43 BOURBON PLACE, WHITBY
3+1 bedroom, 4 bathroom, finished basement with kitchenette. Detached above grade (only linked underground). Upgrades in every room. Owner is a general contractor and does fabulous work. Crown molding in most rooms. Granite counters, ceramic backsplashes even in laundry room! Master bedroom has custom built in cabinets, his and her closets and 4 piece ensuite. Finished basement with one bedroom, kitchenette (could easily add stove/dishwasher). 2 pc bath and large living and eating area. Laundry on main level.
Open house Sat and Sun Aug 26/27 2-4pm. Offers any time.
CLICK FOR 43 Bourbon Pl., Whitby Walk Through Virtual Tour
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The first step to getting started in real estate investing is finding out if you have what it takes – personally and financially – to own and maintain more than one home or property. You can learn more about this by reading my previous post here.
Obtaining your first income property doesn’t require that you have huge sums of money available upfront. You don’t need to be a business major or a contractor either (although that certainly doesn’t hurt). What you do need to do is to educate yourself and learn the strategies that make income property investments work best for YOU.
Once you’ve decided you’re ready to invest in rental properties, you need to connect with a realtor who knows the local rental/investment property real estate market. A Realtor® such as Michael Dominguez, who owns multiple investment properties in Durham Region and has helped countless other people get into investment property ownership successfully for many years.
Your next key partner is an accountant. Again, preferably one who is a real estate investor themselves or highly knowledgeable in Canadian property tax law who can help you minimize any tax implications from owning properties in addition to your principal residence. Ask people who already own investment properties for recommendations and referrals as to who they use.
Start Organized and Stay Organized
Keep detailed and copious notes and keep all of your paperwork together. All of your expenditures need to be tracked and easily accessible. If you can’t commit to doing that yourself diligently, hire a bookkeeper. It’s an expense that’s well worth it and that you’ll thank yourself for in the long run.
Keep separate bank accounts solely for your real estate “business”. Have deposits, rent checks and expenses flow through that specific account. The greatest benefit to being organized financially is you’ll be able to see at a glance anytime just how great your investments are doing!
If you’re not quite ready to become a full-on landlord quite yet, alternatively, you could consider investing in an REIT (Real Estate Investment Trust). this allows a more arms-length approach to real estate investing.
REITs typically encompass properties such as shopping malls, office buildings and apartment complexes, which are packaged into portfolios and professionally managed (for a fee, of course). Shares in REITs are traded on the stock market and allow casual investors to get into real estate investing. Many REITs have proven to be solid investments with substantial returns year after year.
The Bottom Line
Weather new investors choose to purchase an income property or acquire shares in REITs, having real estate in your investment portfolio can help you build your passive income cash flow.
Talk to a professional who has experience with real estate investment like Michael Dominguez, or contact him to sign up for one of his upcoming Durham Home Investment Properties Tours at 905-728-1600 today. Like The Michael Dominguez Team on Facebook for more investor tips and property listings. Visit www.durhamhome.ca for available properties in Durham Region and surrounding areas.
Michael Dominguez is a full-time, professional Realtor® with RE/Max Jazz Inc., Brokerage and a member in good standing of the Durham Region Association of Realtors® (DRAR), the Toronto Real Estate Board (TREB), the Ontario Real Estate Association (OREA) and the Canadian Real Estate Association (CREA). Michael is an active investor in real estate and owns cash flow generating properties in Durham Region (Oshawa, Whitby) and in Northumberland (Cobourg). Winner of the Canadian Real Estate Wealth Magazine Realtor of the Year & Real Estate Investment Network (REIN) Realtor of the Year. Author of articles in CREW Magazine. Expert speaker for various investment clubs. Hosts cashflow investment tours. Investment coach of how to find and purchase cash flow properties.
Oshawa and the Durham Region is a “perfect storm” for those looking at investing in residential rental properties right now. Several factors are converging that will create continued demand for rental homes. With the anchor being Durham College/UOIT, the expansion of the 407 will bring more people out of the city to the east looking for affordable housing options, including prospective tenants.
Before you rush out and start buying up real estate, there are a few key things you would be wise to consider first.
Here are 10 things you need to know before buying a rental property.
- A rental property with a good, paying tenant, will continue to provide cash flow even if there is a stock market correction. The amount you charge in rent should be based on providing a positive cash flow after all of your costs and mortgage payment (more on that later).
- There is risk in any investment, including real estate. Mitigate some of that risk by working with professional advisors, like your Realtor® and your financial advisor, obtaining a fixed mortgage, and carefully screening your tenants. TIP: When meeting prospective tenants to view a property, try to get a discrete look at the interior of their car… chances are if it’s a mess, their housekeeping skills won’t be much better.
- Study the local economy and market. You can do all the legwork yourself, or, you can work with a professional whose livelihood depends on being on top of these factors. A professional full-time Realtor® like Michael Dominguez, who is also a skilled and successful investment property buyer and landlord himself.
