Todd and I were happy to receive our Platinum pin last year from REIN it was a goal we've been working towards for about 7 years.
We've come to a place where we know so clearly the kind of properties that we purchase that we can refine our searches so precisely that the only properties brought to us are those that have already passed a lot of screening.
Cashflow Gold
1. Half duplexes with suites - super low cash entry points and incredible cash flow. Always with a garage. Tenants split utilities and share laundry. This is the income from one of our properties:
Main - $1050
Basement - $750
Garage - $150
That's $1950 a month.
2. Suited bunglows - I have houses that produce $2450 in rental income, this example is $2300. Tenants take care of the utilities and share laundry. We don't buy houses to put in suites because the codes and permits are very strict. It's much easier to buy a place with an existing suite and reno it to be conforming. For example new suites need 2 furnaces existing suites may not.
3. Multiplex Unit - Three or four suited units. Really good cashflow. Up and down suites on each side and one laundry. Tenants take care of utilities. We get these all the time here look at that Cashflow - $485 a month after every expense ( I don't mean only PIT. We're talking taxes, insurance, PM and 12% Repair Maintenance and Vacancy reserve) is very, very good.
We don't buy:
1. Condos or townhouses - Although these units are a low price point you may have condo fees that can increase. We've had condo fees almost double. Never mind the cursed "special Assesment". The worst situation we've had was a $35,000 assessment PER UNIT- were everybody lawyer-ed up and the condo managers were using our fees to pay for their lawyers! Never mind the bylaws on tenanting and pets. Read More Condo HORROR
2. Pre-builds - not even investing. What are you buying???
3. Single Family Homes - What? A house is a good source of revenue but why have only one source of income? You lose a tenant and that's it. There is no income coming in from that property. We don't buy anything without a suite and a single or double garage. That makes three sources of income.
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3 comments:
I'm curious how you deal with the risk that comes with suited duplexes. They're not permitted with the zoning - if there's a fire or the city starts chasing them you can quickly be left with a property without a suite.
Hi Chris, Happy New Year! You can mitigate risk by renting as an in-law suite or extended family suite. That way you have the benefit of higher rents and stay in the legal zone by renting to one family.
As for fire and safety, the lower units can be renovated up to the same codes as legal suites. In fact, increasingly in Edmonton you are able to legalize basements (primarily in bungalows) if you adhere to the safety standards and work with the city guidelines providing zoning is met. I did 2 last year with the city.
In some cases zoning can be changed too. Many new duplex buildings are being built with in-law suites that are already up to fire safety code. Also check out
http://www.edmonton.ca/city_government/urban_planning_and_design/secondary-suites-faq.aspx#8972
http://www.edmonton.ca/city_government/urban_planning_and_design/secondary-suites-faq.aspx#8972
Danielle, Thank you for keeping your posts full of relevant info and links. With duplexes you're saving $$ by not paying condo fees too. Nice blog as always!! Don
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