case analysis help needed---downtown Toronto

[jaccker]

Thanks, terri. I looked through your webside it is so cool! I like it very much!

Yes, I am a little bit worried about the legality of the suites. I am sure it is not a legal 4 plex. How could I find the information of the building? I will try Mpac first. It seems only the house owner could get the house information. Thank you.
QUOTE (terri @ May 13 2009, 05:10 PM) hi,

I own triplexs and a 4 plex around Beaconsfield Village, and live in one of the apts so I may better understand where you are coming from than someone who is looking at this purely as an investment op or someone that is not familiar with downtown toronto.

and Thomas, I don`t know how properties are zoned out west but here in TO a semi`s not half a house, that`s like saying a row house or townhouse is 1/8th of a house simply because it`s attached to 7 others. It`s all about perspective, it`s really hard to get a detached house in downtown toronto, a semi`s pretty good, you`re only attached to one other. Can`t imagine what you think of condo`s...

you do need to look into the zoning and legality of the suites, check with Mpac and buildings department to see if it can at least be grandfathered. make sure there are no outstanding permits.

the rent for the main floor looks a little low so there may be a way to increase cash flow there, the basement rent is good, but even the one bedrooms may have room for improvement given the fact that it`s in the annex/little italy area. but that would depend on the condition of the apt and the condition of the property. My one beds go for $1200-$1500 and my 2 beds $1600-$1700, but there are all newly renovated, with washer/dryer, dishwasher and rent usually includes parking.

Because you are planning on moving into it, you need to look at from a different perspective than someone that is just looking for an investment. Does it fit your personal needs? Will you be happy living there? How long do you plan on living there? etc.

Which apt do you plan on living in? How much can you afford monthy? sounds like you would be able to live in one of the one bedrooms and pay 1/2 of waht market rent should be, sounds like a good deal to me, but that`s looking at it from an owner occupied perspective. If you were to buy a one bed condo it would cost you a lot more to live in.

the 2 things that you realy need to consider is legality of suites and condition of property.

Feel free to check out my website, www.queenwestrentals.com and you can email me @ [email protected] if you want to chat.

cheers,

Terri

 

[JoefromTO]

I did a little bit of searching and found this...

http://www.carsondunlop.com/pdf/Basement%20retrofit.pdf

Not sure if it applies to you...but it can`t hurt. There`s some good info in there.

 

[Nicola]

QUOTE (terri @ May 14 2009, 06:10 AM) the 2 things that you realy need to consider is legality of suites and condition of property.

I agree with Terri, the condition of the property is important. These old houses can cost a lot - we have a semi-detached house (2 units) in St Clair West. It seems like every month there are some repairs or maintenance to do ... and Toronto is not cheap! Get an inspection from a good licensed inspector so that you know what you`re getting into.

 

[jaccker]

Yes, I agree. Could anyone recommend me an experienced inspector? (Toronto, downtown)
QUOTE (Nicola @ May 13 2009, 08:24 PM) I agree with Terri, the condition of the property is important. These old houses can cost a lot - we have a semi-detached house (2 units) in St Clair West. It seems like every month there are some repairs or maintenance to do ... and Toronto is not cheap! Get an inspection from a good licensed inspector so that you know what you`re getting into.

 

[JoefromTO]

I posted one here http://www.myreinspace.com/forums/index.ph...ic=11651&hl=

 

[weenapratt]

QUOTE (jaccker @ May 13 2009, 05:39 PM) Yes, I agree. Could anyone recommend me an experienced inspector? (Toronto, downtown)
Hi,

I recommend Alex Welsh, 416 322 5555.

I live and invest in the Annex. Pls feel free to email me. I`ll be happy to help with your questions concerning the market in this area.

 

[jaccker]

Thanks, I will contact him.
QUOTE (JoefromTO @ May 13 2009, 09:09 PM) I posted one here http://www.myreinspace.com/forums/index.ph...ic=11651&hl=

 

[terri]

QUOTE (weenapratt @ May 13 2009, 09:00 PM) Hi,

I recommend Alex Welsh, 416 322 5555.

I live and invest in the Annex. Pls feel free to email me. I`ll be happy to help with your questions concerning the market in this area.

Hey Weena,

when are we getting together for coffee? maybe we should do a bigger group thing with others that invest in the downtown TO market?

