What I did to further my goal.

Friday Dec 13.
Showed a warehouse to a potential tenant.
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Started to look at Calgary and Edmonton as potential investment areas.
I will need to find better information. The listings I looked at give very skimpy information. A cap rate of 6% without any back up information really means nothing to me.
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One of the keys Ideas that I discovered (this may be obvious to experienced investors, but was not for me until I started my spreadsheet)...

When you start from the position of looking at an investment with no loan, ie buying the whole investment with cash AND you can get a CAP rate (Say 6%) which is ABOBVE your loan rate (say 4.5% commercial loan) then when you take a loan to help finance the property, the CAP rate INCREASES. Cash on Cash increases.

Conversly, if you have a property who's returns (say 3%) which is below your loan rate (again 4.5% commercial loan) then when you take a loan to help finance the property, the CAP rate DECREASES. Cash on Cash decreases.

This might seem obvious but essentially, if you can take a loan from the bank at 4.5%, invest it and get a return of 6%, you get a return of 1.5% on the loan amount for the risk of making your investment). I don't want to call it a risk free return, because we are not investing the money in a 6% government bond.


The whole purpose of my being a Strata Manager/Community manager and doing the rental licencing course is to help minimize the risk.
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In short:
1)I am only looking for properties with a CAP rate above my loan rate
2)I am looking to minimize the risk on my RE investment by having all the tools and seeing all the problems and how other companies handle vacancies/vagrants/break ins/ renovations/contractors/ budgeting/insurance claims/ CRT discrimination cases/ evictions/ damage deposits/pets/ yada yada yada..
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December 14

Completed Assignment #13 of the Rental licencing course

Sounds like you discovered a fundamental that could potentially add 1.5% profitability on deposit overall with little downside. Thats a great shower thought

What I did today to further my goal.

I am listening to Earl Nightingale's "Communicate what you think."
from there I wanted to be able to put my pitch into a 20 second pitch; a 2 minute pitch, a 20 minute pitch and a 2 hour explanation. The one I really want to focus on will be a 15-20 minute pitch.
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When people ask me what I do...I will give them my 20 second pitch.

I am a Real Estate investor. My goal is to tap investors' unused cash and credit limit, invest it along with my own money in real Estate and get an 8% return, plus an equity increase and possible capital gains, with the minimum of risk.

I would like to know if any of you think I can do better than those two sentences, for a 20 second pitch. Please be as critical as you want or make any suggestions. I will seriously consider all input.
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I looked at Penticton BC for appartments, and only found 3 for sale. It will likely be too difficult to find a good deal in a small market, but I thought I would look anyways. Each of the listings gives very minimal information.
Nothing worth posting here to look at.

Investors don't want to hear your goal, they want to hear what you do. Nobody wants to be tapped for their money, partner with them. Leave out the unused cash and credit part, they understand you're after their money in what ever form you can get. Leave off the minimum risk part, they understand there's risk in any rel estate deal.

I partner with investors, and pool our money together, to buy well vetted multi unit residential properties that cash flow an 8% plus return, while providing equity growth, and appreciation.

Awesome.

I was reading more of Ray Dalio's "Principles" and he says 3-6 smart people are more effective at coming up with a good process than 20+ people are. Individuals have large blind spots which adding one or two more people can cover. Adding extra people after the group gets large does not improve coverage but adds red tape.
This is so obviously clear to me since I though I had a good 20 second explanation of what I do and it was clearly "Me" centered rather than "investor" centered. That was a huge blind spot for me.
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What I did today to further my goal.

Yesterday Dec 18: showed my warehouse to a new potential tenant. That was a second showing and took over 3h with 7 people from the company looking at the warehouse.

Today Dec 19: clarified the terms to be part of the Offer to Lease

Do you own a lot of industrial/warehouses buildings right now? Why not focus on that niche 100%?

Me and my partner have an accepted offer on a 12 units, I'll share how much the numbers DONT work if we go forward after chrismas... (i think we have something like 2%CoC, idc I dont even look at it anymore).

We were the 4th offer, everyone before us walked out after visiting, (building probably has the worse tenants base of the area)yet this is a GEM with a lot of upside.

I will be very interested in seeing numbers and location.

What I did today to further my goal.
I tried a new platform called Point 2 homes and only looked at appartment buildings in BC. 138 or so. None list a cap rate of even 4%.

