When Frugality Fails

Being a landlord can feel EXTREME

Earlier this month, I started feeling as if

someone somehow 

made 

the God of Appliances 

MAD

Every time I picked up the phone, I heard one of my tenants deliver the bad news.

It started on Sunday morning.

Ring-ring. My fridge stopped working.

Monday morning. Ring-ring. My dryer stopped working.

Monday evening. Ring-ring. The washing machine doesn't drain.

At that point, I made a strategic decision of letting the phone ring and go to voice mail, while I was sorting out all these appliances issues.

Luckily, this was it for the time being!

Extreme Efforts Being Frugal

Most properties I get, come with appliances and in most cases they are pretty old. Hence, I expect at least some of the appliances would break fairly soon after the purchase.

In the past, I always looked for a used appliance to replace the broken one. I thought this was the most cost effective approach.

For two to three hundred dollars, I could find a decent used washer, dryer, stove or whatever needed. A new appliance would be about $500, almost twice more expensive.

With a used appliance, I also had to figure out a way to deliver it to the tenant, get it installed, and get rid of the old broken one.

Luckily, my husband is quite handy and could help with most of this.

This is How We Did It

I'd find the most affordable decent used appliance and negotiate the price.

Then, coordinate child sitting, so we can free up either a Saturday or a Sunday.

Our weekends are packed with our youngest son's Russian lessons, music, hockey, and occasional birthday parties.

Our youngest son is nine and the oldest is almost 19. My parents and my-in-laws have 6 grand kids each. They used to be eager and excited to babysit the oldest couple of grand kids.

Let's be honest, after 19 years on grand-parents duty, I can't say any of the grand-parents are thrilled when I ask them to spend a day driving grand son #6 back and forth, trying to bribe him with just the right amount of doughnuts, chocolate milk, and chips as he goes through a back to back list of all sorts of developmental activities and sports.

Having said that, more often than not, our parents still agree to help us out.

Childcare arranged - Yay!

Next, we'd borrow our friends' mini-van. Our friends have three kids of their own. So this is a hassle for them as well. They have to move car seats, strollers, and downsize their life for the day every time we need to borrow their car.

I'm grateful every time they help us out! To thank them we always bring back their car with a tank-full of gas.

Transportation Arranged - Yay!

The following step is to make an appointment with the tenants, at least 24-hours ahead. This is usually the easy part since the tenants look forward to getting a working appliance.

It has to be on the weekend, though! Because my husband has a day job. All this investing jazz is happening after hours and on weekends.

Tenants on Standby - Yay!

On the day of, usually a Sunday

1) Wake up early in the morning, seven-ish

2) Get Starbucks, it's going to be a long day!

3) Pack and drop off the child

4) Give extremely-detailed-instructions to the grand-parents about all the activities they have to tackle including a back up plan in case the child is in a whiny mood

5) Get the mini-van from our friends

6) Pack all tools and hardware

7) Remember to take the key, in case tenants aren't home

8) Go and get the appliance from the seller, typically someone I found on Kijiji

9) Drive to the tenant, either to Barrie or Guelph

10) Attempt to install the appliance

11) Find out that something doesn't work or is missing - pipes, outlets, drains, narrow doorway. It's guaranteed that something is going to be messed up or in our way.

12) Go to the hardware store for the parts and tools, minimum twice

13) Finish appliance installation super-late in the evening

14) Roll out the old appliance to the curb. Comply with local city and safety rules (ex., if it's a fridge, take off the door!)

15) Get fast food. We are super hungry and done with all the snacks by this time

16) Drive back to Toronto. No traffic on the way back - Yaaay!

17) Fill up the tank and return the mini-van

18) Pick-up the child from the parents

19) Go to bed at two or three am

20) Wake up four hours later

The job is done! Yay!

How Much Money-Wise?

With do-it-yourself approach, we'd pay about $300 for the used appliance, $50 for gas, $80 for a full tank of gas as a Thank You to our friends, get coffee, fast food and realize one out of every four new used appliances would break within several months after purchase and we'd have to fix it.

In summary, used appliance would cost about $600, while a new one would be about $800.

