Now that we’re back in Canada, we’re actively searching for a house to invest in!
Our budget is $130K for a multifamily home, which will likely get us a duplex that is about 400km south of Toronto.
It’s hard work looking for an investment property! We’re not just shopping for a home that we think looks pretty, we’re looking to make MONEY so the numbers have to work. $$$$$
So far we haven’t found a place yet, despite visiting our target city TWICE and looking at a few potentials with our realtor.
Either the house was too run down, price was too high, we didn’t like the area, or all of the above.
At the moment we’re giving the hunt a bit of a break since there doesn’t seem to be much listed at the moment. Winter is generally slow for real estate, it seems.
Single family homes vs. multi family homes
Sometimes we get seduced by single family homes because they are generally much nicer than multifamily homes since they haven’t been beat up by tenants.
But when we run the numbers on the SFH’s, it just doesn’t work out cash flow wise like the MFH’s do, even when the MFH’s need some work (which is always).
Since our goal is to cash flow, we want to see strong cash on cash ROI for any property we buy, otherwise we could just stick to ETF investing. Our ETFs are up 25% right now, which is pretty sweet even though I’d rather it be lower so I can buy more!
I’m calculating 9-12% cash on cash ROI on a good MFH, if we can actually land one! The numbers are quite low (this is Canada afterall!), but we want to give real estate investing a try anyway. One reason is because we want to diversify, but the main reason is that we’re just plain curious and think it suits our personalities and skill sets.
Considering another city
Since the search in our target city is dragging on a bit, we’ve expanded our search to include another target city.
This second city is only 200km away from Toronto (as opposed to 400km), has double the population of the first city, and we could continue doing freelance bike courier work like we do in Toronto! Very ideal in case we can’t make ends meet doing Airbnbing/landlording, so we have an income stream to fall back on by doing something we enjoy.
The only problem is that we’ll have to expand our budget to purchase in this second city, which is not desirable. Though second city shows stronger appreciation, the cash flow is not as good as in first city.
Second city only piques my interest because of the bike courier possibilities!! But probably I shouldn’t choose an investment city based primarily off of that. 😛 We can still cycle in our first target city, we just won’t get paid for it. Which is kinda a bummer now that we’ve turned our hobby into an income stream.
DIY home inspections
Martin is appalled at how crappy the houses are here. In Germany houses are built with concrete. In Canada (and US) houses are built with concrete foundations only and the rest is wood framing.
Yesterday we were at a thrift store and Martin found a good book on housing construction, and bought it for $2.99 no tax! He has been looking over it and explaining it to me which is GREAT because it helps us better evaluate the house from an engineering/technical point of view.
We may go ahead and get Martin to do a home inspection for any houses we are interested in, instead of hiring a professional to do it. Mainly because we don’t trust the thoroughness of the home inspector we know, and don’t know any others.
FINDING A HOUSE
Now we just gotta find a house. We’re competing with other investors, because all the big cities in southern Ontario are heating up with investor attention.
We don’t have a good strategy asides from consistently looking and trying.