Monday, December 18, 2017

Fraud Contractor Avoided

Let it Snow!
I can't believe how early it started snowing this Winter. It's not even Christmas and my kids already made a ginormous snowman outside!

Snow Removal: Sold Out 

Last week, I started looking for a contractor to handle snow removal at one of the properties in Barrie. I searched for local companies and contacted a few that looked good. It was almost 6 pm on Friday night, so I was surprised that many people picked up the phone and gave me some info.

But I was even more surprised that most of the snow removal companies were already booked solid for the entire season, even though it was only December 15th.

I started to worry that I wouldn't be able to find anyone for the job.

Finally - Great Fit! 

Eventually, a guy named Chris sent me a text message and said he was available. I asked him some questions about the services he provided, his company, insurance, etc. He replied to all my questions very quickly and gave me perfect answers.

He sent me a contract late on Friday evening. I was very impressed - he was very well organized, easy to deal with, and eager to work. Chris seemed to be a great fit.

On Saturday morning, I printed the contract, read it start-to-finish, thought about it, signed it, scanned it and almost emailed it back to Chris.

But, as I was about to click Send, it occurred to me that I haven't done any due diligence. So I back paddled and started checking.

Oh No! Fraud Alert!!!

I noticed on Chris' website that the service area is Halton and Peel, which doesn't include Barrie. This seemed weird to me. So I texted Chris to confirm if they actually service Barrie.

Chris replied that they've expanded and now service several properties in Barrie.

I started looking for additional information about the company, and sure enough, I found numerous reviews from various people, who signed a contract with Chris, made either a deposit or full payment, and never heard from him again.

Feeling Grateful

I am very grateful to all those people who shared their experience online and saved me from another bad contractor! THANK YOU!

At 7 pm, Chris texted me: "Your driveway was just done. Please send payment for the winter package". I replied that I will not go forward with the winter package and Chris sent a few more texts advising that I should pay for the work done ASAP to avoid late fees. I ignored his texts.

And today I continued my search and hired an awesome legitimate snow removal company! Yay!

Wednesday, December 13, 2017

Landlord and Tenant Success Stories

Yummy Surprise!
I often come across horror tenant/landlord stories such as the one I posted a few weeks back.

However, I strongly believe that if you do your part right as a landlord, your tenants will bring you lots of joy. They will take great care of the house, pay rent on time, let you know if something isn't going right or needs your attention. And occasionally they will give you a hug or come up with a wonderful surprise, which will make your day.

Here are some examples when tenants made me very happy:
  • A tenant made a dessert for me. Very yummy surprise!
  • A tenant takes care of a flower garden around the house. She loves flowers and makes the garden look beautiful.
  • A tenant paid a self-inflicted $20 extra for being late with rent. We'd previously agreed about the delay and this extra bonus came as a very pleasant surprise.
  • A tenant sent me a link to a song that he felt was the most wonderful thing he has ever seen and heard. I really enjoyed the music!
  • A tenant recorded a CD of his own music. It was really cool! 

I am grateful to these amazing people!

Hope you found this blog post helpful. Post a comment if you did. I love hearing back from you.

Monday, December 11, 2017

My New Year's Resolutions

The pressure is on! It's time to stop and reflect. Another year is almost gone. New year is around the corner. I will make the best out of it!

Here is my preliminary New Year's resolution:

  1. Be realistic. 
  2. Set one SMART goal for all of 2018. 
  3. Research and study at least 3 ways of achieving the goal. 
  4. Find and trust experts, be open minded and learn from them.
  5. Fully commit to making it happen. 
  6. Follow through, be consistent and disciplined.
  7. Have fun, meditate, exercise and go for walks.
  8. Finish everything I start. 
  9. Get out from under the rock, stay out of my bubble.
  10. Share and help others as much as I can!

Friday, December 8, 2017

Buy and Hold Rental Property Recipe

I must be hungry :) 
Yesterday we closed three properties (two duplexes and a single home aka 5 doors). Yoo-hoo!

If you told me three years ago, that I'd be buying three houses a day, I wouldn't believe it. The reality is, buying several properties together is not much different than buying one house at a time. The recipe is the same. All you do is follow the recipe and, if you run into any problems, figure out how to overcome them.

So if you have a big goal, find a recipe that will take you closer to your goal and do your best to follow the recipe. One step at a time! As long as you keep going towards the destination, you'll get there.

Initially, when my husband and I set course towards 50-doors goal, we thought "Okay, let's figure out how to buy the first door". Our hypothesis was that if we buy one property and make it work, we can then repeat the process 49 times... Sounds childish, but so far this approach has worked for us.

And here is the recipe we are using.

Recipe - Buy and Hold Rental Property 

Serves: $200 / month

Preparation Time:  up to 6 months

Cooking Times: 30-90 days

Equipment: Determination, computer, wi-fi, and phone

Ingredients: 1 house that can be rented, 1 insurance policy, 1 real estate lawyer, 1 real estate broker, and 1 property manager. 

Method: Using a computer, wi-fi, phone and determination,
  1. Find a house with positive cash flow 
  2. Find money to buy the house
  3. Add a real estate broker, a mortgage broker and a lawyer, mixing well 
  4. Stir in an insurance policy
  5. Simmer until successful closing
  6. To serve, add an experienced property manager.

Tuesday, December 5, 2017

Key to Investing Success: Get Good Deals and Avoid Bad Ones

My real estate mentor once told me that "Success is not only the good deals that you get; it's also the bad deals that you don't get".

Here is a recent example of a bad deal that I didn't get.

Perfect Find - Very Ugly House

My husband and I accidentally walked into an open house in Barrie, Ontario. The property was being sold by an estate. It was in a super rough shape. The house had to be gutted and re-built. Most investors would agree that this was the best type of an ugly house you can ever find - a flipper's dream come true type of a deal. Asking price was 250K. Next door houses were selling at 350K.

What Was Given 

In our situation we knew that:

  • We could find funds at 10% interest rate
  • We could complete the renovation in 3-4 months and sell the property in about 6 months
  • We wanted to make at least 25K at the end of the project
  • Real Estate Commission on sale would be 5%
  • Closing costs on purchase and sale would be approx. 2.5%
  • HST applied to real estate commission on sale would be 13%
  • Most prominent costs would be interest and renovation. Assume utilities, insurance, etc. would be part of renovation cost.