	Used Appliance	New Appliance
Appliance	$300.00	$500.00
Delivery	$-	$100.00
Installation	$-	$200.00
Starbucks for Two	$12.00	$-
Fast Food for Two	$20.00	$-
Gas & gas re-fill	$130.00	$-
Fix New Used Appliance	$132.50	$-
Total $ Cost	$594.50	$800.00

How Much Effort-Wise?

In addition to dollar cost, we'd need to collaborate with and inconvenience a whole bunch of family and friends to coordinate appliance re-placement.

Collectively, we'd spend over 150 hours either putting in heroic efforts AND/OR sacrificing our weekend.

The result would be subpar. After all this time invested, our old new appliance will likely break soon or stay functional for just a couple more years. So we'd need to re-group and fix it again!

People Involved	Do It Yourself Delivery /Install	Professional Delivery/Install
Grandparents @ 12-14 hours	2	0
Child @ 12-14 hours	1	0
Friends @ 12-14 hours	5	0
Husband @ 12-14 hours	1	0
Self @ 2-4 hours admin work	1	1
Self @ 14-18 hours inspiring my husband to put in heroic efforts over the weekend	1	0
Handyman @ 2-3 hours	0	1
Tenants @ 3-6 hours	2	2
Total # Participants:	13	4
Total Time Needed from everyone involved	128 to 156 hours	8 to 16 hours

With PROFESSIONAL help,
being a Landlord feels smooth

Landlord Job gets Easier with Professional Help

As my portfolio grows, appliances issue come up more and more frequently.

Sometimes, as often as three times a day!

My friends and family will NOT want me to hijack all their weekends, so that I can save $200 on an appliance.

I will never see my son again, if spend all my time trying to get and install cheap used appliances.


Also, my husband would very likely ask for a divorce if I queue up appliance deliveries and other handyman work for the next three-four-five weekends in a row...

Lately, I always go for NEW appliances and pay for PROFESSIONAL delivery and installation. 

This is the ONLY way I can scale to 50 doors.

Vacancy: Landlord's Worst Nightmare

Vacancies Keep me Awake at Night!

A few days ago we filled our last vacancy.

What a Relief!

The search took about three weeks. Our property manager began advertising the unit on November 19th. 

We started with $1,650 asking price, which was higher than the average for similar units in the area. There were barely any inquiries at that price. 

December and January are typically slow months for tenant search. People are busy with holiday prep and after holidays they go into hibernation-mode for the remainder of the winter. I was worried that we'd have a vacancy until Spring.

Vacancies Keep Me Awake at Night

The reason I am so afraid of vacancies is because they are very costly. Every month of vacancy, I'd have to come up with money to pay the mortgage, property taxes, utilities and, in case of this specific property, property management and condo fees as well.

Ouch!

Typically, they recommend that you include 2-5% vacancy fee in your cash flow calculations.

Given 5% vacancy, my annual cash flow would be $1,280. Or $100 a month.

In reality 5% only works if you manage to go without vacancies for a while. Actual losses are a lot higher!

For example, my annual loss for a year with one month of vacancy is about ($1,660). That's because:

I will not get a month of rent of $1,600
Pay about $300 for the utilities during that month
Pay about $2000 for tenant search and making the unit ready - fresh paint, minor fixes, etc. add up
Pay all regular expenses of $16,960...

If my property is vacant for two months, the loss will be ($3,560).

With three months of vacancy, I'd lose ($5,460).

Once I do find a tenant, it will take a l-o-o-o-o-o-o-o-o-o-o-o-o-ng time to catch up.

I'd need the tenant to stay for almost 2 years, to catch up after one month of vacancy.
The tenant will have to stick for over 3.5 years to catch up after two months of vacancy.
Lastly, the tenant will have to stay for almost 6 years, to fully catch up after three months of vacancy.

My math is simplified, of course. I don't take rent increases into account at all, for instance. Still, you get the idea why I hate vacancies. Vacancy losses are horrific.

The danger is on the flip side as well. If you rush and get a BAD tenant, you can end up with thousands and thousands in losses... See my blog post here for details - My $30,000 Mistake.