- Know what you have available to invest in time and skill, not just money. This is where being a landlord is vastly different from buying stocks as an investment. If you’re handy, you can take care of many small repairs yourself without having to hire someone else and eating into your profits. Owning an investment property entails a much more hands on approach. Unless you have the means to hire a property management company to oversee everything for you, you’ll be the one rolling up your sleeves and taking care of repairs, maintenance and chasing late rent cheques. All that being said, don’t fall into a fixer-upper trap. Don’t buy the cheapest house out there thinking you’ll get it fixed up quick. You’ll have to factor time and cost into your investment process and things can get out of hand quicker than you think.
- Invest close to home, especially if this is your first investment property purchase. It’s easier and a lot more satisfying, to be able to keep an eye on your investment personally if it’s nearby. Don’t be afraid to make regular visits to the property to ensure your tenants are keeping of the place (with proper notice, of course). Also, look for a neighbourhood with good schools, access to amenities, schools, parks, low crime and good job prospects. Visit the area at night. Does it feel safe? Would you want your child to live here? Better areas will generally attract higher quality tenants. Be prepared to pay for it initially though – the cost of homes in these areas will also be higher.
- Be aware of ALL of the costs. Clearly, your mortgage payment is going to be your largest single fixed expense (remember to ensure you have a fixed mortgage rate!). Property taxes can and will change. Don’t forget insurance. Unexpected repairs and unexpected vacancy can quickly eat into your overall profits.
- Keep your expectations realistic. Choose your property carefully and your tenant even more so and always do the math. This isn’t a “get rich quick” process, but rather “get rich steadily”. Building a portfolio of real estate and its growing value over time is a great way to generate passive income. Just be aware of any tax implications – especially when you sell an investment property. Your accountant will be key to your overall long-term success.
- Before investing in a rental property, make sure that your own financial house is in order. Pay down any high interest debt, make sure you have money for not just the down payment on the new property but also some set aside for unexpected or costly surprises, as we’ve already mentioned. Make sure you don’t have any large expenses on the horizon either – such as college or university tuition.
- Be aware of higher interest rates. The cost of borrowing money today is still at an historic low, but the interest rate on investment properties will be higher. Do the math. Your mortgage payment needs to work within your rental equation or it will eat away at any profits you hoped to gain.
- The bottom line is it’s not rocket science. You can do it! Educate yourself. Work with professionals. Be careful and take the time to learn the ropes. Screen your tenants. Keep an eye on your property regularly. Be firm but respectful with tenants. Save for the repairs you know about, and always set aside a little extra for surprises.
Michael Dominguez is a professional, full-time Realtor® with RE/Max Jazz and owns several investment properties in Durham Region, Cobourg/Port Hope and Orillia. He hosts regular investment property tours in Durham Region, sharing his insight into buying and owning residential rental homes while touring through available properties. To find out more about upcoming tours, call The Michael Dominguez Team at 905-728-1600 or visit www.durhamhome.ca and LIKE The Michael Dominguez Team on Facebook for more information.
When it comes to real estate investing, I would consider myself to be a tad on the conservative side. I don’t risk my wealth on high risk ventures like development deals, or even tear downs. I avoid land deals. Yes each of these ventures can build big wealth, but if projects don’t work as planned, I’ve seen projects such as these cost the investor some or even all of their wealth. I simply don’t want to take on these kind of risks.
I don’t want to be the first into a market. In real estate, much like the old wild west, the pioneers get slaughtered. It was the settlers that build the empires. Yes, some of the time being first into a market can produce a lot of wealth, but if an idea is a good one, I don’t need to be first in.
What I am saying is you don’t need to reinvent the wheel in order to be successful in real estate. Simply obtain quality properties, in quality locations. This can get you quality rents. In real estate, time is your friend. Hold onto it. Allow your tenants to pay your mortgage. Historically, over time, property values tend to go up. As long as my property can be supported by the property, and it is in an area I want to own real estate, I am very interested in that property.
When it comes to short term rentals, let’s look at what the successful rentals in the city. Let’s do more of that.
Airdna looks at the data and analytics of Airbnb rentals in any market you are interested in. As of April 2016, there were 4764 active rentals listed on the Airbnb website. Interesting, of that number, over 80% of these “active” rentals have less than 25 reviews. There are real opportunities for active full time rentals, properly managed and monitored.
What are the top 100 Airbnb listings doing in Toronto? Some are buying larger houses and renting out the house by the room, some are renting out condos in popular areas, some are renting out full 2-4 bdrm houses.
My takeaway from this list is that there are multiple ways of doing well in the short term rental business. That said, just like in any business, it does help to differentiate your product from the competition. Airbnb promotes the uniqueness of the product. “With Airbnb, you can find unique accommodations in people’s homes—from houses and apartments, to tree houses and igloos. The listing details below explain what you’ll find in this space. If you have any questions, you can contact the host directly.”
