Learnings from our first property

After a couple rounds of renovations (we ended up using 2 contractors as the first firm couldn't finish the job up to the standards we required so we had to hire another firm to complete the job) and tens of showing, we finally rent out both units of our duplex in the downtown.

Several learnings throughout the whole process

1. Be a better negotiator - we bid on this house with $34K below the listing price. We were the only bidder but was "pressured" to up our offer by $2K at the end in fear of losing such a "good" opportunity. Looking back, we could have take more money from the table by going back with an even lower offer (there were opportunities or excuses we could use, such as the seller didn't proivde us certain documentation or bills). Of course, the seller could have decided not to sell too.

2. Inspection report only cover the basic - We have used one of the most famous / most popular firm for the inspection. While the report came back with generally positive comments, there were many qualifiers in what an inspector had done or could comment. A qualified opinion on the wet wall should be intrepreted as a red flag of potentially a mould issue and require further due dilignece.

3. Manage your renovation budget - we originally budgeted for $5K, received quotes adding up $20K and ended up spending ~$15K. Granted, the house is old, no onsuite laundry facilities and dish washer, plus many other things that require potential upgrade. However, we learnt that we have to prioritize our spending, much more so than our home house. At the end of the day, what you want to do is to provide a safe, comfortable living space that looks attractive enough and leave a good first impression with the potential tenants. With that in mind, we crossed out items that are nice to have, but not must have (such as laundry, dish washer, yard), but focus on things that address the safety, comfort and first impression (such as humidifier, kitchen vent, stair, front porch). Plus, you can always leave some of the renovation item when the lease is up for renewal to appeal the tenants to stay for longer.

4. Beware of newly renovated unit - there is always a good or bad reason why the previous owner would spend $$ to upgrade the unit / house. It could be the owner hoping to make a significant premium, or even worse, hoping to cover up issue by some quick fix.

5. Try to get to know the neighbor before you buy - if you can. They are very good sources of due diligence of the current owner

REIN learnings Nov 16, 2010

1. Tenant evition
- critial info to get: sin, current phone, email, facebook, past landlord/employer, correct spelling of names (esp. Women w lots of last name)
- call landlord, ask for whether there are place to rent (to check real or not)
- parent contact - call it "in case of emergency contacts"

2. Carl Gomez fr Bentall
Marco:
-no inflation threat in next 5 years w lots of underutilized capacity
- canada: v shape recovery vs u-shape back in 90s. But growth coming off soon, affected by FX rate and slower growth of others
-Lending / residential mortgage
-home owner equity - 70% in canada vs 40% in Us

Housing mkt outlook
- going into balanced market
- according to house / rent ratio, 63% over value in Canada
- Toronto: 10% over valuation
- on long term avg, real estate should not grow faster than inflation (source: irrational exuberance). Here's Carl's blog. check it out.
Canadaeco.blogspot.com

Job prospect
- onatrio recovered 80% of job it lost, vs alberta - 40%

3. Condo myth Brian Persuad

- 20,000 condo registered since 2009
- 1/3 are listed for sell
- 25% enter into rental supply
- avg age 42 or higher
- mortgage need to qualify today though don't need for 4 yrs
- develpers must sell 80% to get financing
- 2005 - green belt limit availability of low rise
- 905 area condo could be attractive

4. Eviction - Ricketts Harris

-Useful links
Landlord sell help line 4165045190
-Ontario and california toughest tenancy registration
- always use written correspondence in communicating w tenants
- eviction forms/notice shouldn't be emailed only
- Giving notice s 43: set out reason, info tenant you will seek order if they do not leave, infor tenant that they are entitled to challenge order, keep a copy
- Annual/monthly tenancy: 60 days notice period

- List out Causes: if it's illegal activity, landlord has liability too. Make sure get police involved.

Investing in US real estate - now or later

We have been thinking about investing in US real estate for almost 2 years.

True that, the 40+% drop in real estate value has been tempting, but the foreclosure inventory has also been a major concern. Some are predicting the current inventory will continue to drag on the real estate prices till end of 2011 while others predicting it will possibly take 103 months to liquidiate all the inventories in the current market. 

On top of that, the tax and legal system for Canadian buying real estate in US is complicated to navigate. I haven't seen many articles that deal with this issue in great details except for these that touch on the basic. 

Truila - What are the tax laws for Canadian buying real estate in Florida