Here is a chart with the numbers in my examples above:

	Projected: 5% Vacancy	Actual:    1 month    Vacant	Actual:     2 months     Vacant	Actual:     3 months     Vacant
Gross Rent	$19,200	$19,200	$19,200	$19,200
Less Vacancy	($960)	($3,900)	($5,800)	($7,700)
Rent Income	$18,240	$15,300	$13,400	$11,500
Expenses
Financing Cost	$6,860	$6,860	$6,860	$6,860
Condo Fee	$5,304	$5,304	$5,304	$5,304
Property Taxes	$1,961	$1,961	$1,961	$1,961
Other	$1,200	$1,200	$1,200	$1,200
Property Management	$1,094	$1,094	$1,094	$1,094
Insurance	$540	$540	$540	$540
Total Expenses	$16,960	$16,960	$16,960	$16,960
Net Profit (Loss):	$1,280	($1,660)	($3,560)	($5,460)

Success! Got a Great Tenant

Needless to day, the pressure was on.

We lowered the price by $50 to $1,600. Luckily, the interest picked up! 

The ad generated over 230 views, 15 inquiries, three viewings, and a great application on December 9th. 

Our property manager uses Naborly for tenant screening. I've never seen a Naborly report before and was quite impressed. The multi-page document covered most of the information that I typically review for a candidate and gave some additional insights. Here is what the report covered:

• General info about all occupants
• Previous addresses and address verification
• Equifax credit summary and score
• Debt summary including monthly debt payments
• Rental history
• Financial information
• Employment history
• Analytics showing the likelihood of key tenancy risks (late payments, eviction, property damage) 
• Analytics showing the likelihood of a successful tenancy during the entire term.

Our property manager also collected a photo ID, a full credit report, and a letter from the employer. They conducted a face-to-face interview and verified employment and personal references. My property manager summarized their findings including possible risks.

I reviewed all the information as well and did my own due diligence. I typically research every piece of factual information and make sure all facts align and make sense. The way I do it is very simple: research every name, every address, every company name, every email, and every phone number that the candidate provided; look in Google and on all social media platforms; contact all references and chat with them; verify income.

In this case, all checks were successful. I accepted the application and to my delight, the tenant confirmed that they'd like to go forward as well.

No Vacancies!!!!!
Overwhelmed with JOY and
will definitely sleep like a baby :)

The property manager impressed me very much! This was the first time when they found a tenant for me and I loved how smooth the tenant on-boarding process was. 

As soon as this last vacancy was filled, I started sleeping like a baby again! 

$300 Duplex Conversion

Over the past year, I’ve been meeting a lot of investors whose strategy is duplex conversions.

Here is how it works, in a nutshell:

1. Buy a home 
2. Get permits to add a legal unit to it. For example, create a legal basement apartment; Or get a permit to split the unit vertically creating a quasi semi-detached home.
3. Hire and oversee contractors & trades to get the work done
4. Re-finance to get your money back
5. Rent both units
6. Live happily ever after (or until you get another one of these duplex conversions).

Based on meet-up presentations I’ve seen, my understanding is that the cost to add a legal unit nowadays averages at about $90K in GTA. Perhaps, you’d see numbers between $75-110K, depending on how optimistic the presenter is.

Here’s how our “Duplex Conversion” Happened

My husband and I got a duplex. It turned out that the two units are connected by a door. Initially, there was not even a lock on the door, which wasn’t an issue since one of the units was vacant at the time.

As we were getting ready to find a new tenant, we had to replace the door with a wall and properly separate the units.

In Our Case, Duplex Conversion Was a Lot Less Elaborate

Step 1. Take measurements & get some two-by-fours and other hardware

Step 2. Measure & cut.

Step 3. Put a back wall up & add insulation

Step 4. Finish up with the fancy front wall. Voilà!

Now we have a proper two-unit house. Can't wait to find a great tenant to move in!

Tenant/Landlord Perspective on Rental Property Lease Agreement

Choose Great Tenants!

Starting April 30, 2018, all landlords in Ontario, Canada are required to use the standard lease agreement template for residential rentals.

Many investors and landlords are not happy about this new requirement.

They don't like the fact that the new lease agreement spells out all the rules that tenants may want to know.