Lots of properties do not give enough information, but the numbers look ok.
4Plex in Kinimat BC
Asking 575 k
built in 1957
fully occupied
generates $4300 per month.
#7
https://www.point2homes.com/CA/Multi.../83546257.html

What they dont say... Dec 2019.
Chevron Canada Limited (Chevron) plans to exit its entire 50 percent working interest in the Kitimat LNG Project in British Columbia.
Kinimat is a small port town in northern BC. 50% of what happens in the town of Kinimat depends on a new partner for this project, so if no partner, then I would expect that the property will generate $0 per month!

#8

https://www.point2homes.com/CA/Multi...3.html#ratehub

So this place has potential.
So i started to fill out my spreadsheet and everything would depend on the annual expenses. In large part if the utilities are included or not. I roughed in snow removal, insurance, taxes, landscaping, janitorial, maintenance/repairs and 7% management fees.
Asking price $850k
9 units, Gross annual income 98k.

It has street appeal, good location, good transit routes. Looks like it would be one bus to downtown Edmonton.
I was interested enough to ask for the listing realtor to send me more information.

What I did today to further my goal.

Negotiated further details of commercial lease.

Went to warehouse to clean up/stack my old office equipment.

Completed assignment #14 of Rental Licence course.

#9
No stats, but the property is very similar to #8.
875K, 9 units. Close to downtown Edmonton.
When I get closer to the deadline, I will have to look a lot deeper into the stats on these properties.

https://www.point2homes.com/CA/Multi.../84450154.html

#10

100k per door. I am getting a better feel for looking at these properties.
This one is Red Deer Alberta.

https://www.point2homes.com/CA/Multi.../67343954.html

#11

https://www.loopnet.com/Listing/81-N...s-NV/17214110/

This had promise. 10% cap rate. 710k property 8 units.
Then I scroll down and there is a special improvement Tax assessment in this "Development area of LV"
2019 taxes is $70,000. That is insane.

Back at it after a break.

What I did today to further my goal.

I actually didn't take a break. I was working on another potential tenant. Showed the warehouse to this tenant 3 separate times, (they had different people accompany the primary person on the 2nd and 3rd visit. ie production crew came on 2nd visit to work on layout. Electrician came on 3rd to inspect the volts/amps. Worked on the offer to lease and final lease document today. Crossing my fingers on this one again. Conditions should be removed by next Wednesday, so I will know by then.

Also worked on the Kansas-Vancouver swap. There is some drama there but I generally ignore it all and just do the work and get the relevant information to the correct people so they can make informed decisions.

What I did in the last 3 days to further my goals.

Completed assignment #15 of the Rental licence.
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Met with lawyer re: extended family real estate, put him on retainer, discussed my immediate, medium and long term goals. Asked him to tell me if the goal was achievable. We discussed the best way to get the goals accomplished. ie. when your a hammer every problem looks like a nail. = when you are a lawyer, every problem looks like it could use a good lawsuit. In my case, that would be the action of last resort, but it is an option and I want to have in my back pocket fairly good assurances if it does go that way, I can win.
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Met with banker re: Kansas apartment-Vancouver Warehouse swap. found out that my bank's commercial department will finance the LESSER of an appraised value and a sale value. (this is a key piece of information) Following this, I drafted a letter to the other partners. One is preparing a letter to the Kansas General Partner on how to make the swap and the terms of the swap. Ie. do we want a 1.078M mortgage or a 1.47M mortgage. Several Partners including the one who is a lawyer preparing the letter are away on vacation for this week. I also got FOUR (unusually high number of ) quotes for a commercial appraiser and finally got the partners to agree on one. I will have to get a cheque to that appraiser. It will take two weeks to do the appraisal.
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Got news on My (personal) Warehouse. The party that viewed the warehouse three times has accepted my offer to lease late last night. I prepared the offer to lease and the lease documents over the last week and sent them 3 days ago.
He has obtained insurance. We will be meeting tomorrow to do a site condition inspection report, and remove any other conditions.
I will get a deposit cheque and hand over the keys. If I have time I will write up a report on this property so you can review the numbers.
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finished Ray Dalio's Principles book. Highly recommended if you are a business owner and are building up your company.
Started reading "The Laws of Human Nature" by Robert Greene. This is also a 600 page book, but it is much longer as the print is smaller and there are no diagrams AND the topic is farther out of my area of expertise so it takes me longer to absorb the ideas. 15 pages per day will get this done in 40 days.

Yesterday

Met to sign all the lease documents for the warehouse and do a site inspection report.
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Had a very interesting discussion with a colleague who has a contact from China who needs partners in "University cities" Esentially has lots (say 1000's of Students in China who want to study overseas. His business is to find places for them to stay. Will do some homework on this company to see if it looks legitimate and if I would consider being one of those overseas partners.
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Today
will get the deposit cheque and hand over the keys.

