Just joined, looking to gather some info/opinions

Hi all,

What a great find this forum is.

I wanted to put a couple questions out there as I’m interested in what others have to say:

  1. When you are purchasing to rent, are you following a guideline such as purchase cost vs rental income ratio (e.g. I’ve read that you should only buy properties that have a rental income of at least 10% of the purchase price) or do you simply do the calculations to ensure positive cash flow?

  2. There are 2 interesting properties in my area. One has been vacant for 7 years (the rumor is it is owned by a Korean family who hopes the son will move into it) the other, a dilapidated vacant rental. My husband and I have tossed around the idea of trying to aquire one/both of these but have done nothing yet as they are costly properties and even purchasing them well under market value would not generate positive cash flow from a rental ( so they would have to be flipped). It’s a bit unnerving that we would be carrying these properties if we couldn’t sell them asap.
    I guess I’m asking would you stay away from these properties or pursue it in the event they could pay off big?

  3. When financing property purchases - are you generally using bank financing, private investors, group purchasing etc… ?

  4. I’m in Canada - have you any links or good resources like this one with Canadian focused content?

Thanks!

  1. When you are purchasing to rent, are you following a guideline such as purchase cost vs rental income ratio (e.g. I’ve read that you should only buy properties that have a rental income of at least 10% of the purchase price) or do you simply do the calculations to ensure positive cash flow?

During the initial phase to see if you are even interest or not that number is pretty good. As I learn more about the property and move closer to closing, I run real numbers. As I find out how much it will cost to rehab, when I see how long rentals stay on the market, etc that number changes. I probably calculate to see if I should buy for and how much 10 times before I buy a house and probably 50 times after I buy it.

  1. There are 2 interesting properties in my area. One has been vacant for 7 years (the rumor is it is owned by a Korean family who hopes the son will move into it) the other, a dilapidated vacant rental. My husband and I have tossed around the idea of trying to aquire one/both of these but have done nothing yet as they are costly properties and even purchasing them well under market value would not generate positive cash flow from a rental ( so they would have to be flipped). It’s a bit unnerving that we would be carrying these properties if we couldn’t sell them asap.
    I guess I’m asking would you stay away from these properties or pursue it in the event they could pay off big?

Why are you buying properties? I ask this question because this determines how you find your properties to buy. If you are just buying any properties that you find just to take advantage of any opportunities that fall into your lap. Then I would analyze these against whatever your plan is. If you are trying to buy enough rentals to retire yourself then you will need to buy a property every 3 to 6 months. That means you have to have a system for identifying and acquiring properties. This system should be able to work everyday. Seeing an empty Korean family’s house or a sorry landlord may not be a reliable enough system to get you where you want to go. I suggest spending some time to develop that system. This system should include a place that you can look every day or any day and have a chance of finding a potential acquisition property. I happen to look at the foreclosure list.

  1. When financing property purchases - are you generally using bank financing, private investors, group purchasing etc… ?

I use private money for the purchase because I buy houses that conventional banks won’t finance. These houses are trash houses. They are not habitable because they have holes in the walls and no flooring etc. I also get the fix up money (and all the closing costs) in the loan. After the house is fixed up, I refinance with a traditional bank.

  1. I’m in Canada - have you any links or good resources like this one with Canadian focused content?

Oh no not Canada. Well you guys had your chance. We tried to make you guys our 51st state but no you guys had to do this war of 1812 stuff. So there.