These rules are designed to:

"provide protection for residential tenants from unlawful rent increases and unlawful evictions" and "for the regulation of residential rents" 

per Residential Tenancies Act, 2006. 

However, some of these rules are not at all landlord- or business- friendly. 

In this post, I’d like to recap what I learned from a lawyer and a paralegal presentation, who have been in the residential rentals business for many years and have seen a lot of landlord/tenant situations. I'll also share some of my own thoughts and findings on the rules landlords are supposed to follow in Ontario.

My goal is to share the key concepts that will benefit beginner landlords without sacrificing the happiness of their tenants. 

First things first:

If you are reading this post, finding it helpful and are not my Mom, please leave a comment at the bottom or share it. Your comment will make my day AWESOME and I am very grateful for it 😁🙏

The Term of Tenancy Agreement is Always Indefinite

Landlord specifies the term of the agreement in section 4 of the lease agreement template. The choices here are fixed length (ex., a year), monthly tenancy, or other (ex., daily or weekly).

Most new investors believe that it is beneficial to sign a lease for a year. Many landlords also learn at various real estate courses that it is a good practice to renew the lease for another year at the end of each term. 

"The tenant does not have to move out at the end of the term." 

- section 4 of Lease Template

The truth is that no matter what type or length of term you put in your lease agreement - a year, monthly, or daily - the tenant has the right to stay in your rental unit FOREVER. 

The tenant will leave if and only if he/she leaves voluntarily OR landlord goes through the process of ending tenancy using one of the very few permitted reasons.

Please note that in case of a problem one year lease really restricts the landlord from evicting the tenant early. For example, N8 form states that the termination date cannot be earlier than the last date of the fixed term - i.e. end of the year for an annual lease. While monthly lease can be terminate with a 60-day notice. Because of this landlord should try to stick with month-to-month leases and stay away from annual ones. 

Can a Tenant Break a Lease? Anytime

On the flip side, suppose you sign a one year lease, but your tenant wants to move out early. Per current rules, tenant is supposed to give landlord a 60-day notice, which has to be effective at the end of a month. 

But if your tenant is going through hard times, chances are they'll move out much faster and with a much shorter notice. In this case, they'll stop paying you rent as soon as they are out. If you try to insist on 60-day notice and they can't afford to pay you, they will not pay you.

In this case, your best course of action is to be thankful that the tenant has moved out on their own accord (rather than staying at your place for free until the Sheriff changes locks) and get a new paying tenant as fast as possible.

Having said that, more often than not, I see tenants giving sufficient notice and coming to a mutual agreement with the landlord to break lease early. This approach is most effective both for the landlord and the tenant. This is why it always helps to have a good business relationship with all your tenants, so they let you know as soon as they decide that they'd like to leave.

Can a Landlord Use a Non-Standard Lease? 

Yes, in theory a landlord can still use their own lease. It's against the rules, but possible if a tenant agrees to sign the non-standard lease and doesn't ask for a proper one. 

In case when the tenant asks for the standard lease and landlord doesn't provide it within 21 days, tenant has the right to leave and landlord would lose the tenant.

My analogy is: Can we drive above speed limit? Absolutely. But there may be consequences if we get caught. So everyone chooses their own boundaries and balances higher speed vs. # of tickets vs. safety.

In tenant/landlord situation, consequences usually come up when there is a disagreement between the tenant and landlord. In that case, Landlord and Tenant Board (LTB) will make decisions based on the Act and other applicable legislation. All terms of any lease agreement that are in conflict with the legislation would be deemed void and non-enforceable. 

LTB officers are very strict in following the legislation. My prediction is that they will not be lenient towards a landlord who decides to break the rules of the legislation on purpose.

This is why I recommend that you find ways to incorporate your additional terms into the new standard lease template and do your best to comply with the rules. 

Rent / Deposit / Increases?

Most landlords are already aware of the boundaries on the money side:

• We can can charge last month's rent, NSF fees up to $20 and key deposit
• We can increase rent per approved guidelines every 12 months
• We have to pay interest on last month's deposit.

Now, these same boundaries are listed in black and white on the standard lease template, so that all tenants are aware of them at the start of their tenancy. 