Grats on the new tenant, 5 years lease? Not sure I understand the kansas thing, what do you mean swap? Selling one to buy the other with other partners?

We just visited a building we have an accepted offer on. Theres actually 5 investors who walked away from this property before us, so we have pretty good leverage here, only us left. Sometimes being late pays more than being early.

It's a shithole with tough tenants in a great area. Current owners have no idea what they are doing and it shows. We actually visited only about 6 units out of 12, one unit is a crazy hoarder tenant, we opened the door after knocking multiple times and she went crazy, assaulted us and started filming saying we have no right blah blah blah. The smell when we opened the door!

They paid 770k in 2010, we had an accepted offer at 850k with 50k seller financing. We are lowering at 830 after this and we will be lowering at under 800 after inspection with 100k seller financing hopefully. Goal is to pay 770k, maybe lower. The building's structure is pretty good. We're not buying this to leave it like this. About 8 units out of 12 we will kick people out, change the heating system, renovate and rerent to good tenants (easier said then done).

Here are the gross numbers I dont feel like being too precise.
Gross numbers : 102k revenue (1 unit is vacant, and after asking tenants what they pay, these numbers might be bogus too, we'll see further along).
Gross expenses when we will buy are around 52k total, since owner pays for heating and hot water (10k) in 6 units. We can convert it to electrical (cheapest electricity in the whole nation checking in ) and have tenants pay their own bills. We can lower heating cost by 8k, lower insurance cost by a few thousand too. Rent to market value and get an optimal 116k revenue, if market rents stay the same and do not go up, so pretty conservative analysis. We should take 3years maximum to complete the project, if all goes well it will be done this summer.

Our market is around 19 times the net, NOI will go up 22k, which means we will add over 400k of value to this building.
8units to renovate 20k each = 160k
Changing heating system = 40k

If our final price is 800k, our all in price will be around 1m. Hopefully seller will pay our acquisition fee

Building value will be around 1.2-1.3m easily. We can refi to 85% in our market. 0.85 times 1.3m is 1.1m. 0.85 times 1.2m is 1m.

Good case scenario we'll pocket 50k each and have a great building in a great localisation! Will take a lots of work, especially social work with people who are not all there mentally (and probably dont pay... i hope they dont pay, very easy to kick out when they dont pay). Getting them out is the tough part.

We have a much bigger project too, actually buying land to build (hundreds) of units on it, we're meeting sellers for the 4th time tomorrow with a pretty good offer. We hope to get this life changing deal under contract!

I need to know how to do evictions efficiently so when I get my rental licence I will switch to that field for a year or two. I need to know how tenants or squatters can game the system and how best to get rid of them.

I am also very interested in the location of this new "Bigger" project. Is it located anywhere near a large university? What city are you in? When is the expected completion date.
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What I did today.
I had a full day at work and ran an evening budget meeting for a Strata (HOA)
I did get the deposit cheques and deposited them so it is official.

Here are the basics of that one Warehouse property.
Purchased in November 2010 for $752,000 Canadian dollars, approximately 6244 sqf of warehouse and 1340 office space in a light industrial area.

I have two mortgages on the property. The original fixed portion is down to 507k @3.31% A second Variable portion is 71k currently at 3.26% I took the variable portion out to invest with some other partners in another property.
Mortgage payments are approximately ($33,00/y) $2715/mo 1175 is increase in principal, 1575 is interest.
Tax assessed value in 2011 was 527k
Tax assessed value in 2020 is 1,497k

Current lease for the warehouse portion completed today is $78,000/y
current lease for the office portion is $16,080 (Total $7840/m taxes not included) Tenants pay for utilities and own services. I pay for taxes Strata insurance and water. Estimated Taxes this year is $15k, Water and insurance around 3k/y.
If i did a occupancy % it would be around 85% so instead of 94K I would average income at 80K.
This is the Tenant that just moved into the warehouse.