Jackker--

I used to go to city hall, there is an mpac office there and I would search on their computer by address to see how a property was listed. It would tell you who owns it and whether it`s single family or duplex or multi unit, the assessed value. I don`t know if they have stopped giving out this information. I know that some rules have changed lately and now you need permission from the owner to check the status of certain things, but I don`t know what that is. I`m going down to city hall today to check on another property so I`ll check that out.

Terri
www.queenwestrentals.com

 

[jaccker]

Thanks,Terri! I`d like to join your guys to have fun together!
QUOTE (terri @ May 14 2009, 01:01 PM) Hey Weena,

when are we getting together for coffee? maybe we should do a bigger group thing with others that invest in the downtown TO market?

Jackker--

I used to go to city hall, there is an mpac office there and I would search on their computer by address to see how a property was listed. It would tell you who owns it and whether it`s single family or duplex or multi unit, the assessed value. I don`t know if they have stopped giving out this information. I know that some rules have changed lately and now you need permission from the owner to check the status of certain things, but I don`t know what that is. I`m going down to city hall today to check on another property so I`ll check that out.

Terri
www.queenwestrentals.com

 

[weenapratt]

QUOTE (terri @ May 14 2009, 10:01 AM) Hey Weena,

when are we getting together for coffee? maybe we should do a bigger group thing with others that invest in the downtown TO market?

Jackker--

I used to go to city hall, there is an mpac office there and I would search on their computer by address to see how a property was listed. It would tell you who owns it and whether it`s single family or duplex or multi unit, the assessed value. I don`t know if they have stopped giving out this information. I know that some rules have changed lately and now you need permission from the owner to check the status of certain things, but I don`t know what that is. I`m going down to city hall today to check on another property so I`ll check that out.

Terri
www.queenwestrentals.com
Good Idea Terri. Pls let me know if next week or the week after is good.

You can check the assessed value of other properties on line at MPAC site under AboutMyProperty using your user ID and password shown at the right end of the Property Assessment Notice 2008. Info on owner`s names are not there.

Jackker

Alex is very thorough and experienced. He has engineering background.

 

[terri]

QUOTE Good Idea Terri. Pls let me know if next week or the week after is good.


I`m avail. wednesday during the day. does that work?

 

[InvestagainInc]

QUOTE (jaccker @ May 13 2009, 05:05 PM) Thanks JoefromTO! I am very new to this business. And I need to learn all of those skills from my first income property. Your advice makes perfect sense to me. As to the rent, I know my quote maybe a little bit low but I just try to be conservative. Also I believe a relatively lower rent may reduce the turn-over rate and reduce the vacancy rate.


Hi there,

I think that there are many opportunities in and around the GTA for investments and also great places to live. I would suggest asking yourself what is more important, living in your investment or living and investing. If you choose to live in the investment that you described you will have a very tough time actually calling it an "investment" in 10 years since it will likely cost you more money than you will make.

I would suggest picking a neghbourhood that you like, renting a place in that neighborhood if it is too expensive to buy, then taking the 115000 and investing it in real estate investment properties. You get the best of both worlds and your money can stretch a lot further. If your place goes up 10% then you make 61000 less realtor fees, but if you had 4-7 properties that were an average value of 200,000 that went up 10% you could net 140,000 which would be better if you want to leverage it and make more investments in the longrun.

Regards,

 

[invst4profit]

The topic posted by lil buffet, "A New Way to Make Money in Real Estate" makes a pretty good case for not investing in over priced real estate in areas such as Toronto if it is your intention to actually see a profit.

Bad tenants, 50% expenses (or more with older homes) high price to income ratios and the possibility of Toronto further taxing LL makes Toronto a unattractive area overall to invest.

 

[terri]

QUOTE (invst4profit @ May 15 2009, 11:54 AM) The topic posted by lil buffet, "A New Way to Make Money in Real Estate" makes a pretty good case for not investing in over priced real estate in areas such as Toronto if it is your intention to actually see a profit.