This certainly clarifies the rules of the game for both parties involved. Very transparent.

Conclusion

Tenant Perspective: Follow three rules and you'll always have a home in Ontario with reasonable annual rent increases:

1. Pay your rent on time and in full
2. Treat your home nicely
3. Respect the neighbours.

Landlord Perspective: There are way more than three rules. Learn them!

• Start at LTB website
• Look through Legislation 
• Consult an experienced paralegal - this always helps.

GOOD LUCK!! 👋

PS Let me know if you have any questions about tenants, landlords, or lease agreements? Use "Comment" box to ask.

Real Estate Income Property - Case Study #3 - Bad Tenant

Everyone makes mistakes. Unfortunately, this case study shows how my bad judgement and a poor choice of tenant resulted in two years of stress and big losses. The lesson I learned is - if you make a mistake, find the courage to fix it fast. I dragged my feet with the eviction for too long and, literally, paid for it.

Rental Income Property

Beautiful Home

This beautiful semi-detached home is located in Barrie, ON.

We were lucky to have met the seller, as she stayed at the house for a couple of months being our first tenant while finalizing the closing of her new home.

The seller shared that she got the house at 20 and lived in it for 28 years while raising two amazing children.

Based on her words, the schools and neighborhood were amazing. Neighbours were great and supporting: a lovely retired couple on one side, a professional woman and her son on the other side; and a couple with a sweet little girl across the street.

The owner was certain that whoever would move in here next, would be happy. 

Key features: 

• Semi-detached house  
• Parking on driveway plus 1-car garage 
• Main level: 
• Entrance/hall 
• Large living and bright dining room 
• Kitchen including fridge, stove, microwave and dishwasher 
• Entrance to a nice, deep backyard with a porch 
• 2nd Floor: 
• Master bedroom 
• 2nd bedroom 
• 3rd bedroom 
• Full bathroom 
• Extra storage 
• Finished Basement: 
• Utility room with washer/dryer 
• Family/exercise room 
• Bathroom 

Purchase

• Asking price: $239,900
• Purchase price: $231,000
• Found on Realtor.ca
• Owner occupied at purchase
• Expected Rent: $1,450/month
• Expenses:
• Utilities: paid by tenant
• Taxes: $200 / month
• Insurance: $100 / month
• Misc repairs and maintenance: $100 / month 
• Expected NOI: $1,050 / month
• Financing: 80 LTV, 30 year amortization, 5-year term, variable 3.25% interest
• Expected Cash Flow: ~ $250 / month

Total Investment

This property required a 95K investment, of which a big chunk of 40K was spent on renovation.

Initial expectation for renovation cost was 10-15K. Unfortunately, we made lots of mistakes choosing the right tenant and sub-contractors, which led to a much higher spending than planned.

Investment Summary

Investment	Amount
Downpayment	$47,687
Closing Costs	$8,857
Capital Improvements	$39,121
Total	$95,665

Cashflow and ROI 

• Initially cash flow was projected to be $250 / month
• Property has been barely cash positive over the first three years because of continuous tenant issues. 
• Cash flow averaged $43 / month or 518K per year
• Thanks to mortgage pay down, net profit is approx. $300 / month or 3.5K per year
• Cash on cash return is practically 0% so far 
• ROI is 4% over the four years and 11% annually on average

	Year 2015	Year 2016	Year 2017	TOTAL All Years	Average Annualized
Income
Rents (@100%)	2,900	17,400	20,000	40,300	13,433
Vacancy/Non-Payment		1,365	2,250	3,615	1,205
Total Gross Income	2,900	16,035	17,750	36,685	12,228
Expenses
Taxes	585	2,395	3,003	5,983	1,994
Insurance	311	1,512	1,406	3,229	1,076
Repairs/Maintenance	446	170	3,745	4,361	1,454
Utilities	373	287	1,641	2,301	767
Admin/Advertising	45	0	0	45	15
Total Expenses	1,760	4,364	9,795	15,919	5,306
NOI	1,140	11,671	7,955	20,766	6,922
Mortgage - Interest Payment	796	4,712	4,594	10,102	3,367
Mortgage - Principal Paydown	683	4,160	4,268	9,111	3,037
Cash Flow	-339	2,799	-907	1,553	518
Net Profit (Loss)	344	6,959	3,361	10,664	3,555
Cash on Cash Return	-0.35%	2.93%	-0.95%	1.62%	0.54%
ROI	0.36%	7.27%	3.51%	11.15%	3.72%