https://www.vakaricreations.com/

This is the current tenant in the office section.
http://www.l2group.ca/

The new warehouse tenant is a multi year lease with options to extend.
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In Kansas the General Partner entered into a separate agreement with a local (in Kansas) Partner about 18 months ago. They are now having problems and to get his local investors (in Vancouver) untied from this property, he is going (or is supposed to) sell us a Vancouver Warehouse at a discount. He has several high interest mortgages on the Vancouver warheouse property. When he sells the Vancouver warehouse to us, he will still have a substantial capital gain, cash to pay off all the mortgages/loans, est 300K cash in his pocket and appeased his Vancouver investors. The Vancouver investors, specifically me will not be pestering him about any dealings in KC anymore. It is very likely I will manage this property as well although there is very little to do once a long term tenant is in.
It is only because the KC general partner took out high interest only loans on this warehouse, he is in a rush to sell it. The property was already cash neutral to start, but after the high interest only loan, he was/is losing money every month and is in desperate need of cash, not "on paper capital appreciation." He owns multiple KC flip properties but has not sold anything for a while. I am guessing his burn rate was +$30k per month.
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I originally came up with this idea about 4 months ago when preparing with my Vancouver investors on how to get us out of Kansas. I had to be creative because the KC General Partner did not have cash to buy us out nor the skills to turn the project around on his own. I would like to move quickly, but my Vancouver partners do not have as much experience and need time to get educated. Just as well, it gives me time to do more homework. Hopefully this gets done before something throws a wrench into the works and makes it a no go.

Nice, creativity in real estate💪 The real gain here is that you are done with him. I'm sure it's not going to be a smooth ride, it never is, but you'll figure it out.

We negociated our 12 units to 835 (we adjusted 830, they countered 835, we accepted but will take our sweet time with new delays for inspection and financing.)

After inspection we should go to 800 fairly easily, which makes this a very good deal. An appraisal was done at 870 last year but in my experience, appraisers suck.

The big deal we made our final offer friday. Nothing more to be done, they either accept and we build between 350 to 500 units 3minutes from quebec city bridges. Huge path of progress here in saint-nicolas (levis). Or they refuse and we move on. It's not directly next to the university, but it's close (10km), our target audience isn't really students.

Over 250000 square feet land, straight into the big game if sellers accept.

Kekeeke,

Do you buy properties in Montreal? How is rental market in Quebec city? I am from Montreal and do multi unit rehab / refinance.

Very tough to find deals here (still doing 2 projects right now) but the rents are exploding in this city.

Investors that bought at the top of the market a few years ago are now seeing large equity build up due to their apartments being "underpriced" rent wise from the market jump. I'm not sure how long this will keep going.

Yesterday I had a daytime meeting with a colleague who has a potential contact that seems out of this world. (China) that has 1000's of students that need housing in any city that we would care to supply rentals for. This is a 1:10,000 shot but I am looking into it.
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I have had a bad experience with this sort of thing before. The concept that you go into business based on someone else's promise to deliver something. I will likely just proceed with my plans and if the contact can fill my 80% up to 100% then all the better, BUT the project I invest in has to work without it.
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Tonight what I am doing to push my plans forward....
running another meeting with investors trying to get them to move on the Kansas Apartment-Vancouver Warehouse swap. 10pm conference call meeting.

When is the expected opening date for move ins and is it close to a Transit Station that goes directly to the University. (which university) This is key. I will look further into being able to supply an endless (all relative i suppose) supply of students.
Would it be a staged development? 150 stage 1, then +350 stage 2 or something like that?
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Yesterday I had a very productive meeting. One of the other investors came up with a third option to finance the warehouse swap. The original versions, each investor put up about 120k and we formed a corporation. The corporation took the money, made the down payment and took out a corporate loan on the RE for 70% of the Value. The downside was that the corporation had to pay a commercial mortgage rate. (I estimated 4.5%).
The other partner suggested we all come up with 350K-400k in personal loans at 3% and put all the cash in the Corp. The corporation would the purchase the property outright. With the difference in %, the property would technically be + cash flow, and we would hold on to it indefinitely.
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I can get into the details of the deal if we move ahead with this verson #3 of the plan.
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I was also invited to an after event party at Buildex Feb 12-13 in Vancouver. Had to pass as I have a HOA.Strata meeting at the time of the event.
https://www.buildexvancouver.com/en/...0-program.html
I know some of the speakers at a few seminars that I want to attend.
One of the talks is" How to Engage and Retain Your B & C Class Tenants"

The other lectcture is
Housing Academic Communities – Designing Exceptional Environments for Student Living One of the speakers was an architect for Campus MTL
https://www.campus1mtl.ca/montreal-student-housing/#

kekeeke, I would like to hear more about your project if it gets the go ahead.

No I do not touch montreal, like you said it's on fire and will keep going for a few years atleast. I am focusing on quebec city. Vancouver->toronto->montreal... I think quebec city is where the chinese money will go in a few years after montreal is saturated. Theres (hundreds?) of thousands of chinese millionaires and they all want to get out of china. Canada is dream land for them.

