Best real estate for investment

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  • Nov 28th, 2018 5:48 pm
Sep 30, 2016
21 posts

Best real estate for investment

What real estate is better for investment (buy and rent then):
- Detached House
- Semi-detached House
- Townhouse
- Apartment in Condominium
- Apartment building

In case of houses - better to rent whole unit or by rooms?

What province is the best for that?
2 replies
Deal Addict
Feb 22, 2007
2024 posts
there are pros and cons to both...

assuming money isn't a factor...and you have the option to buy of the above items:

detached to a full family, more rent...should be long term tenants
semi detached/ to a young couple or a couple with 1 kid - they might not be as long term and want a detached house of their own
condo - catering to singles/young couples - high turn around - job change, they move; get married, they move; have a kid, they move

from a maint. perspective - condo is easiest...hardly any issues to deal with (no shingles, leaky foundations, people not cutting grass etc.)
houses - more maint, need to abide by by-laws, more risk - but also more reward

renting out rooms should net you more money - but rules are a lot different and high turn around.

this is my viewpoint from Ontario
Sr. Member
Jun 27, 2012
913 posts
Winnipeg, MB
To extract max revenue one must convert every conceivable area into bedrooms. That means cutting out windows if necessary, installing doors on living and dining rooms, everything possible. Its often possible to drastically increase revenue by doing this. Most people don't even use their living room much anyway and its usually bigger than any bedroom. When you rent to a family you won't come close to maximizing revenue. Basically its a very lazy way to rent real estate. You're saying "I can't be bothered renting individual rooms so I'll rent a bunch of them for a discount". And this means the owner isn't living there. Huge risk. The owner should always live on the property. When problems arise the owner can fix them much faster this way, be they physical (property) or social (tenant friction). To do this one must be a decent communicator and above all else, like people.

If renovations need to be done before resale they should be done to maximize revenue.

For your own sanity as an owner, take a room/area with a private entrance so you can avoid people if you want at times. This helps cool tensions a lot. Often just not seeing someone results in tempers calming and things getting back to normal with minimal drama.

Soundproofing is a huge asset when renting to individuals. So when you do renovations endeavor to soundproof the area while you're in there as its so much cheaper this way. Be careful with hard floors. They are very microphonic and can drastically raise noise transmission levels if not installed very well which they often are not. A cheap carpet does wonders for noise. Its also a lot warmer on the feet.

When renovating always do it for maximum accessibility as well. And document everything you do with photos, videos and receipts so you can show the stages of improvement to the next buyer.

Say you put 10% down and the house goes up 20% in 2 years. The tenants cover the mortgage and you are improving the house. As soon as its done its listed. If you sell it for 20% more and haven't needed to pour much into the house this results in an excellent tax free return as its your primary residence. Plus you've lived free for 2 years! And you have 100% control over the living space. This is a huge advantage over sharing with others where someone else has the final word. Especially in the spring/summer/fall when outdoor space can be maximized as you see fit.

This scenario works in areas where land costs are lower. In Vancouver and Toronto and a few other places its rather difficult....actually its pointless. In those areas you are tossing the dice and hoping things appreciate. Only an idiot would bank on that. And there is no way in the world any conceivable rental plan would ever come close to paying the mortgage - another huge issue. Land must be reasonable! The house should be the main reason the price is what it is. As soon as land gets expensive you can kiss your profits down the drain. There are plenty of reasonably priced areas in Canada to choose from.

And if you REALLY want max revenue, rent by the week but this will result in a lot more But about double the revenue.

One important fact about this type of shared accommodation: Usually the tenant has no tenant rights because there is no lease. This means if you have to, you can evict someone in a day. Just having that power is a huge asset. No more tenants stringing you along, no more waiting weeks or months for eviction orders to go through so they can be enforced at a huge cost when paying for a sheriff....none of that. If you say LEAVE they have to go. If they don't you call the police and they will drag them out. What this means is they will respect you and your rules much more. All you want is for them to abide by the very rules they agreed to when they moved in. You know the honeymoon period? A tenant is always on their best behavior for about 2 weeks. Then the real person slowly manifests. :)

So look in your city to see what rooms typically rent for in different areas. The best are the median to a little lower median. Then you get respectable people without paying a fortune for the property.

