Plumbing 911!

Oh-oh! Plumbing 911!

Over the past couple of weeks, I had to deal with a few plumbing issues. Just wanted to share some pictures, so that you can see how simple or extensive a plumbing problem can get!

Urgent yet Easy Plumbing Issue

Our tenant called on Friday evening. Their basement was flooded. Every time they used a toilet, the water would back up in the basement. Urgent help, please! - tenant really needed help. It's unpleasant when you can't use the bathroom.

We called a few plumbing companies and were placed in their priority queue. We called and called! Trying to expedite the resolution. However, no one was available and most companies didn’t even return our calls. Thankfully, our tenant was quite understanding. We did our best to get help as fast as it was possible, but no luck until the end of the weekend.

It helps when you have good local connections in the area! 

This is one of the reasons why I’m working towards gradually shifting from self-managing all units towards partnering with a property manager.

Finally, we got an appointment scheduled for Monday morning.

Fortunately, it turned out that the issue itself was easy to fix.

The plumber cabled approximately 45 feet to clear blockage, finding it approximately 32’ in the drain line at the front of house. When he retrieved the cable, we found roots on the line.

Roots Blocked a Pipe

Non-Urgent yet Difficult Plumbing Issue

We recently acquired a duplex (the one we've split up into two units). During pre-purchase inspections, we identified two problems that needed to be solved:

1) Sewer stack rusted and needed to be replaced
2) After each rain, rain water mixed with sewage backed up into the basement.

The two issues were not urgent and didn't create too much inconvenience for the tenant - he knew we'd find a good solution and was not rushing us.

Our tenant recommended an outstanding local plumbing company! 

Two technicians visited us and did a lot within just a few hours:

• replaced the old stack with new ABS plumbing
• cleared sewer lines, removing calcium build-up and roots
• fixed broken plumbing under the utility tub in the basement
• replaced P-traps and some old sections of the lines
• cleaned floor drain and put a back trap on it
• there was only one section of the lines (6-7 feet) that could not be snaked and inspected with a camera.

Now, the first issue was resolved.

Next, we had to wait until it rained, to find out if the basement would flood.

Flooded! Not Again...

There was a big storm over night! Unfortunately, the basement still got flooded.

The plumbing company let me know that most likely the problem comes from the city lines.

However, we had to inspect the last section of our pipes, to make sure everything is in order on our end. Without this, the city would never start looking into the problem.

The plumbing team came prepared to inspect the last bit of hidden lines. Take a look at the pictures below to see what it took!

Now, we know that all of the plumbing under our house and up to the City line is in good shape.We'll wait for a rainy day to find out if the basement would still get flooded. Fingers crossed...

Getting ready to dig!

Where does this pipe go?

Holly, molly!

New Pipes!

No More Flooding (Hopefully!!)

Cleaning Up!

Instant Return on Investment

Ready for the Winter

The townhouse I acquired with a serious discount last month, came with no heating.

The previous owner removed electric baseboards throughout the house and used a gas stove in the basement as the only heat source. She was saving considerably on the monthly utilities!

My brother-in-law being extremely frugal as well is another person I know who uses a wood stove to heat his entire house!

However, I don’t think I’ll be successful finding tenants who’d be thrilled about a similar set up.

Most tenants would be looking for either baseboards on every level or a gas furnace. I don’t blame them!

Can you imagine starting a wood stove early mornings when it’s 30 degrees below zero?! 

I was debating between installing new electric baseboards or using the opportunity to upgrade to a gas furnace. I decided to get quotes and work timeline for both options and go from there.

My amazing property manager received several quotes from multiple reputable vendors. Now, we knew that the costs would be as follows:

1) Electric baseboards: $6,000
2) Gas furnace including ducts: $9,000.

Instant Return: $9,000 makes $4,000 = 44% ROI

A local appraiser let me know that the price of the property would go up by $15,000, conservatively, once the gas furnace is in place. This is a $4,000 net gain on a 9K investment.

44% return - not bad, eh?

An additional benefit is that the property will look more attractive to potential tenants. Many families prefer gas heating, as it typically costs less than electricity.