Good Deal Numbers

We confirmed with our contractor that the cost of renovation would be approximately 100K.

We added up all major costs ans saw that if we buy the property at 185K and sell it at 358K, we'll make our desired profit of 25K.

Given current market price of 350K, it was reasonable to assume prices will reach 358K by the time we will be selling.

If market remained the same and we'd sell at 350K, we'd make ~17K on the flip. This was acceptable to us.

We made an offer at 185K.

Bad Deal Numbers

There were 2 competing offers with the highest bidder being at 250K. Our agent asked if we'd want to increase our bid.

At 250K purchase price, we'd be losing 60K.

In order to make a 25K profit, we'd have to sell the house at 434K or 24% over current market price in only 6 month (48% annualized increase).

Betting on 48% annualized increase would definitely be a "buy and prey" type of investment.

We did not increase our bid and passed the deal. 

What Actually Happened 

After the recent mortgage rule changes, market actually rolled back from 350K down to ~330K.

If we purchased the house at 250K, we'd be looking to lose about 80K on the flip. Given rent and utility costs in the area, rent & hold on this property would be cash negative as well. 250K would have put us in a very bad position.

Looking back, it is obvious that our numbers did not make any sense at 250K. However, it was very hard to walk away from the deal in the moment when the events were happening. What if other bidders with much higher offers were smarter, more experienced and knew more than us? What if the real estate agent was right saying that this opportunity to get a property at 100K below market was a miracle? What if market would keep rising like a rocket ship and we'd miss out if we don't take the deal?

No matter what everyone else was doing, thinking, saying, or predicting, it was crucial for our success to stick to our own business and make the decision of not getting a bad deal, given the facts we had at the time.

Sunday, December 3, 2017

Amazing Face Lift (aka Stucco Fixes)

On Friday, our contractor finished stucco fixes at a Guelph, ON property. Timing couldn't be better and I am super happy this project is complete before the winter.

Oh no! Gigantic Stucco Bubbles
A few weeks ago, my husband and I noticed some deepening cracks in stucco. The cracks were hiding behind a bushy vine plant that has spread all over one of the walls. When we removed the plant, we discovered gigantic stucco bubbles. It became obvious that the issue is quite severe and should be fixed before the winter and before the wall outer layer simply falls off. See the image on the left.

Hiring a Stucco Expert

I got several quotes for the job ranging from "this can't be fixed" to $14,000. I was not prepared to give up or pay 14K for the fixes.

Finally, we were lucky to have found a great stucco expert! His bid was reasonable and within our anticipated budget. He has over 20 years of experience and had completed numerous residential and commercial projects in the area.

Making Sure Job Will Get Done

After my recent experience of losing a deposit and lots of time and energy with a contractor who's gone from great to bad due to being over booked, I asked the stucco expert to sign a one-page agreement confirming that he'll either finish the job by Dec 1st OR return my deposit.

Stucco Face List Complete

As expected, the bubbles were really nasty. Most of stucco came off as soon as the stucco expert started removing the lose sections. Metal lathe was installed. Then, bonding agent and high strength concrete resurfacer were applied. Once everything dries up, the patches will blend in with the other parts of the wall. We will also put a nice coat of paint over the entire house in Spring. The house will look fabulous!

Not only the job got done as agreed, but also the stucco expert patched up all the cracks on all other walls around the house at no extra charge. I am very grateful for all his help and doing so much for me on this project. Our tenants will be warm and cozy.

All Patched Up
Stucco Face Lift Complete

Monday, November 27, 2017

10 Ways To Improve Your Credit Rating

In the blog post yesterday, I posted a couple of free ways to get your credit rating.

Today, I’d like to share ten tips I learnt from a very experienced mortgage broker who specializes in getting financing for serial investors. These strategies will help you improve your credit rating.

Restructure Debts 

  1. Reduce your unsecured debt (i.e. credit cards and lines of credit (LOC) not secured by an asset)
  2. Eliminate car loans and car interest payments
  3. Reduce secured large revolving LOC debt (i.e. line of credit that is always full)

Boost Your Income

  1. Report all of your rental income
  2. Plan and report sufficient income (if self-employed)

Manage Mortgage Payments

  1. Slow down accelerated or double payments
  2. Re-amortize loans to reduce monthly obligation
  3. Avoid approvals with 25-year amortization. Always aim for 30-year amortization instead.

Plan Ahead 

  1. Review your investing strategy with an experienced mortgage professional
  2. Implement their suggestions

Sunday, November 26, 2017

Use Your Free Credit Report to Invest with Confidence

Lender's Point of View

Think of your credit report as your financial resume and references. Lenders and mortgage professionals look at your credit history and credit rating as an indication of your ability to meet your current debt obligations and borrow new funds.

Unfortunately, there are many situations when borrowers default on their loans. Understandably, lenders have to evaluate the risk before lending you some of their money for your deals. This is why lender evaluation of your credit report is an essential part of your credit application review.

As an investor, you have to do your best to maintain trustworthy image with solid financial reputation.

For Your Own Good

Credit rating and report are super helpful for your personal good. Let me explain.

As I grow my investing portfolio on the way to my 50 doors goal, I have to be careful about the risk of over leverage. Over leverage means that I've put myself at risk of going down because I can't pay interest on the money I borrowed to grow my portfolio. If I borrow too much, I will not reach my goal and most likely will have to start over.

Luckily, I don't have to re-invent the wheel every time. Credit bureaus have the tools for me to do my self-assessment. I know how risky / trustworthy I look in the eyes of lenders based on my credit rating and my score trending down or up.

If I have a low score or my score is trending down, I know that I should slow down, stop borrowing, and fine tune my investing strategy in order to avoid the risk of over-leveraging. And vice versa, when my credit rating is high and trending up, I can speed up, look for new great opportunities, finance them and grow my portfolio with little over-leverage risk.

