A bad renter could make a dog's breakfast out of a cheap renovation. Wearing work-boots on cheap laminate flooring etc.
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COVID and the housing market
- Thread starter mimico_polak
- Start date
He doesnt want to get stuck with his turd. He knows the quality of work done. Take it on the chin and maybe learn for the next time.
A losani homes subdivision on the mountain partially burned yesterday. Something like 24 framed homes destroyed and 10 with windows in with some damage. Damage estimate is 10M. Seems steep to me. 300K average for a house that isnt even closed in yet?
Mad Mike
Well-known member
Italian lightning!
Mikedezo44
Well-known member
My buddy sold a rental townhouse last fall and had money burning a hole in his pocket for a couple months looking for the next flip, settled on an old house from the teens/twenties with a small attached building that previous owner ran a butcher shop out of. 5 min walk from downtown St Catherines. house was unlivable, no kitchen just empty rooms on inside with 2 walk in fridges/freezers taking up 2 of the rooms. Needs a full gut, is old knob and tube wiring etc. no idea where you would even begin to match the 100 year old moldings and trim. Easier to rip it all out and start fresh. Going to be a major major project. His plan is to add another entrance, make 2 rental units, and rent out the small shop. He paid 440 (all cash as couldn't get a mortgage on house with no kitchen/livable space) Easily going to be another 100k or more into reno's. I think is another 10 grand or so deep in hiring someone for drawings/pulling permits. Hasn't touched it since around Feb/march. I would be second guessing my actions if I were him. Going to be very long term investment now.
There were some townhouses on burnhamthorpe or bloor a few years ago that were being built….magically the work burned to the ground 1 or 2 times.
Funny things happen when people either want insurance money or don’t want something to be built….
Paying 550 for three rental units isn't so bad. They should cover themselves. No quick pot of gold but old school, buy/rent/pay off mortgage should work. In his case with mortgage of zero, he gets the passive income from day one. What would it rent for? I would guess >$3000/month combined. Not a bad mostly passive income.
Mad Mike
Well-known member
That's a bit along my style. My magic number $150k/ property then $2k/mo rent. Not huge money, but after 10 years it's paid off and pumping out $1500/mo in cash.
Can't do that in the GTA, but it's possible in some parts of Ontario.
A friend's mother was into rental properties and at that time the rent income had a very modest ROI. The icing on the cake was the rent went up a bit each year and so did the property value. To be comfortable with it you need a lot of cash up front.
You would have trouble doing it today in TO.
I dont know if I already put this here. Friends are putting in a pool house (think fancy shed not fresh prince of belair). Approximately 200 sq ft finished nicely (stucco above stone). Price to build complete building was 70k. Price with interior bare studs was 40k. Cough. They are going to do their own interior finishing.
Mad Mike
Well-known member
Toronto is a different beast, it's location, location, location. I'm looking at a few properties in the heart of the city - bachelor types in nice buildings with excellent maintenance fitness. Fees+tax are $700/mo, mortgage is $1700/mo (100% financed), rents are running $2400/mo. It's break-even proposition today with no money down, the bet is long-term appreciation and using rents to pay down the mortgage.
Sister is putting in a pool, and basketball court in the back yard. Along with landscaping the total is around 200k right now. I almost puked.
They removed the outdoor gym / pool house because that would be another 100-150k.
Mikedezo44
Well-known member
True, not end of the world to pull in around 3k a month but won't be selling for the 700-800k he was telling me in the beginning anytime soon. Also one of the entrances he is planning to put in side of the house leads directly onto the neighbors driveway that straddles property line. I don't think that is going to fly.
If your in a 2mil house you like and 300k in the backyard means not moving for what you want, it’s not an awful idea . It’s 50-60k in fees and paperwork just to move down a street . As long as you can AFFORD it
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Mad Mike
Well-known member
Should have called me -- I'd have given her my pool for free!
If you're handing out free hot tubs I may just be able to convince my wife!
I offered my sister our above ground 14ft pool for free...but she shockingly refused! Least I could do after a free trampoline and playground!
Priller
Well-known member
There's a three-unit rental house in our neighbourhood where the listing proudly trumpets $59,000 per year in rental income. Sounds great until you do the math on the asking price of ~$1.2M. Unless you're putting down a huge amount up front (and why would you?), break-even is the best proposition, with zero left over for maintenance or rental management costs. Talk about a mediocre investment. Needless to say, it's been on the market for over a month, no bites.
Be very cautious of low maintenance fees unless it's a short-term hold. There's actually serious concern about widespread problems across Canada with way too many condos being run with a way too small reserve fund and skimped maintenance, totally unprepared for when maintenance costs start to skyrocket at roughly the 20-year-old mark. Borderline criminally incompetent management companies and sketchy engineering firms telling people what they want to hear in reserve fund studies make the problem exponentially worse.
In my previous job, I managed concrete repair and waterproofing projects on larger buildings (among many other things), and dealing with most condos was a terrifying prospect. The loudest owners' voices in the room were *always* arguing against spending money, convinced every option was a total rip-off. They were also the ones squealing loudest when a special assessment was issued due to some entirely avoidable crisis due to lack of preventative maintenance. And if by some miracle a sensible group got in and started planning good work, more often than not there was some sort of revolt and the board was replaced and all work halted. We actually stopped doing that work because it was too difficult to make money in that market without being a litigious corner-cutter, as low-bid stupidity is rampant.
If you're a Globe and Mail subscriber, here's a good article:
Ontario condo reserve funds ‘a train wreck’
This is basically what it comes down to. Spoke with my BIL a few days ago and in the grand scheme of things it's the right call for them.
'I can spend 200k on a renovation, or have to buy a cottage. With the pool and basketball court...I don't need a cottage and don't have to leave my oasis.'
It's sound logic. I'd probably do similar if I had as massive a lot as them...and the $.
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