Appreciation / Equity

Based on MPAC assessments, the value of the property increased by 33K during the last four years. Once we include the equity gain in ROI calculations, return on investment becomes 15% per year:

Total gain including appreciation: $33,000 + $10,664 = $43,664
Total ROI including appreciation: 46% overall and 15% annually.

15% ROI per year is pretty good! This shows you that even in an absolutely horrible situation tenant-wise and after a streak of bad decisions, overall return can be fairly OK thanks to mortgage pay down and market appreciation. I got lucky!

Appreciation is like lottery. Hence, we can't bet on it. Therefore, selecting a good tenant is a MUST going forward.

History

2017

• Spring 2018 - Tenant is behind on rent. Got an eviction court order and agreed to a payment ctach up plan with the family. Yay! They are fully caught up on past rent now. Hooray!! 👍
• December - Hired a great snow removal company after avoiding a fraud contractor
• September - all pipes updated. New tenants move in. Gross rent up to $2,100 inlcuding utilities 😁
• August - Pipe bursts 20 minutes before the appointment with the new tenants 😡
• August - New contractor found and finishes the job brilliantly 😁
• July - False Bed bugs issue
• July - Contractor disappears, floors not finished.
• June - New AMAZING tenants found. They will wait until all work on the unit is done. 😁
• June - Cleaning, Paining, and more cleaning
• June - Tenant evicted. Total cost 30K as outlined in this post
• May - Eviction confirmation sent to Sheriff/Enforcement office
• May - Eviction requested at Sheriff/Enforcement office
• April - Plumbing issue resolved at $950. Water leaked from upstairs bathroom, ceiling damaged on the first floor. 💦
• March - Notice to end tenancy served (N8)
• February - LTB court hearing. Mutually agreed to a rent catch-up schedule. Shook hands with tenant agreeing that this was her last chance.
• February - Water bill payment late. Balance $232
• January - Application to evict submitted (L1). 
• January - Rent paid consistently late notice sent (N8)
• January - Rent non-payment notice sent (N4). Balance $2,900

2016 

• November - Water shut-off for non-payment. Balance per city $397. 
• November - Rent non-payment notice sent (N4). Balance $2,200
• October - Rent past due. Balance $750
• August and September - Tenant caught up with rent as agreed.
• June - Landlord and Tenant Board Hearing. Mutually agreed to a rent catch-up schedule.
• May - Application to evict submitted (L1). Balance $2,470
• May - Rent non-payment notice sent (N4). Balance $2,300
• February through April - Partial or late rent
• January - Rent on time 💪

2015 

• December - real tenants moved it: a couple with two young children. Rent $1,450.
• October to end of November - Previous owner stayed as our first tenant for two months while she was looking for a new home. We agreed to a discounted rent of $900. At the time, we had several other projects under way and we were running around like headless chicken, so getting partial rent immediately after closing was very helpful.
• Purchased in October.

Real Estate Income Property - Case Study #2

If you ever wonder what it is like to own a rental property, read on! This post will tell you how we got a triplex, what the numbers look like and what sort of property management adventures we ran into over the past few years.

Rental Income Property

This beautiful century home is located near down town of Guelph, ON.

Like many other homes on this quiet old street, the house has a gorgeous flower garden around it. You can sit down on a wooden porch and listen to the church bells ringing on the hour in the distance not too far. I love the peace and tranquility.

Key features: 

• Triplex: 
• 1 bedroom in a side wing comes with a small back yard
• 2 bedroom on the main floor comes with a nice back yard, washer/dryer/dishwasher, and lots of storage room in the basement
• 2 bedroom on the second floor has an incredible feel to it, thanks to mezzanine like ceilings
• 1 car attached garage
• Corner lot

Purchase

This home is our very first investment. Stars aligned in a special way when we got it. You can read the full story at Our First Rental Income Property.