Two Free Ways To Check Your Credit Rating

1) Mogo

I use Mogo app on my phone to check my credit rating. The app sends me a monthly nudge when my credit rating is updated. I login to take a look at the trend of my credit score going up or down over time. Then, I think back on what changes might have happened over the last couple of months that affected my credit rating and plan my next steps to improve my future score. Mogo is super easy to sign up for and it's free. It takes 2 seconds a month to keep an eye on your credit score.  

2) Royal Bank of Canada

If you are a RBC customer, login to your online banking account and click on "View Your Credit Score" in the right-hand side menu under "My Services". This will take you to your TransUnion credit rating dashboard, full credit report with all the details and credit education tab with lots of info on how to read your report. Study all three sections carefully to get a good understanding of your current credit report and rating. Plan how you can improve your score in the future. Re-visit this report every several months to stay on top of your financial resume.

Did this help? Post a Comment Pls :)

PS I hope you find this blog post helpful. If you have a question or comment, please don't hesitate to post it below.

PPS I had my first comment ever on one of my previous blog posts about Our First Rental Income Property. This was super exciting and I can't wait to see more feedback! 

Saturday, November 25, 2017

Why Jan 2018 Mortgage Stress Test Will Have Minimal Effect on Investors

No Need to Panic Because of New Mortgage Rules
Starting January 1st 2018, all Canadians looking for a mortgage will have to undergo a stress test. No matter how much down payment you put in, your lender will apply the stress test criteria to check that you will be able to pay interest even if interest rates were to go up.

Stress test rate is the higher of:
  • the rate that you are approved for plus 2%, or 
  • current Bank of Canada (BoC) 5-year conventional mortgage rate.

As of Nov. 25th, 5-year BoC rate is 4.99%. 

Fixed Rate Mortgage Qualification Example

Suppose you are applying for a 5-year fixed 3.29% conventional mortgage with 20% down payment.

Currently, the lender verifies that you meet their borrowing criteria at the contract rate of 3.29%. Let's say that based on your income, borrowing, etc., they determine that you qualify for up to $400,000 mortgage. Thus, you can afford a house up to $500,000.

Come January 1st 2018, the lender will check that you meet their borrowing criteria at 5.29% interest rate instead of the contract rate of 3.29%. This is because 3.29 + 2 = 5.29% and 5.29% is higher than the 5-year BoC rate of 4.99%. Based on this test, the maximum mortgage amount you will qualify for will be $328,000. Thus, you will be able to afford a house up to $410,000.

Variable Mortgage / Line of Credit (LOC) Qualification Example

Suppose you are applying for a variable 3.00% interest rate mortgage or a line of credit.

Currently, the lender uses Bank of Canada's 5-year conventional mortgage rate as their qualification rate for such applications. Say, you qualify for a variable mortgage up to $337,000.

Under the new rules, the lender will use 5% as qualification rate because 3.00 + 2 = 5% and 5% is higher than 4.99%.

Given that 4.99% is very close to 5%, you will not notice much difference and will still qualify up to $337,000 variable mortgage.

Qualification Summary Chart

Current Criteria
Down Payment 20% or more
New Criteria
Any Down Payment
House Price
Approved Rate
Fixed: 3.29
VRM: 3.00 (prime - 0.2)
Fixed: 3.29
VRM: 3.00 (prime - 0.2)
Qualification Rate
Fixed: 3.29 
VRM: 4.99%
Fixed: 5.29
VRM: 5%
Approved Mortgage 
Fixed: $400,000
VRM: $337,000
Fixed: $328,000
VRM: $337,000

Minimal Implications for Investors

At a recent Real Estate MeetUp, a survey of real estate investors showed that most of them did apply and were approved for a line of credit or a variable mortgage in the past 12-18 months. 

This means that the majority of investors already met the more strict qualification criteria, such as 5% test in the example above.

This tells us that for all the investors who have recently qualified for a variable rate mortgage or a line of credit (i.e. most investors), the new stress test will not make a substantial difference.

Useful Tools

Here are some tools you might find useful:

Thursday, November 23, 2017

Cash Flow Problem? Use Rent-to-Own (RTO) to Boost to $600+ per month

Invest With Great Returns and for a Great Cause
I attended a very helpful educational Real Estate MeetUp earlier this week. One of the topics covered was on Rent-to-Owns (RTO).

How Rent To Own Works

Investor and home buyer/tenant are the key parties in a rent to own deal. Here are their primary responsibilities:


Someone who buys a house as a temporary home owner with the intention to re-sell it to home buyer/tenant at a pre-agreed upon price at the end of the rent-to-own term. Investor's name goes on title at purchase. Investor qualifies for a mortgage and is responsible for financing and closing costs. 

Home buyer / Tenant

Someone who moves into the house with the intention to buy it from the investor at a pre-agreed upon price at the end of the rent-to-own term, usually 3-5 years. Home buyer treats the property as his own from the get go and uses the time to build up credit rating and down payment to qualify for a mortgage, buy the house from the investor and become the permanent home owner. Tenant / home buyer is responsible for all aspects of the buy-out at the end of the term.

Benefits For Investor

Rent to Own strategy can be a great way of investing for the following reasons:

  • Great Cash Flow when compared to traditional hold & rent strategy
  • No landlord head aches - home buyer / tenant assumes all home owner responsibilities and addresses all maintenance issues and repairs. Investor doesn't get calls or complaints.
  • No repairs / maintenance - no need to budget for and worry about any unexpected home-ownership related problems, since home buyer / tenant covers them.
  • Pre-determined Returns and Cash Flow - no guessing; the return on investment (ROI) is known ahead of time since the future sale price and length of term are part of the contract. 
  • Helping a family realize their home ownership dreams and become home owners. 

Benefits For Home Buyer / Tenant

Home For You and Your Loved Ones
From home buyer / tenant perspective, rent to own strategy can be a great way to become a home owner for the following reasons:

  • Own a home faster - choose a home and enjoy it before you can qualify for a mortgage
  • Equity - build equity in your house before you even buy it
  • Down payment - start with a 4-5% down payment, then gradually build up to the required 10% 
  • Mortgage Assistance - use time to work with a mortgage professional to strengthen your credit rating and eliminate the risk of not being able to qualify for a mortgage at the end of the term.


Here are the numbers from a case study we reviewed at the meet up based on a recent Rent To Own property in GTA. This deal had a 3 year term with 4.4% annual appreciation used to determine the future purchase price.