Bad tenants, 50% expenses (or more with older homes) high price to income ratios and the possibility of Toronto further taxing LL makes Toronto a unattractive area overall to invest.

why would you say that toronto has bad tenants? Toronto can be a great place to invest if you do it right. I have the greatest tenants, they are all professionals. They all pay rent on time. They all keep their homes emmaculate. I have zero vacancies unless I`m renovating.

right now, I`m averaging about $400/door positive cash flow and that includes the interest payments on the monies borrowed for the d.payment, so 100% financed. I can`t imagine wanting to invest any where else when I read posts by other investors that seem to deal with nightmare tenants, grow ops, tenants moving out in the middle of the night, having to go to the tribunal, etc.

Jackker is looking for a principal residence as well as an investment. He is looking in an area that is highly appealing to both university students and business professionals. There are so many good reasons to buy your own home and rent out a part of it. I think that a live in/rental is a great way to start, you can keep an eye on your investment, your tenants, you can write off a percentage of the repairs and expenses on your personal residence and when you sell you don`t have to pay capital gains.

You need to take all the pros and cons into consideration, but I think when you factor in property management costs vs no property management costs, the cost to rent somewhere else to live, capital gains, etc, you will see that a live in investment may come out miles ahead in the long run, even if it does not cash flow quite as well as some other "pure investment" property out of town.

Also because this will be a principal residence there are other things to take into consideration, like the fact that you can renovate to suit and you can`t really do that if you rent. I don`t think people on this thread are really looking at that side of it only at the cash flow aspect.

what concerns me about this investment is the legality of the suites and the condition of the house (which I`m not sure of), but if this one does not work out, Jackker, continue to look for something that you can live in and rent out.

I feel that most people not familiar with downtown Toronto don`t understand just how hard it is to own a house here. In many areas, single family with basement apts sell for higher prices than single family because you need that income to make the #`s work. Now I`m seeing properties with 3 apts in them fetching the high price tags as well. This wasn`t the case 6-7 yrs ago. IN the early 200`s houses with 3 apts were cheap to pick up, no one wanted them, they needed renovating, everyone was after the renovated single family home, but now in order to get a house in downtown, and I mean a real house, with a yard, many people are willing to accept the fact that they will have to rent out a larger portion of it for now, in order to finance it. Yes, housing in Toronto has become less affordable but prices didn`t drop, expectations changed and people adapted. It`s about location, and the location I`m referrring to is right downtown, downtown east, downtown west as far as parkdale. This market appeals to a certain demographic, singles or young couples without children or perhaps one child. This trend toward renting out more and more of your house is not true for other areas that are more family oriented or higher priced well established areas such as Forest Hill or Rosedale. But it`s all about understanding your area and your tenant profile.

The annex/little italy area is a well established area, it will attract a good tenant base of young professionals, and if that`s where you want to live and if you can find something that works and allows you to live in one apt for less that what you would pay in rent, then you are way ahead of a lot of people.

Cheers,

Terri

 

[jaccker]

Thanks, Terri. I agree with your points here. I will do the home inspection tomorrow. I will keep updating here.
QUOTE (terri @ May 15 2009, 03:30 PM) why would you say that toronto has bad tenants? Toronto can be a great place to invest if you do it right. I have the greatest tenants, they are all professionals. They all pay rent on time. They all keep their homes emmaculate. I have zero vacancies unless I`m renovating.

right now, I`m averaging about $400/door positive cash flow and that includes the interest payments on the monies borrowed for the d.payment, so 100% financed. I can`t imagine wanting to invest any where else when I read posts by other investors that seem to deal with nightmare tenants, grow ops, tenants moving out in the middle of the night, having to go to the tribunal, etc.

Jackker is looking for a principal residence as well as an investment. He is looking in an area that is highly appealing to both university students and business professionals. There are so many good reasons to buy your own home and rent out a part of it. I think that a live in/rental is a great way to start, you can keep an eye on your investment, your tenants, you can write off a percentage of the repairs and expenses on your personal residence and when you sell you don`t have to pay capital gains.

You need to take all the pros and cons into consideration, but I think when you factor in property management costs vs no property management costs, the cost to rent somewhere else to live, capital gains, etc, you will see that a live in investment may come out miles ahead in the long run, even if it does not cash flow quite as well as some other "pure investment" property out of town.

Also because this will be a principal residence there are other things to take into consideration, like the fact that you can renovate to suit and you can`t really do that if you rent. I don`t think people on this thread are really looking at that side of it only at the cash flow aspect.

what concerns me about this investment is the legality of the suites and the condition of the house (which I`m not sure of), but if this one does not work out, Jackker, continue to look for something that you can live in and rent out.