This property is a condo town house. I learned from the condo manager that, before making any updates, I am supposed to get approval from the Condo Board.

Getting Board's Approval 

The approval process turned out to be much smoother than I expected. I received an “Alteration / Renovation request Form” form from the Board. Then, completed this form and returned the following to the Board before their scheduled meeting:

1) Completed Alteration / Renovation Request form
2) Photos of the locations where the contractor will core through the brick (with the area circled)
3) Contractor’s WSIB eClearance Letter and Insurance Certificate.

My property manager helped me with all three of these!

The Board confirmed their approval and we now have all the work scheduled.

I am very grateful to my Property Manager and his team. 

Can’t wait to start looking for a tenant! I’m sure they’ll love this home and enjoy being warm and cozy during the winter.

Million Dollar Decision: Spend or Save?

Balancing Act! Spending vs Saving

Recently, I ran across a fantastic company. I loved their business model.

The team their helps Canadians take control over their finances and build passive income. Most of their clients achieve the following objectives:

1. Pay off their bad debt within about 30 days
2. Create about a $1,000,000 investment portfolio within 8-10 years
3. And all this, without sacrificing their current lifestyle. 

I am starting to work closer with this firm, to learn more about the specific software program and approach they use to achieve such tremendous success. I can see how this process will benefit many of my readers.

Wouldn’t you want to have a million dollar portfolio!?

This afternoon, I worked through my own numbers and a couple of scenarios to see how I can use my primary home plus leverage to build up my passive income.

I'd like to share my notes with you. It’s amazing how the decision to hang on to current lifestyle affects the long-term outcome!

The Formula

Step 1) Re-finance your primary residence to extract as much equity as possible. Pay-off all high interest rate bad debt and invest the rest.

Step 2) Repeat step #1 above three times: today, then in 3 to 5 years, and then again in about 10 years.

Assumptions

Below are the key assumptions I made when working through my own numbers. These assumptions are reasonable in my particular case.

Your situation might be different, so please adjust and feel free to post questions below the post:

• Property appreciates steadily at 5% a year
• At first refinance, my mortgage interest rate will increase from 3.15 to 4.5%
• Mortgage interest rate will remain at 4.5% for all future years
• I will be able to re-finance up to 75% loan to value every five years
• My portfolio will be invested with an average 11% annual return.

Scenario 1: Keeping My Lifestyle

After each re-finance, I’ll spend all of the passive income.

It is important for me to use the extra disposable income right away.

Outcome

• Fifteen years later, my net worth will be $770,000.
  
• My investment portfolio will be $383,000, producing $42,000 of passive income a year. This income will not be enough to cover my annual mortgage principal and interest payment of $55,000.

Scenario 2: Extreme Frugality

After each re-finance, I’ll find a way to reduce my day-to-day spending, so that all of the passive income goes right back into my portfolio. 

As a result, my disposable income will get smaller with each refinance, yet my portfolio will grow very fast thanks to the compounding interest.

Outcome

• Fifteen years later, my net worth will be $1,307,000.
  
• My investment portfolio will be $1,001,700, producing $110,000 of passive income a year – more than enough to cover my mortgage payments of 55K. 

Know Your Options - Make Conscious Decisions 

These two scenarios show you the full spectrum of possibilities.

The first scenario best fits those who appreciate today and live in the moment. It shows that with some effort put into making your equity work for you, you can build some wealth while enjoying some extra passive income.

The second scenario emphasizes the importance of being conscious about the impact of compounding interest over a long time. If you can be frugal – be frugal! This will pay off over time and you could be on the road to creating a multi-million-dollar portfolio and hundreds of thousands in passive income!

Whichever point on the spectrum of options you choose, it's extremely important to know yourself well, evaluate the possibilities, and go for whatever plan you believe fits your needs and desires best.

In The Landlord Paradise

I love flowers on the side of the house!

In the last post, I shared that I've been tolerating an eight-month long vacancy because of fear, which wasn't even my fear to begin with, but it still paralyzed me.

Now, determined to fix the issue, I set out to find a great tenant ASAP.

Determining Price

To determine the price, I analyzed all for-rent ads on Kijiji. There were 39 of them.