Purchase Price: $394,900

Homebuyer Deposit: $16,000

Initial Investment: $78,780 (includes down payment remainder and all closing costs & broker fees)

Future Purchase Price: $450,354

Return from Sale: $43,728 (includes mortgage paydown and credits)

Monthly Cash Flow: $646

Profit from Cash Flow: $23,256

TOTAL RETURN: $66,984 = 28% annually over 3 years.

I hope this post gives you a good initial overview of what rent to own investing strategy does and how it can boost your cash flow. If you have any questions or would like to discuss in more depth, please post a comment in the comments section below.

PS Don't forget there are always cons and risks to any strategy! It might be a good idea to start with a reputable rent-to-own turn key provider if you are new to investing. 

Wednesday, November 22, 2017

The Best Way to Always Keep Kicking

Whenever I throw my hands up in the air and say "I have no idea why I'm doing all this!" or something along these lines, my dad always tells a story of two frogs:

The two frogs fell into a jar of milk. One gave up, stopped moving, and eventually drowned. The other one kept trying to get out, she was paddling her webbed feet inside the jar, trying ever so hard to escape. After a long while, from all this kicking, the milk turned into cream, and then into butter.

The frog pushed off of the butter, jumped out and lived happily ever after.

Today is One of Those Days

Today is one of those days when my hands are down. It isn't very clear how I will ever achieve any of my goals

Knowing myself pretty well, I can tell you that this depressed state is a result of three things combined:

  1. Physical exhaustion after a long day yesterday
  2. Starving myself yesterday since I thought I didn't have time to eat and, so, I didn't eat
  3. Emotional drama because my best friend told me she doesn't want to be friends with me any more.  
Yes! You heard it right. I admit that am not capable of feeding myself when I'm hungry; taking a break when I'm tired and am re-living the worst nightmares of my pre-school life in a grown up version.

Very awkward. 

Head and Body Management

What led me to this situation is my diversion from my routine and discipline of head and body management.

Every day since July to end of October, I meditated for 10-15 minutes and worked out for 30 minutes to an hour. 

Regular meditation and exercise help my life balance a lot.  They keep me from saying nasty things to my family and friends. They keep my head clear. They make me super productive. They also help me eat, sleep and rest on a daily basis.

Whenever I stop meditating and exercising, my emotions spill out and unfortunately usually shoot at the most dear people to me; I stop eating; and I forget to take breaks from work.  

You know what happened in June before I started exercising and meditating? 

Exactly the same chain of events. I was too busy and one day I had no time to meditate and exercise. Then, another busy day followed. Sure enough, two weeks flew by with no basic self-control and things got out of hand. 

At the end of the two weeks, I literally starved my self having 5 coffees a day instead of eating food, worked like a machine for over 16 hours every day, got super tired, started crying for no reason, and quit my job on an impulse. 

Lessons Learned

I must be disciplined about my head and body management routine.  ALWAYS! 

I am not sure how the story of the two frogs ties in here, but thinking about it definitely cheered me up. I also just re-watched "Nothing Box" about men/women brain and had a good lough. 

Going to meditate & work out now. 

Cheers! Wish you all a great balanced day! Keep kicking :) 

PS If you can relate to this post or would like to share your survival tips & tricks, post a comment!  I already had one comment on another blog post and can't wait to see some more

Friday, November 17, 2017

Our Second Rental Income Property

Sunday used to be my least favorite day of the week. Every Sunday, I used to wake up with a life draining feeling of the weekend being almost over, dreading the inevitably approaching Monday. I loved my job but it consumed me. I knew I was a workaholic.

Every Monday I had a one-on-one with my boss to walk her through the weekly report, which she'd be presenting to the CEO and other executives at 9 am. I'd be on standby during the executive meeting to answer questions. Our CEO always had questions. I spent most of my Saturdays preparing the report and most of my Sundays worrying about the upcoming CEO quiz...

This Sunday Was Different

Sunday, Apr 30 2014 was different. My husband and I were now with Robert Kiyosaki's Rich Dad coaching program. 5 weeks ago per our coach's instruction, I wrote down our goal: 

"I am beginning on my road to real estate riches March 20, 2014. In 5 years I will reach my Real Estate Passive Income Goal of $10,000 / month."

Our first rental income property was already scheduled to close on May 7th, 2014. I was determined to find our second property. We had mortgage pre-approval and enough room on a credit line to cover the down payment.

After putting kids to bed, I was looking through Kijiji ads trying to find a property with existing tenants and positive cash flow of no less than $200 per month. And here it was!

Grasping An Opportunity

At 12:34 AM, I sent out the following email to a Kijiji ad titled "BARRIE 3+1 Bedroom FREEHOLD Townhouse for sale":


My husband and I are interested in purchasing an income property in Barrie. If this property is still available, could you please send us some additional information regarding rental income and expenses that will need to be covered by us?

We will be able to provide pre-approval.

Thank you".

12:40 AM: The current rental income is 1200 per month and the tenants cover the utilities.

12:50 AM: Can we please make an appointment to see the place?  We are open Sat. May 3rd, preferably in the morning and also Mon - Thu. evenings next week, starting 7:30 pm.

8:12 AM: Sure, what time Saturday works for you?

8:18 AM: Good morning!  How about 10 am? If this doesn't work, any time will be good!

8:22 AM: Good morning, 10am works for me too.

Numbers Worked!

I plugged in the numbers into my Excel template and realized the house was cash flowing at the asking price exactly the way I needed:

 $1,200 rent
- $100 insurance
- $200 tax
- $600 mortgage
- $100 miscellaneous

= $200 positive cash flow.

$200 / month net cash flow was our criterion for getting new properties.

Morning of the Showing

Now I knew we should be ready to make an offer, if the property looked good. I started googling for a Purchase and Sale Agreement template. Found it.

I started filling out the template on my computer, but realized that there was no time to do it properly before the meeting. My mother-in-law noticed that I was in panic mode. She always gave good advice. She suggested to print a couple of blank templates and take a copy of our P&S agreement from our first rental house purchase, so we could fill out an offer by hand, if we liked the property.

The House Looked Great!

The house looked good based on our gut feeling.

