You have the funding, you have the drive, you have the interest, you have the Realtor – ME. You are good to go.
So let’s talk about Real Estate Investing. Today I will share with you some of the experiences I encountered as a Real Estate Investor. The good, the bad and the ugly. Let’s start with the bad and the ugly because it’s more interesting.
So we bought our first investment property, a 5-plex. After we overcame the hurdle of getting the place insured we were all set. Commercially insured because it was a 5-plex. Anything larger that a 4 plex is categorized as a Commercial property.
The house itself was a beautiful single family home that had been renovated back in the 60’s. The home itself had great street appeal, was in a great location, but it was original inside.
We can’t blame the last owner for that. As an investor you have a choice to make. Do you leave the place original, get lower market rents? Or do you renovate when someone moves out.
If the place is humming along and you have a long line up of people waiting to rent, it’s easy to just keep the flow of income steady.
When we bought the place I knew that work would have to be done. That was one of the reasons why we bought it. We knew that the value would go up and the rents would go up as we renovated.
Two weeks after we purchased we received our first moving out notice! Something we said!! A couple of days after that we have unit #2 becoming available. I was definitely getting a complex now. So a little bit of fear was setting in. Oh crap, now we have 2 units that aren’t making us any money.
The easy option would have been to have put the for rent sign up. The 2. units really were original though and needed some TLC. We had some experience doing minor renovations so we started the work.
The first unit was the basement unit. I knew it had issues when I walked through with my Realtor. The floor around the toilet and bathtub was spongy. A sign of water damage over the years.
So let’s get busy. We pulled up the linoleum flooring in the bathroom, yes, it was disgusting. The sub floor was damaged and stained as I thought it would be. The smell, now that’s something that will remain with me for the rest of my life. But first things first, let’s deal with the toilet & bathtub. We had to remove both.
When the tub came out I noticed something in the drain. I had gloves on but I dove in to see what I could find.
I didn’t find a horse. But I did find a clump of hair, about 50 years worth that kind of resembled the tail on that horse above. So, think long and hard before you tackle that renovation yourself!!
With regards to renovations. It’s easy to cheap out and try and do things yourself, and/or find someone cheap to do the work. It’s ok if you have the time and the skills to do it yourself. My suggestion though is to find the best person for the job and hire them.
Hiring an expert gets the renovation done asap. What that provides you with is a quick turnaround and a unit that isn’t sitting vacant for too long. That old adage time is money is dead on. So get the place ready to rent and get it rented.
We did 2 renovations early on, replaced the appliances in both units and had them rented in no time. Crisis averted.
About 6 months later we had notice from unit #3. Turns out unit number 3 was being rented from an illegal immigrant. This tenant was pulled over by the police while driving. Seems that her plate sticker had expired. Well her Turns visa had expired as well. She was driven to the airport and was on the next plane home.
We had an empty unit, a missing tenant and we were left with all her belongings, clothes, furniture and so on. So now we had to deal with all of that.
Still wanting to buy that investment property!!
Renovation number 3 started. We ended up owning that property for 6 years. We purchased it for $625,000. We sold it for $1,140,000. Plus the tenants were kind enough to pay down the mortgage during those 6 years.
We put a lot of work, time, sweat and tears into that property. We learned a lot, had some fun, made some new friends and also had some not so nice tenants. 95% were great, we just had one couple who liked to destroy things.
That’s life as an Investor. The other thing to remember. If you have made capital gains the government will be lined up for their share. It doesn’t seem right. You had the courage, took the risk and invested your hard earned time and money. But, the Federal Government only cares about taking their share. So, make sure that you have a top notch accountant looking after you to minimize that tax hit.
And if you need one and you happen to live in British Columbia, this is who you need to be speaking with: Jethro Bushenbam CPA
You might also like: Real Estate Investing: buy and hold how to get started in Kitsilano and Vancouver
And call me if you want to experience this first hand 🙂 [email protected]/778-228-2448.