They are selling experiences. If you can offer an experience that you can’t get in the local Hilton or Holiday Inn, you can truly differentiate yourself. Of course, not every accomodation offered can be in some historic home or treehouse in the city. But, clever decorating, staging, then promoting can set you apart. Perhaps your unit near the Air Canada Centre should have a Leafs or Raptors theme. Perhaps the Beaches home includes a classic Jazz theme. What about the Queen St loft that has all kinds of funky artwork. Or go off the board and have something really unique. Who wouldn’t want to rent a Frozen themed room, or a house with a den with an awesome big screen tv, foosball table and Blue Jay themed walls. Maybe, you might be into a home decorated like a dungeon.
Anyway that you can actually cash flow in Toronto real estate sounds great to me.
The debate always seems to continue. Do I purchase a condo to add to my investment portfolio or do I buy a freehold property. (A property without condo fees.).
Purchasing a condo does offer a lot of advantages. They typically are well located, are easy to rent, requires far less exterior maintenance, can look pretty, and requires a much smaller cost for entry into the market. The biggest downside for owning a condo is that you have very limited control of what your condo fees will be. If the board decides to take on a large project, your monthly expenses will go up. If the condo board changes their policy on rentals within the units, you could be forced to alter your investment strategy or be forced to sell.
Meanwhile the freehold does cost a lot more and will require both exterior and interior maintenance. However, freeholds have a far better track record for appreciation and their are far fewer restrictions and guidelines, as it is your place and their is no board limiting your use.
As you have likely read in other articles I have written , I want a property that can support itself. In Toronto, and other large cities , it is difficult to do that with conventional renting.
This is why I am suggesting moving to a house sharing strategy of investing. Companies such as Airbnb offer investors the ability to increase their revenue from within the same four walls.
However, if house sharing does become your decided strategy, this does not answer the debate of condo vs freehold.
The condos are more closely linked to being like a furnished hotel, with cooking opportunities. However, if the condo board makes a unilateral decision on whether to ban short term rentals, you could be stuck without your investment strategy.
The vast majority of short term rentals go off without issue, but occasionally, there is a group of people that uses the pad as a home base for a party and that makes the biggest news.
The freehold, on the other hand, may not be as well located as that downtown condo. Short term renters may not want to leave the entertainment districts, or simply where the action is.
However, owning a freehold can be the safer bet, knowing you won’t get shut down anytime soon.
But, likely the best reason of all is the difference in appreciated values over the last few years. Freehold properties have consistently outperformed condos in property value increases. Although it is possible for that trend to one day reverse, actual LAND, will always remain very desirable. As more and more of the older homes are replaced with multi-unit buildings, it simply seems logical that houses with a backyard will continue to be sought after real estate.
Both condos and freeholds can be great assets to add to your portfolio. The advent of short term rentals now allow investors to hold onto either without suffering negative cash flow.
Do I invest in the suburbs or stay in the comforts of the city I know so well and invest in Toronto.
Investing in the suburbs has offered both cash flow and appreciation over the years. Admittedly, even getting cash flow in those markets is getting tougher. Of course, traffic is never getting any better, and making the trip out to your investment property is getting more and more difficult. You can consider hiring a property manager, but that affects the cash flow even more.
Investing in Toronto offers a near guaranteed customer base. The population continues to grow, and demand for living in the city is simply not going to disappear. The challenge has been, how can you get enough revenue to cover your expenses on the property.
I’m never a big fan of using the answer that ” I will only supplement the property a few hundred dollars a month”. I want my assets to at WORST cover themselves, and ideally having a little extra to cover contingencies and maybe even make a little profit.
The two big reasons one should avoid the temptation of adding an asset that has negative cash flow is:
1. If I lose my primary income for some reason, I want the property to carry itself. If I needed to continue supporting the property, and I don’t have money to spare, I don’t want to be forced to sell it, or worse, lose it via power of sale.
2. I want to continue to add to my portfolio. The next property is simply one of many I want to have in my portfolio. Lenders look at all of my assets and all of my expenses when determining whether or not I can qualify for another mortgage. In Canada, lenders will only take half of the rental income when you are not occupying the residence. This means that a property not cash flowing will actually hurt your chances of qualifying for future properties.
The solution might just be an Airbnb style of renting. If you aren’t familiar with this kind of renting, it is sort of a house sharing, or room sharing system. People all over the world offer rooms, flats, or homes for rent for as little as a day or two, right up to longer rental periods.
As a property owner, you can promote your property, much like a hotel, with prices varied depending on the time of year, or even the day of the week.
If you haven’t been on their website before, check it out. Pick a random place in the world. Whether it be San Diego, California … Liverpool, England … Buenas Aires, Argentina … Or St.Johns, Newfoundland, there are people looking to rent out their place.
Locally, there are a ton of choices too. Both condo owners and people that own a freehold (a home that is not a condo) can rent out their place.
Yes, there is way more work than renting out your place to one person for one year. You have to spend time and money promoting your property, meeting new renters, cleaning up after they leave. However, the upside can be more rental income a month. Possibly way more.
If the time commitment concerns you, there are very reputable companies that can manage your property, promote it, tenant it, and arrange the cleaning crews. Yes there are fees involved in hiring those services but I consider that the cost of doing that business. As long as the property supports the extra cost, it is certainly worth considering.
With house sharing , it can now be possible to own property in Toronto and actually generate enough income to cover those higher expenses.