It wasn't shiny, but it was solid. We'd already heard some landlord/tenant horror stories from friends and family, who thought our 50-Doors plan was crazy. So we were prepared to be non-judgmental and open minded about tenants and their ways of living. All rooms seemed just fine to us: a little messy with no doors on the closets, but livable.

We met the tenant. She was nice. 

We loved the seller. She was friendly and very approachable. We said we'd like to make an offer. The seller asked us if it would be okay if she invited her friend who had some real estate experience to help her out during negotiations. Sure we said! and agreed to meet in the nearby Wendy's restaurant in about half an hour.


My husband and I filled out two copies of P&S agreement by hand. We copied all the terms from our first deal. Price 80K (10K below asking).

Seller reviewed and asked for 85K. We agreed! 

Closing was set for May 30th. Here is a page from our hand written offer:

Thursday, November 9, 2017

Overcoming Hurdles with New Rentals

I am working towards closing 5 new doors at the beginning of December. So far, transaction isn’t going very smoothly.

On financing side, our application is being reviewed by the lender. It’s been several weeks since we applied and the process is going very slowly. I worry that we will run out of time. My back up plan is private money. This option will consume most of the cash flow and is not ideal. But even with private money the opportunity is still worth going for.

Today I learned from my insurance adviser that we will have to look at sub standard market insurance providers. Standard market insurance companies don’t want to take on the properties since the properties don’t meet their “best in class” underwriting guidelines. This is expected. There are a couple of things that need to be fixed per inspection. The plan is to obtain a short term insurance policy with a sub market vendor, make improvements upon closing to bring the properties to “best in class” level, and switch to a primary insurance provider. 

Keeping fingers crossed. I am grateful for all the help from our mortgage and insurance advisers. 
New Income Propery

Tuesday, November 7, 2017

Giving Myself a 2K Raise

Last year we came across a free hold town house in Barrie. We already had several rental properties in the neighborhood and were intimately familiar with the market. We realized this was a great opportunity because the house was about 50K below market and could be brought to market with 10-15K investment.

Financing was promising to be problematic. So we found three tentative options and ran our numbers:

Plan A

2.99% interest rate with 40% down payment resulted in $18/month cash flow with additional $250 of principal paid by the tenant during the first year. $268 cash flow per month is more than our goal of $200 per door per month.

Plan B

With 4.99% interest rate and 25% down, we'd be losing $210 dollars per month. But again after taking principal pay down into account, the cash flow is positive $15.

Plan C

In the worst case scenario of 7% interest only financing, we'd be losing $278 every month. This is a type of deal we don't want to get.


Before making the final decision and waiving financing condition, we confirmed with our mortgage broker that Plan A and B looked doable. We also negotiated a $200 / month increase in rent 3 months after purchase with the existing tenant. With this rent increase, even in the worst case of Plan C our loss would be $78 per month. We decided that we could live with this loss temporarily for 6-12 months, while securing a better financing option.   


We qualified for Plan B and went with a 1-year term. 

During the first year, we averaged $164 cash flow per month plus principal pay down. 

At the end of the year, we re-financed and got 2.84% interest rate, which is $155 cash saving per month. In addition, we increased rent by $21. Lastly, we reviewed insurance with our insurance broker and removed flooding and earthquake, since the house is on top of a hill and earthquakes never happened in Barrie before. This saved another $5.

Overall, cash flow after the first year increased from $164 to $340. This means I gave myself a 2K raise.

Friday, November 3, 2017

Great Contractor Gone Bad

Beautiful Bathroom by the Contractor (last project)
Remember my 30K mistake? I was lucky to find an amazing contractor who helped fix that property at a very short notice. He went far beyond my expectations to turn the unit around super fast. I really enjoyed working with him.

But guess what? Apparently, there is an issue with great contractors. They become very popular! Then, they start having capacity issues.

New Job

At the end of August, we completed Summer property inspections in all of our self-managed rentals. Most issues we found were very minor and my husband took care of them. See details here, if you'd like to know the specifics.  

In one of the units, tenant reported several more substantial issues during the inspection including:
  • Because there is no fan in the bathroom, ceiling is getting dark (aka moldy) 
    • New fan needs to be installed. Ceiling needs to be sealed, cleaned and re-painted.
  • One of the eavestroughs is clogged to the extent that trees are starting to grow out of it.
    • Eaves have to be cleaned.
I received a quote from my hero contractor and a text that he can get the job done in the next 3-4 days. 

58 Days Later

My job is too small. The contractor is in high demand and has a higher priority bigger job every week.

Here is what happened:
  • Sept 6 - Quote finalized and accepted. Contractor commits to 3-4 day timeline
  • Sept 6 - Contractor requests full up-front payment. I ask for smaller pre-payment.
  • Sept 7 - We agree to 50% deposit. Deposit sent
  • Sept 8 - Contractor confirms he'll contact the tenant and schedule a date/time
  • Sept 12 - I follow up with contractor. He was crazy busy; work not scheduled yet; he'll get to it
  • Sept 21 - I follow up with contractor. He was crazy busy and is going away for a week. He will handle as soon as he is back.
  • Oct 4 - I follow up with contractor. Tenant not happy with mold. Please fix ASAP.
  • Oct 5 - Contractor apologizes for not having enough hours in the day and promises to get to it
  • Oct 10 - I follow up asking if contractor had a chance to schedule a date. Contractor responds that he will call the tenant tonight. Visit is scheduled for Oct 12th. Hurrah!!!
  • Oct 16 - I check in with contractor regarding the status. Contractor sealed the ceiling and is going to install a fan and then paint bathroom. He will do it this week.
  • Oct 24 - I follow up with contractor. It's been crazy busy and he should be able to get the fan installed early next week
  • Nov 1 - I ask if contractor had a chance to schedule a date. If not, can I please have the money back?
  • Nov 2 - Contractor is aiming for Friday or Saturday this week. Tenant confirms that a date isn't scheduled yet
  • Nov 3 - I follow up with contractor... no response

Next Steps

I plan to find a replacement contractor on Monday, November 7th and get the job done ASAP.

I asked my friend who had recommended the contractor not to recommend him again. I felt really bad about it because I really liked the guy. On the other hand, I have to do the right thing and save other potential victims from losing their time and money.