• Asking price: $344,900
• Purchase price: $340,000
• Found by: Real Estate Broker on MLS
• Zoning: Legal nonconforming triplex (sigh... I didn't know zoning could be an issue at the time)
• Rent: $850 + $895 + $750 = $2,495/month
• Expenses:
• Utilities: ~$410/month
• Taxes: ~ $280/month
• Insurance: ~ $200 / month
• Misc: ~$100 / month
• Expected NOI: $1,505 / month
• Financing: 80 LTV, 30 year amortization, 5-year term, variable 2.98% interest
• Expected Cash Flow: ~ $400 / month

Total Investment

This property required a 82K investment.

The biggest capital improvement so far was installing a new flat roof on the garage in 2017.

This was an expected investment as problems with the original flat roof were brought up during pre-purchase inspection. We did not know at the time that flat roof installation can get pretty pricey.

Investment Summary

Investment	Amount
Downpayment	$68,000
Closing Costs	$5,500
Capital Improvements	$8,389
Total	$81,889

Cashflow and ROI 

• Property has been cash positive from the get go
• Cash flow averages $500 / month or 6K per year
• Net profit is approx. $900 / month or 11.9K per year
• Cash on cash return is 7.3% 
• ROI is 58% over the four years and 14.5% annually on average

	Year 2014	Year 2015	Year 2016	Year 2017	TOTAL All Years	Average Annualized
Income
Rents (@100%)	18,335	31,750	34,200	35,200	119,485	29,871
Vacancy			1,300	300	1,600	400
Total Gross Income	18,335	31,750	32,900	34,900	117,885	29,471
Expenses
Taxes	3,824	3,768	4,319	3,858	15,769	3,942
Insurance	1,217	2,148	1,961	1,926	7,252	1,813
Repairs/Maintenance	1,157	1,997	1,463	5,109	9,726	2,432
Utilities	1,946	2,201	5,616	5,496	15,259	3,815
Admin/Advertising	34	45	30	0	109	27
Total Expenses	8,178	10,159	13,389	16,389	48,115	12,029
NOI	10,157	21,591	19,511	18,511	69,770	17,443
Mortgage - Interest Payment	4,364	6,145	5,670	6,105	22,284	5,571
Mortgage - Principal Paydown	4,147	6,347	6,502	6,661	23,656	5,914
Cash Flow	1,647	9,099	7,339	5,745	23,830	5,957
Net Profit (Loss)	5,793	15,446	13,841	12,406	47,486	11,872
Cash on Cash Return	2.01%	11.11%	8.96%	7.02%	29.10%	7.28%
ROI	7.07%	18.86%	16.90%	15.15%	57.99%	14.50%

Appreciation / Equity

Based on MPAC assessments, the value of the property increased by 33K during the last four years. Once we include the equity gain in ROI calculations, return on investment becomes 25% per year:

Total gain including appreciation: $33,000 + $47,486 = $80,468
Total ROI including appreciation: 98% overall and 25% annually.

History

2017

• December - Two great tenants renewed leases. Hurray!
• Nov - Dec - Fixed stucco 
• September - New garage roof and eaves repairs
• August - New super-awesome tenants moved in. Rent up by $200 💪
• June - Tenants moved out. They'd like a bigger place with parking.

2016

• December - Two awesome tenants renewed leases. Yay!
• September - new washer 
• July - New tenants! Rent is already at market, no change
• June - One of the great tenants moved out. He is relocating to the West coast

2015 

• November - Fixed a garage light. Turned out wiring issue. Cost $700. I couldn't believe it!
• October - Found new great tenant! Rent up by $200 💪
• October - Old furnace suddenly died. New furnace installed as a rental
• September - Another good tenant moved out because he found lower rent closer to university.
• September - Found a new awesome tenant via referral. Rent up by $200 💪
• August - Amazing tenant moved out - engagement 💕
• February - Pipe broke! 💦

2014 

• October - New amazing tenant moved in. Rent up by $50 per month 💪
• September - Tenant got engaged and moved out  💕
• September - new dryer
• June - First ever tenant request: clogged sink 💦 
• Purchased in May - Our First Rental Income Property.

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.