Some people like to be near colleges and universities but I've found these people often move out at the end of the school year. Much better to get solid working people. Ask to see their bank statement for the last year. If they are constantly broke then they are very risky. You want to see healthy saving habits....if possible. Otherwise maybe ask for a much larger damage deposit or first 2 months rent so they are always 2 months ahead. Then if they fall behind you have plenty of time to find someone else and they have plenty of time to find another place. And get to know reasonably priced movers. If you can take care of the movers people tend to move much more quickly. Its a great way of smoothing over a situation. Nobody wants to end a business relationship on bad terms.

If you have a choice, and you usually do, aim for rather hideous looking tenants. These people tend to have a rather less active social life. :) This means no people calling for them outside, no banging on the door late at night, etc. You want a dysfunctional social misfit with the communicative skills of a rock!

Another issue is alcohol. Alcohol plagues more social lives than anything else (except maybe meth but you can probably see the effects of that pretty easily). Having a zero alcohol policy really helps screen out the drinkers. And it attracts people alienated by alcohol. Alcohol at home is a nightmare.

Smoking: To find out if someone REALLY smokes don't ask them if they smoke. They may lie. Smokers often do. You might as well if you didn't want to admit you engaged in a filthy, carcinogenic, health robbing, disgusting, repulsive habit that makes the opposite sex retch. Instead, ask them,
"If you want to smoke, do you mind smoking outside?"
If they never smoke they will most likely testify to that forthright. Non-smokers love to state they never smoke. We all do.
If they do smoke they will most often say "No problem, I don't mind at all."
Then you can tear up their application the second they exit. :)
Smokers and candles: Your 2 biggest fire risks. Eliminate both. And crappy extension cords! If I was doing this I would invest in good quality cords and offer them freely to any tenant that needs them. One fire can ruin your whole day.

As for what kind of property? Obviously a house. What you want is a house the seller is classifying as a certain number of bedrooms but can actually rent out far more. What you want is a house that you can change into something very more lucrative than how it presently sits. Most you can. And the more rooms it has the more likely this turns out to be. And look carefully at basement renovations. There is no other area with more potential than the average basement. By using large egress windows and especially a private entrance it no longer has to have the dark, dank look of so many basement suites that people loathe. The great thing about basement suites is the tenant can pound on the floor and nobody above will hear a thing! So that's where you put all your tap dancing drumming tenants. Also very good for kids. Just make sure you test for radon with a digital detector like the Safety Siren as radon causes lung cancer so it can be devastating for a child's health. Its the 2nd leading cause of lung cancer (95% morbidity rate) after smoking. Test for radon and you will know. Fixing radon problems is not difficult. First you seal then, if necessary, install venting that sucks the air from under the house directly outside. Then its done. And you test periodically to make sure. Mail in radon kits are ridiculous. Look on Ebay or locally on Kijiji/Craigslist for digital radon detectors. About $200-300 new but often much less used. It takes about 2 days to get a reading so you can check several areas of the house in just a couple weeks. Also you can lend/rent this little device to your family and friends and probably save some lives that way too. Almost nobody in the country understands either the danger of radon or how easy it is to fix. One house can have nothing and the neighboring house can be high. You just have to test. And when windows are closed its always highest in the winter in the area closest to the soil (basement). If no air conditioning is used then the summer will always have zero readings as windows are always open.

If it has bed bugs use Diatomaceous Earth (food grade used for livestock, not the stuff used in pools). Its about $1-2/lb bought from a feed store, not a ripoff pest control business, and goes a long way in treating a house. In a few days they will be gone. And keep it treated so if anyone brings them in in the future, and they will, they will die. The bed bugs, not the tenants. That would be terrible. Especially just before rent day! The Diatomaceous Earth physically cuts them, its not a chemical. Lots of videos online showing how to use it.

Hope that helps your real estate voyage. So get flipping!


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