Do you have any suggestions?

Please share in comments below.

Friday, October 27, 2017

Update on Two New Duplexes: Maintenance Catch Up Status

On September 25th, we closed two new duplexes in Chatham. This is my first time working with a property management company. The company I am using is amazing (knocking on wood). They collected October rent from all of the tenants quickly, so transition was very smooth. Now, they are working on various required fixes and catch-up on maintenance. Communication is outstanding! The company office manager keeps me in the loop on all of the progress and replies to my questions very thoroughly.

I am truly grateful for their help.  Here is a list of items that need to be addressed, with some of my comments. Priority #1 are the most important and 5 least important. I'll post updates to this post as things get done.

Last updated: Nov. 3rd, 2017

Duplex A (#41 J)

Priority #5 - nice to have down the road:

  • Insulation blow guys - Attic add insulation
  • Done Oct 24 2017 Electrician - inoperative ground fault circuit interrupters (external)
Priority #4 - roof on porch is starting to rot:

  • Roofer - replace shingles on the front porch. Add ventilation
Priority #3:

  • Handyman - some missing bricks in foundation walls - patch with cement or add bricks
  • Done Oct 24 2017 Handyman - finish painting the deck. It is half painted
  • Handyman - need a new dryer vent
  • Handyman - some bulbs need to be replaced in 2nd floor unit
  • Done Oct 24 2017 Handyman - missing cover plates - external & basement
  • Handyman - new filter for the furnace - 20 x 20 x 1
  • Done Oct 24 2017 Roofer - downspout - extend front corner away from house
  • Roofer/Handyman - siding is lose and needs to be fixed (wind can blow siding off and cause issues)

Priority #2: - Moisture and water issues. I think this will cause a lot of damage if we postpone for too long.

  • Contractor - 2nd floor bathroom - renovation (toilet leaking & bathtub water/wall damage, need fan)
  • Contractor - 2nd floor - mold & water stains on walls in bathroom, hallway, and bedroom(?)
  • Contractor - 2nd floor - check windows, some are water damage; storm glass broken
  • Contractor - 1st floor bathroom - caulk & grout
  • Contractor - 1st floor - ceiling stains from bathroom above
  • Contractor - add a 4x4 post (notched joists) -?? I am not 100% sure what this was about...
Priority #1: 

  • Furnace serviceman - get service for the furnace (basement & 2nd unit). Old furnace. Inspector was not sure if heat will come on. 
    • Done Oct 24 2017 Inspection by heating/cooling company: one of two heaters is not making heat (fan was running) and unit to old, so new parts cannot be found.
    • Done Oct 24 2017 Furnace filter changed
    • Done Oct 27 2017 Heating company temporarily resolved the issue. Heater is currently working, but needs to be replaced. Property management is looking into finding a replacement unit
    • Done Nov 2 2017 Cost to replace with a pre-owned (aka used) unit ~$1700. Replacement is being scheduled.
  • Done Oct 31 2017 Increase rents
    • 90 day notice provided: Eff. March 31, rents will increase by 1.8% according to Landlord and Tenant Board Guideline

Duplex B (#141 S)

Priority #5

  • Future: House slopes inward towards the middle 
  • Future: might have to add electric heater to far end of 1st floor unit

Priority #4

  • Handyman - Flooring - 2nd floor carpet is partially removed - will need new flooring
  • Handyman - Walls - 1st unit - damaged(?)

  • Tree cutter - clean all branches off the roof & trim big tree - Tree branches scrape the roof,  will be heavy in winter and will most likely shorten roof life by a lot.
Priority #2 - I think this is all doable and should be fairly quick

  • Handyman - remove shed - tenants complained and it looks like a potential safety issue
  • Done Oct 24 2017 Handyman - add railings to front & side, fix loose railings (rear)
  • Done Oct 24 2017 Handyman - trim trees near walkways (trip hazard)
  • Done Oct 24 2017 Handyman - some rot on deck, boards should be replaced
  • Handyman - interior wire used for external light (replace)
    • Done Oct 24 2017 Inspection by electrician
  • Handyman - caulking of external light
  • Handyman - install cover plates where missing in the basement
  • Handyman - 2nd floor - toilet running & caulk & grout bathtub
  • Handyman - 1st floor - toilet leaking & caulk & grout bathtub
  • Handyman - Install missing screen on one of the windows
  • Handyman - weather stripping on the doors
Priority #1

  • Furnace - get service and cleaning for the furnace - less critical than in 41 Joseph, but should be done before it gets cold.
    • Done Oct 24 2017 Inspection by heating/cooling company: one of two heaters has been condemned and needs to be replaced
    • Done Oct 25 2017 Quote for new heater ~3K
  • Done Oct 31 2017 Increase rents
    • 90 day notice provided: Eff. March 31, rents will increase by 1.8% according to Landlord and Tenant Board Guideline

Thursday, October 26, 2017

Living Far Away from Rentals - Yep, Doable!

In my experience living far away from rentals is doable and can be successful. Here is a summary of my experiences so far.

Long Distance Rentals - What Worked For Me

  • Working Full Time plus Investing - For about three years, my husband and I have self-managed our properties remotely and both worked full time. We got to 12 units at this pace. I was lucky because I had an amazing job at a really great California company and all of my managers trusted me and allowed to work from home. Because of the time difference with California, I was able to do houses related stuff in the morning from 9 am to 12 noon and do my actual job from 12 noon to 10 pm.

  • Juggling Family and Investing - This is very doable now because our kids got older and are fairly self-sufficient. Older boys are happy to watch the youngest one. When we started investing, kids were 14, 12, and 4. We were very lucky to have lots of support from friends and family who we often asked to pick up/drop off kids to and from activities. I am hugely grateful to my mom, dad, parents-in-law, sister-in-law and best friends. THANK YOU GUYS! Love and hugs.

  • Remote Property Management - This worked as well because all our properties were located within an hour drive. We had to go lots of times mainly because at the beginning we did all of the work ourselves: cleaning, painting, renovating, fixing, looking for and selecting tenants, giving notices and collecting rent.

