I want to buy a Rental property which should give me enough rent to cover my Mortgage & other expense. I am looking for a house in the range of 250000 to 270000 & I will be giving down payment like 25%. House should have multiple portion like basement, main floor & second floor.
Is it possible to buy this type of house in GTA? If so, in which area & how?
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Driller the thriller
Location: God's own country
Posted on: 18-05-06 21:59:22
Hello!
I am not a realtor . I am just a common man with house design experience and my experience is this :
These kind of properties are everywhere, though in Toronto you may only get a 50 year old house for that Rate. Mississauga and Brampton abound in these type of houses. Also you have to see if in the area that you buy, wheather rental people will come.
My two top pick areas are :
1. Dundas-Hurontario in Miss.
2. Old weston and St Clair in Toronto.
Always on the MLS advt., locate the area and see the description of the house to see if it fits your idea.
For eg. in Old westona nd St clair area a punjabi is renting a 60 year old house worth 180-200K house as follows :
Basement for Family $800
Ground floor for family $900
Second floor 3 rooms of $400 each
Loft 2 rooms of $450 each.
So decide yourself what you would like to do. Also consider vacancy periods and loss of rental income during that time.
For rental properties, Location X 3 is the key word. Look in populated areas. That is where you can get good rental income.
Check with your friendly desi realtor for properties that fit into your budget.
TK
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I am a Gents and not a Ladies.
TK, Thanks for reply. Example given by you is making atleast 1.5 times of his mortgage & other expense. My expactations are not so high. Even I break even it is OK for me as my aim is to look for Capital apreciation of whole house over a period of time (say 3 years). I assume that it will apreciate by around 5 % per year. Any real experience ??
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Driller the thriller
Location: God's own country
Posted on: 19-05-06 09:37:19
Desi Driller,
I would not think that there might be any significant capital appriciation. 5% per year is too much to ask in the GTA for a $250K investment. The market is a bit saturated.
My guess is that you will break even only.
Other CD members/ Realtors can advise you better.
TK
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I am a Gents and not a Ladies.
Location: Canada-Glorious and Free
Posted on: 19-05-06 11:06:42
Quote:
Originally posted by tamilkuravan
Hello!
I am not a realtor . I am just a common man with house design experience and my experience is this :
TK
While I am not a realtor, I am not, as TK put it, \"a common man\". I have a decade of experience in this area.
While there are legal duplexes and triplexes, any other home in the GTA is generally a single family homes. What TK is talking about is turning a home into a rooming house. You can apply to the city for a zoning variation. However, this is difficult at best.
Having said that, in 1996 Marylin Churley was the housing minister in the provincial NDP goverment. She legalized basement apartments right across Ontario. This law has since been reversed. So a home older than 1996 can be seperated into the main house and basement and two rental spaces can be created. All municipalities have by-laws that cover creating a legal basement apartment. When you find a home to buy, ask the planning / zoning department for any variations to that property to see if the apartment has been legalized.
Why do you need this? Well, in any sort of dispute, the legality of the property is the easiest way for the tenant to contest everything from not paying you rent to even ignoring eviction. They can become squaters and we all know the kind of mess that is.
As for financing. My personal thoughts are that now is not the right time to buy a property for capital apriciation. The home market int he GTA is over-heated.
As for cash-flow.Again, the prospects are not good. The fact that vacancy rates are now close to 7-10% (depending on the area of GTA), there is big downward pressure on rental rates. Breaking even is not acceptable. With a cash investment of $ 60,000 plus, you expect to make some return, right? At least $ 6,000 per year ($ 500 pmth). And do not forget that this income is taxable. So pre-tax return has to be over $ 7,500 plus depending on your income level.
As for tenancy. With low interest rates and low-downpayment enviroment, the quality of tenants is dropping. Most people with any kind of employment, can and do get a decent mortgage to buy a home. So a landlord ends up with high turnover rates and very low-income tenants. Not the type of people you want in a $ 250-$270k investment.
My advise - There are much better investment opportunities out there. More liquid, more return (income and appreciation). Find them or ask around.
BV
Location: God's own country
Posted on: 19-05-06 11:18:45
Desi Driller,
I agree with what Big Vee said.
My only exceptions are that :
Applying for a rooming license is not very essential. 99% of the people donot do it. However it is upto your discretion.
The best option for you would be to :
Buy a house. Live in a small portion of it and rent out the rest into as many portions as you can. Let the rent all go to the payment of the mortgage. If rent is not enough to pay to the mortgage cost (due to short time vacancies) pay from your own pocket.
Remember, it is easier to get bachelors to live in than for families. You should also be in a very densely populated area like westwood mall or Dundas-Hurontario area.
TK
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I am a Gents and not a Ladies.
Location: Canada-Glorious and Free
Posted on: 19-05-06 16:37:37
Quote:
Originally posted by tamilkuravan
Desi Driller,
I agree with what Big Vee said.
My only exceptions are that :
Applying for a rooming license is not very essential. 99% of the people donot do it. However it is upto your discretion.
It is not discretionary. It is the law. You either do it, or it is illegal - subject to penalties under the law. TK seems to think the laws of Canada are optional. You only have to deal with a tenant who won't leave and won't pay once to understand the issue.
Quote:
The best option for you would be to :
Buy a house. Live in a small portion of it and rent out the rest into as many portions as you can. Let the rent all go to the payment of the mortgage. If rent is not enough to pay to the mortgage cost (due to short time vacancies) pay from your own pocket.
Remember, it is easier to get bachelors to live in than for families. You should also be in a very densely populated area like westwood mall or Dundas-Hurontario area.
TK
My thoughts were based on a pure investment approach. TK is thinking in terms of renting owner-occupied properties. If that is your plan (Owner-occupied) then the whole idea of value apreciation is ridiculous.
BV
