the damage. So that will be lovely to deal with as well.

A lot of professional investors arrived in the last few years (buildings from 30 to 150 rooms) and what worked in the past (old house 5/7 rooms 1/2 washrooms) is not working as previous years, to get a full occupancy you need to lower your rent.

This was an awesome insight. Go check out your competition. Make an inventory of the supply in the marketplace.

[EMAIL said:
[email protected], post: 156506, member: 23994[/EMAIL]]Will we always have Vacancy during the Summer and Winter break?

Yes. And in the middle of year. And one month in when personalities don't work together. Actually better just free up your entire schedule because this is the new part time job. Or hire a PM. Personally, I wouldn't touch a student rental for less than 20 - 25% gross revenue. Way too much minimum-wage work.
 

Mike Milovick

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Some great answers above. I'll address a couple of your questions I didn't see addressed above.



Student rentals are very different. Repairs and maintenance are substantially higher as is PM fees. I have operated rooming houses before and I really don't think they are worth the extra $200 - $300 / month per house.

Special knowledge: expect personality issues in the home. Dealing with kids who know nothing about maintaining a home, even basic things like cleaning. You may need to hire a cleaner on a regular basis just to ensure the property doesn't become too disgusting. This will drop your tenant profile in a real hurry. You may need to invest more money up front to protect the home from water damage / neglect: lino floors; reinforced doors; industrial door locks; toughen up the entrances, stairs, and nosings. Expect that parties are going to happen in your house so try to limit the areas that can be damaged. On most campuses, the closer you get to the university the easier time you will have filling it, the less vacancy, the higher price you will have to pay, and the greater attraction for university partiers. Maybe check out Samuel's PM fees above and see how much it costs to get "guaranteed tenants". The student housing game is not as simple as putting a bunch of people in the rooms of the house. If you want the house to last, you need to redevelop the property so it can withstand a less concerned tenant. Oh, and it will be substantially more difficult to pinpoint who to collect common-area damage from. A tenant who knows their rights will basically say they are 0% responsible and will pay 0% towards the damage. So that will be lovely to deal with as well.



This was an awesome insight. Go check out your competition. Make an inventory of the supply in the marketplace.



Yes. And in the middle of year. And one month in when personalities don't work together. Actually better just free up your entire schedule because this is the new part time job. Or hire a PM. Personally, I wouldn't touch a student rental for less than 20 - 25% gross revenue. Way too much minimum-wage work.
 

Mike Milovick

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So couple of things for clarification.

1. Student rentals ARE different. Instead of renting to Johnny Lunchbucket and his family (two+ kids, couple of dogs, and a couple cats - you get the picture), you are dealing with younger tenant profile that have hopes and aspirations to some day move upwards and onwards. Young people that have dreams. Not the professional renter that knows all the rules. If you think about the stories in the media about rentals gone bad, they are ALL about Johnny Lunchbucket tearing the place up - NEVER student rentals. That's not to say students will not do damage/wear and tear. But risk is mitigated through parental guarantees. Where things go offside is where leases are not co-signed by a parent. If Johnny Lunchbucket gets laid off from work, your home is dark from an income perspective for that month. No income. $0. And maybe for much longer. That means YOU are paying the mortgage. If student has issue with payment, parent backs up the student. If late is rent you still have income coming in from four other tenants. My research has also shown that the majority of student parents are owners of real estate (I run their address to confirm ownership). What that means is if your property is damaged or tenant doesn't pay, claiming against tenant/parent is VERY EASY.

2. Regarding the "extra" $200 to $300 a month. In Waterloo, renting to a family has a ceiling of about $1400 a month. Renting the same house to five students is about $2500 a month. So in my market place, its a delta of about $1100+. Most investors will realize this is a material amount.

3. In terms of competition, there have been several purpose built student housing developments here in the past ten years. In fact, there is more purpose built student housing here than in the rest of Canada combined. Many people fear competition (they also fear an increase in interest rates, they fear a reduction in real estate prices, they fear an increase in real estate prices). In fact, its a sign that the market is healthy. Think about how many apartment buildings have been built in, as an example, Windsor (I am not slamming Windsor here, just think about it). If there is no new building in your market place, I would then ask the question why? Poor rental market? Unsupportive demographics? Depressed area? If investors are moving into you market place (as they have been in Waterloo for 20+ years), I am going to suggest that it is a sign that market is good. How many REITS or Pension Funds (the types of investors that invest in purpose built student apartment buildings) invest in economically retarded/depressed environments? And these groups have a lot of great market analysis tools - probably better tools than available to the typical investor. They are not dropping $5 MM to $40 MM+ if they don't feel the market supports.

Just some thoughts. I have been investing in student housing in Waterloo for 20 years. I don't think there is a single person that wouldn't buy a stock, in hindsight, that has appreciated in value (while generating great income) for 20 consecutive years. That's what you have here in Waterloo. Very unique market with a very unique opportunity. Show me another market like that in Canada and I am buying there All Day Long. There is a reason why Waterloo is perennially one of Canada's Top Investment Towns as determined by REIN (and its not due to renting to Johnny Lunchbucket) - its because of the opportunities in student housing and the exceptional returns when it is done correctly.

Mike
 
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