  • Tenant Relationships - This worked great every time when we chose great tenants. A couple of times we made mistakes and chose a bad tenant. Once you get yourself a bad tenant, nothing helps until you fix your mistake :)

  • Collecting Rent - This worked! We use Interac online payments in 90% of cases. Remaining tenants mail us a check to a PO Box or provide post dated checks ahead of time. We only have 1 tenant that we historically have allowed paying in cash. It's on my to-do list to work with the tenant and figure out a better payment solution, so that we don't have to go in person every month.

  • Audible & Time with my Husband - When I drive to the properties by myself, I love listening to audio books. Sometimes, I wish I could drive more to finish a good book sooner! If we go together with my husband, we love chatting about our properties, plans, mistakes, problems, and what we learned from recent meetups, events, books or news. This makes the trips fun.

Long Distance Rentals - What Did Not Work

  • Couldn't Self-Manage Properties that are 3 hours away - We recently got several properties that are 3-hour drive away. It takes a full tank of gas to go there and back. And it takes a whole day time-wise! Property management company charges less than that per unit per month. For each of these properties, it is more cost and time effective to use a property management company instead of self-managing.

  • Couldn't Handle Career Promotion and Investing - At the start of 2017, I got a new day job and was assigned to a very exciting global project.  I overestimated my abilities and couldn't handle job requirements, long work days, 1-2 hour commute each way to the office three times a week, plus family and investing. This led to me leaving my day job.

  • Cost of Gas & Time - Over the three years, I haven't been tracking actual cost of travel for each property or put a $ amount on the time spent doing various jobs ourselves. If I did that, I'm pretty sure cash flow would be negative. Going forward and as the number of properties increases, my goal is to outsource property management whenever possible and use other people's time. The trick will be stay cash flow positive.

Tuesday, October 24, 2017

How to Become a Real Estate Investor with No Money and Infinite Returns

Here are three easy ways to become a real estate investor with no money:

  1. Win lottery
  2. Get an inheritance
  3. Rob a bank
Just kidding... The truth is that investing with no money is tricky and I haven't personally done it yet. What I have done is "investing in real estate with no money of my own", which I think is good enough and counts.

Money Sources

  • Your primary home - If you own your primary residence and have not refinanced it in the last few years, there is a high likelihood that you have some equity in your home that you can swap for money and use. In Canada, this is known as HELOC. Contact your mortgage provider or mortgage broker and ask them about a home equity line of credit (HELOC). Depending on your financial situation and credit score, you should be able to get a line of credit up to 65% of the current assessed value of your primary residence. This line of credit will be secured by your home and will not negatively affect your credit rating. Please remember to account for the interest on your HELOC, when you analyse potential investment properties and make offers.
  • Your family and friends - If you are lucky like me, you might be able to talk some of your friends or family into letting you use their money or home equity.  This approach puts a lot more responsibility on your shoulders. In my case, my family gave me a boost. I am grateful for their trust. In our example, in return for 50% of investment capital, my family receives 50% of cash flow and 50% of equity gains. They are "silent partners" meaning that they trust me with all the decision making regarding selection and management of our investment properties. Take a look at my Joint Venture (JV) post with some more insights on using other people's money.
  • Your reputation with your banks - At one point in my life, my husband and I were both between jobs. We started using credit cards for ongoing bills and have gotten to a point when we couldn't pay interest. We started skipping minimal payments. Very quickly and much faster than I thought it possible, lenders cut down our credit limits demanding accelerated debt repayment. Luckily, we did find jobs and got back on track. On the flip side, once we started treating our credit history and financial reputation as the most precious thing on earth and put in effort into decreasing bad debt and increasing assets, the opposite happened. We started getting offers for more and more credit from various lenders. On several occasions, we received 0% interest offers and were able to use the banks' money at 0% as a down payment for rental properties.

Infinite Returns 

The formula for return on investment (ROI) is Net Profit / Cost of Investment.

When you invest almost no money of your own, your cost of investment is approaching zero. In this case, your ROI is infinity:

PS Gotcha

The only gotcha in this formula is that you HAVE TO make sure, you get into a cash positive deal. If "Profit" is below zero, you'd be converging towards negative infinity and might not last very long in real estate investor capacity.


I hope you find this post helpful. Please leave me a comment, if you have any questions or suggestions. I look forward to receiving your feedback.

Monday, October 23, 2017

Why Best Landlords Learn to Find Good Tenants Fast: My $30,000 Mistake

Eviction After Math

First, let me show you how much money a bad tenant costs. True story. This is not the worst that can happen. But I am quite certain this outcome is pretty average. This is why you hear so many tenant horror stories. Some landlords quit after the first bad tenant... and I understand why. Others, like you and me stick around and learn. The trick is to learn fast. 

You Failed

Tenant stops paying monthly rent. You knock on her door. She rushes back into the house and brings out a couple of hundred. Apologizing profusely, she explains that something went wrong in her life. She is already on it and fixing it. This won't happen again. She'll pay the rest of the rent by next Friday. You see how stressed and nervous she is, her fingers trembling. You can hear her little ones behind the door. It's dark and cold outside. You thank her and let her know that next Friday will work.... 
Send N-4 as soon as the rent is late.
Don't find excuses to procrastinate and let things get worse.

No interac comes in next Friday. You still feel sorry for the tenant and can understand her situation. You feel guilty for having to ask her about the rent, when she is in such a tough spot. Your brain throws in sporadic questions about her kids, cold Canadian winters, and reminds that some of your own friends and family have been in tight spots as well. What if you had no money? Bad things happen to everyone...

You decide to give her until Monday. Then, you text her on Wednesday. Call on Friday. She asks for another couple of days...

Finally, you collected full months rent. It's still the same month on the calendar. You are so happy that you did it! You are cash positive this month again. Hurrah!

Oh wait, it's the 23rd of the month. It's obvious that you won't be getting full rent on the 1st of next month. Most likely, the tenant will be a full month behind, then month and a half, etc...

You feel depressed from the thought of going through the same dreadful process again...
You turn around and tell your husband that you are sick and tired of his computer games... 
You tell him to shut down Dota and do something useful...
Your kids seem to be doing all the wrong things... 
Everything seems annoying...
You failed.