Mindflayers: no, atleast not yet. Quebec city public transport is honestly terrible, they were working on a new system... and came up with a tramway. Now picture this: the city had a tramway early 1900s but it was removed because it doesn't work with snow. We've had over 400cm of snow last year... Our mayor is sick and has been a mayor too long, I think it affected his brain for sure. We only have bus stops for now, and everyday I hope that stupid tramway deal falls throu lol. The tramway will not reach our building if it sees the light of day. We'll negotiate bus stops thought. Levis and quebec city are 2 differents cities and both mayors have beef with each other. This is obviously a minus for the project, but it's still good.

I think our deal fell anyway, they had until tuesday to accept our offer and we've had no news. They were going on vacation sunday until early feb, we'll call them again then. The sellers are great (couple) but they have a brother who is an attorney (not really an attorney, I don't know the word in english, but a "fiscaliste"). That dude lives on another planet, so this might take a while.


I don't know mindflayer, these 1000's of chinese students, why would they go study in the states? I guess the chinese really do have a lot of money to burn. Is it any city in the states or any city in the world?

Edit: we didn't spend much time analyzing the project, since we don't have an accepted offer. We'd be building in multiple stages yes, depending on the city, the number of total units, the delays to get the go ahead on everything. The partner we associated with who does brand new construction (mainly rentals) in montreal said to brace ourselves, he's been negotiating for 18 months on another one of these deal. The longer it goes, the more taxes the seller pay (36k/y), the more stressful it gets, the more leverage we have. I'll be updating if we have news��

I assume that you mean, why would they NOT go study in the states.

USA is the first option for these students. Canada is a back up plan and country of second choice. They will go to any Canadian City to virtually any college and transfer to either a better Canadian University when they get the chance or to the US if they get accepted. The contact I mentioned makes deals with developers to take up all of their new rental units and is also looking for extra units to ship students to.

Canada is considered a good place to ship money to China (from a Chinese business person's point of view.)

The reason to go to US or Canada and more specifically Canada is that is an easy way to become a Canadian citizen.
Get a student visa
Study in Canada
complete your degree
work in the field of your degree for 2 years
Become a Canadian Citizen.

As of October 11, 2017 permanent residents in Canada who were previously on a study permit will be able to count a portion of their time studying in the country towards their Canadian citizenship residency requirement.

This change, coupled with the reduction of the physical presence requirement from at least four to three years, means that international students and graduates who wish to settle in Canada can now enjoy a faster and easier way to obtaining Canadian citizenship.

The five amendments that came into effect today benefit not only international graduates, but permanent residents who held temporary resident or protected person status, such as individuals on a study permit, work permit and/or Post-Graduation Work Permit.

“We want all permanent residents in Canada to become citizens. That’s our wish, because we value Canadian citizenship, we understand we are a community that continues to welcome people from all over the world. And we understand the importance and the positive role that immigrants play in our economy, in our society, and in our cultural life,” said Federal Minister of Immigration Ahmed Hussen at a press conference in Brampton, Ontario last week.

How this benefits international students
Prior to these changes, the time students spent in Canada on temporary status did not count towards citizenship, meaning that students could only begin counting time towards the physical presence requirement for citizenship after obtaining permanent residence. Furthermore, to fulfill the physical presence requirements permanent residents had to be present in Canada for four out of six years in order to be considered eligible to apply for citizenship.

The new regulations give permanent residents the opportunity to count each day spent in Canada as an international student, or alternatively a post-graduation work permit holder, as a half-day for up to a maximum of 365 possible days. This new measure and the reduction of the physical presence days to three years could mean that international graduates and workers may be eligible to apply for citizenship after only two years of being permanent residents in Canada.

What I did today to further my plans.


I need help here;
specifically ideas on how to get this next warehouse purchased.
There are 4 Vancouver investors of different degrees of investor knowledge and ability to invest.

We plan on purchasing a warehouse at the "third party assess value" The warehouse is currently listed at 2,28M. It likely has a value of say 2.1M.
The owner has agreed to sell the property to us 560K under the assessed value i exchange for removing our interest/claim in a Kansas City Property.
The warehouse owner and the 4 Vancouver owners, own the Kansas City Property.

The Vancouver investors will form a corporation, each will have 1/4 ownership of the new Corporation.

I only came up with 2 versions of how this could go and another investor came up with a Version #3.

Note that a my bank (TD) will give a commercial loan on 70% of (The lesser of ) the value of a property (using the income method) or the Sale Price.