I feel that most people not familiar with downtown Toronto don`t understand just how hard it is to own a house here. In many areas, single family with basement apts sell for higher prices than single family because you need that income to make the #`s work. Now I`m seeing properties with 3 apts in them fetching the high price tags as well. This wasn`t the case 6-7 yrs ago. IN the early 200`s houses with 3 apts were cheap to pick up, no one wanted them, they needed renovating, everyone was after the renovated single family home, but now in order to get a house in downtown, and I mean a real house, with a yard, many people are willing to accept the fact that they will have to rent out a larger portion of it for now, in order to finance it. Yes, housing in Toronto has become less affordable but prices didn`t drop, expectations changed and people adapted. It`s about location, and the location I`m referrring to is right downtown, downtown east, downtown west as far as parkdale. This market appeals to a certain demographic, singles or young couples without children or perhaps one child. This trend toward renting out more and more of your house is not true for other areas that are more family oriented or higher priced well established areas such as Forest Hill or Rosedale. But it`s all about understanding your area and your tenant profile.

The annex/little italy area is a well established area, it will attract a good tenant base of young professionals, and if that`s where you want to live and if you can find something that works and allows you to live in one apt for less that what you would pay in rent, then you are way ahead of a lot of people.

Cheers,

Terri

 

[invst4profit]

http://www.ontariolandlord.ca/forum/index....5bda48132f5cdec

This site is mainly landlord specific to the Toronto area but also covers Ontario in general. Quite enlighten.

 

[amurthy]

Hi,

This may be a little late in the day, but here goes ...

I`ve found that working with Gil Bonomolo has been a wonderful experience. He`s trained as an Engineer & works thru` Carson Dunlap (I think); & I`ve found him to be very competent & thorough.

I`d recommend him highly.

t: 416-435-0385
e: [email protected]

Cheers,
/am

 

[amurthy]

Hi Jackker,
Do you have any reno/ demo work to be done upon purchase?

I see that you`ve put down 130K as closing costs ... is that 115K for 20% down + 15K for Land x`fer tax?

Just to clarify ...

a) what is your total expenditure? (i.e. paid to owner + paid to gov`t + paid for reno/ demo etc)
b) what parts of the above does your loan cover?

Many thanks,
/am

 

[luckyluciano]

Hi, New member here! Sorry for resurrecting an old thread but I did not want to start a new one on the same subject!
I have a friend who purchased a semi in little Italy area of downtown T.O. also. It was used as 3 apartments previously. She vacated the property, renovated it for over $100k made it into 4 apartments as it was initially 3. She re-rented the building at top dollar market rents as the units were now top notch and brand new and the building brings in over $75k net on an $850k investment. She is considering refinancing and doing this again as a business and either selling off the buildings for a profit or keeping the tremendous return and cash flows even after refinanced. Anyone who knows the area, knows it`s easy to rent 2 bdrms for as high as $1900/month. We also know that 99% of the multi-family buildings do not comply with the by-laws here and are technically illegal.

Does anyone know 1st hand if the city of T.O. is OK with this? It is clear nothing is being done due to the apparent shortage of affordable rentals and it is quite easy for by-law officers to crack down if they wanted to....alll they would need to do is the same thing they did in Brampton....check the MLS for multi family, multi kitchen dwelling listed for sale and cross reference them to see if they are single family dwellings. ( almost all of them are!!!!)

Is this a lesser of 2 evils loophole as far as the city? If so these would make dynamite investments, probably the best in Canada!

 

[invst4profit]

http://www.ontariolandlord.ca/forum/

The city is unlikely to crack down on basement dwellers but mid to upper end illegal properties will be targeted.
There is a shortage of affordable housing in the city which is why they will turn a blind eye to home owners adding basement units. In addition to the fact that the city knows most owners can not afford the homes they live without the rental income.
The city of Toronto has created the situation and will not/can not fix it.

Investing in a illegal property is a crap shoot and eventually you will lose likely as the result of a tenant or neighbour complaining.
The quality of tenants in the affordable housing is such that eventually one of them will try to black mail there LL over the illegal unit issue.
If you do not get all the info you need try the link above. It has very experienced LLs mostly in the Toronto area.