Situation will not improve. This N4 is for the same tenant, 5 months later!!!
I let them take their time destroying my property.

You Paid 

Garbage in every cabinet
Besides all the emotional drama and looks from neighbors who don't understand why your tenant's trash is flying all over their street, late rent is only a small portion of the full cost. 

The sooner you address the root of the problem and evict the bad tenant, the more chance that your unit is salvageable with minimal renovation.

In my instance, the numbers turned out as follows:

Lost Rent 2016: $1,365
Lost Rent 2017: $160
Court application 2016: $170
Court application 2017: $175
Sheriff eviction fee 2017: $323
Paying tenant to move out her furniture 2017: $500
Returning last month's rent to tenant 2017: $790
Cleaning & garbage removal: $1,747
Renovation materials: $4,550
Renovation time & labour: $16,375
Vacancy during renovation: $4,350


And this is why good landlords learn fast.

Garbage on the front yard

How to Find a Good Tenant

  1. Ensure your application form contains good tenant screening questions and you collect everything needed to make an informed decision and minimize guess work and thus risk. 
  2. Do not accept incomplete applications.
  3. Do not accept tenants "on the spot", even if they complete the application fully and give you first and last month rent.
  4. Do not accept any money from any applicant until you complete all steps of the application process.
  5. Do not accept applications without verifying all of the information thoroughly.
  6. Receive and check the following types of info and references:
    1. Legal identity reference (ex., drivers license or passport)
    2. Character/personal references
    3. Employment, school or other occupational references
    4. Guarantor reference. Find out who will help them pay their rent and confirm that's true with that person.
    5. Credit verification - ex., recent equifax report or 3 months of bank statements
    6. Income verification - 3 latest pay stubs or another proof of income
    7. Tenancy verification - Contact landlords over the past 3 years
    8. Social references - dig deep in social media
    9. Emergency contact.
  7. Follow your gut feeling. Do NOT accept tenant in a rush or if you are not sure about them. You only need one good tenant and you will find them.
  8. If you are too weak to do this properly, hire a professional.

Make the Unit Ready

Rental Unit ready to be someone's home
I believe that every rental is someone's home and they should be proud and happy about it. I always strive to make sure that the unit is ready before a new tenant. I try to put myself into the applicants' shoes and see if I'd want to rent my own apartment. 

I think that tidiness and completeness are two most important things. Most of my units have older kitchens, thermostats and appliances, but all of them are crispy clean. 

  • The unit is clean. It looks, feels and smells nice
  • There is a rug in front of the front door and a place for shoes (especially if it's lousy weather)
  • All windows have white blinds
  • All kitchen cabinets, appliances, and closets are clean inside and out
  • All toilets are clean
  • Bathrooms are clean
  • Switches, plug covers, outlets, thermostats are clean
  • Floors, walls, and ceilings are clean
  • Garage is empty and clean
  • Basement has been swept. No spider webs :)

Advertising & Search

First, look up similar ads on Kijiji and other sites to understand current market rents. Once you know your price, start advertising.

Kijiji worked great for me, for all my rentals so far. In my ad, I do my best to explain how the unit feels as if you are walking through it. I add bright and focused pictures of all rooms and the house itself.

If there are any known issues about the unit, find a way to be up front about them in a positive way. For example, one of the units we have has no parking. I put in the ad that free street parking is available and/or tenants can purchase paid parking across the road for x dollars. This saves my time  and applicants' time by not showing to people who wouldn't like to rent the place anyways.

I typically put an ad asking all interested to email, call or text me to book a time during an upcoming open house. Usually, I put my ad up on Wednesday or Thursday, and schedule the open house for the following week's Saturday.

Depending on how many responses I get, I do my best to schedule all showings during one or two 3-hour blocks, 15 minutes apart. I collect email and/or phone and name for each appointment.

The day before the open house, I text, email or call everyone with an appointment and remind them about the showing.

The Day of the Open House

My husband, friend or oldest son helps me during the open house. Appointments often shift and overlap. So, it is convenient if there are two people there during the showings: one stays outside of the unit and greets visitors, the other one does the walk through.

During the walk through, I try to keep a little bit of a distance, to make sure all visitors have opportunity to view the unit thoroughly, discuss it with their family/friend/partner or just think about it. After all, it will be their home and they should feel great about it.

Before they finish the visit, I do my best to do a quick pre-screen. I write down my notes as soon as possible after they leave to make sure I can remember my first impression, in case the visitor submits an application.

I offer an application before they leave. If they'd like one, then I briefly explain key steps in the application process and tell them that I'll email / text them a link to the online application form right away.  If I get a feeling they'd prefer a paper version, I give them a paper copy.

I use Google forms for my online tenant applications.

Tenant Screening Questions 

Here are some examples of tenant screening questions and discussion points. I ask these questions in a form of a conversation during the walk through. My goal is to get a feel about visitor's situation and tenant profile.
  • Do you mind if I ask, why are you looking for a new place?
  • How is your search going so far? Have you run across anything you like? 
  • When are you looking to move?
  • How did you like this place?

Reference Check Questions

Once you receive an application back, you must check every reference and validate every piece of information on it. Use the same process for every applicant consistently. Have a consistent decision making approach. Understand what you can and cannot ask legally in your area. 

Don't discriminate based on race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, age, marital status, family status, disability, or the receipt of public assistance.

For example, see illegal questions at the bottom of this CMHC article.

Try to stay away from yes and no questions. Lead a conversation instead of reading questions off your list. Listen to clues about applicant's personality, personal situation, and history. 
  • How do you know (applicant name)?
  • How long have you known him/her?
  • Can you please tell me a little bit about his/her personality?
  • What does he/she do for living?
  • How often does he/she party?
  • What music instruments does he/she play?
  • Does he/she always smoke outside or sometimes indoors as well?
  • Why do you think I should consider his/her application?
  • If you had a place, would you rent it to him/her?
  • Why would you?


I hope you found this post helpful. If you'd like to bounce any ideas or have questions, please comment below. I look forward to your comments and feedback.

Pls note, this artcile is based on my own experiences. Don't take it as official legal advice and always double check your local laws and regulations.

In Ontario Canada, tenant and landlord rights and responsibilities are listed on the Landlord and Tenant Board site.