Out of 39, only eight were listed under “House Rental” and the rest were in “Apartments and Condos”.

Even though my unit is an apartment in a duplex, it comes with a basement and a backyard, and takes up a larger part of a two-story house. I decided to put my ad under “House Rental”. It seems to be fair and puts my ad into a bucket with less competition.

Out of 39, the majority of 21 ads were two-bedroom places like mine.

In some cases, prices included all utilities, some covered only some of the services, and some were with tenants paying for everything in addition to the rent. In my case, utilities must be included because meters are not separate.

During my analysis, I made the following big assumptions about the monthly cost of utilities:

• ·         Water = $100
• ·         Hydro = $200
• ·         Water + Hydro = $300

I used these assumptions to calculate all inclusive price for all ads.

Next, I looked at two bedroom units by price and saw that out of 21,

·         6 were below $900

·         4 were between $900 and $1,000

·         6 were between $1,000 and $1,100

·         3 were between $1,100 and $1,200

·         2 were over $1,200.

Aiming to be in the middle and also making sure cash flow would be positive, I decided to price my unit at $1,150.

Placing the Ad

Kitchen Looks Great!

I placed the following ad:

Big 2 Bedroom Duplex for rent $1,150 all inclusive

$1,150.00 URGENT

Looking for responsible tenant(s) for this Spacious Move-In ready Duplex!

INCLUDES:

- Lots of Parking

- Large Patio & Backyard

HOME:

- Bright living and dining rooms

- Great functional kitchen

- 2 bedrooms with large built-in closets

- You'll love the spacious Bathroom (pls see pics)!

OTHER:

- Lots of storage space

- Central AC

- Appliances: Fridge, Stove, Dishwasher, Washer / Dryer

UTILITIES: all inclusive

Please text/call or email Anna at MY_PHONE / MY_EMAIL to book your viewing.

We'll be showing the unit this week on THURSDAY, FRIDAY and SATURDAY.

Please reach out to me now to book your viewing: MY_PHONE

Unreal Number of Inquiries

Living + Dining Remind me of Spain Villas - lots of white tile

I got a gazillion responses, mainly through texts!

I booked 31 viewings over four blocks of time: Thursday afternoon, Friday morning, Friday evening, and Saturday morning. Only two people are scheduled for Saturday morning.

So far, as of the end of Thursday, 20 people showed up out of 29.

Landlord Paradise

Since the level of interest turned out to be super high, I started to wonder if I’ve set the price too low.

I asked a few applicants how my unit and its price compare to other apartments they’ve seen. Most said that they are comparable; and only a couple of people said that I could charge a bit more. I checked with my property manager and he thought the price was right as well. It’s what people in the area can actually afford to pay for this size and type of a place.

It appears that the market is very landlord friendly. Lots of demand, and lack of units. Landlords get to choose from a large pool of applicants.

It’ll be a long time, before I forgive myself for an 8-month long vacancy in this landlord paradise type of market. Unreal. I’m such a la-la.

Home Alone: Ever Think a Tenant Might Come After You?

Source: Home Alone.

In my last post, I talked about a duplex conversion. Here’s a prequel to that story…

Eight months ago, we got a duplex in Chatham. The duplex has a one-bedroom unit at the front and a two-bedroom unit at the back. There was a door between the two apartments. I'll call it "The Door" for the remainder of this post.

At purchase, the small front unit was already rented to a tenant and the bigger back unit was vacant.

Long story short, my property manager and the tenant in the small unit did NOT start out with the right foot.

As a result, I was under the impression that the tenant in the front unit was a

• frightening, 
• sneaky, 
• irrational, 
• demanding, and 
• crazy person, who is 
• impossible to deal with, and 
• who’d sue me at the drop of a hat. 
• I was seriously afraid of her and her meaniness.

(Hmm... I was wondering if meaniness was even a word.
Now I know that it isn’t, but I’ll still keep it.)

By the end of 8-month long vacancy, the longest vacancy I’ve ever had,

I finally started questioning the absurdity of the situation.

After all, I am the owner of the property. My property manager is so scared of my tenant that he doesn’t take any action. I am so afraid of the tenant, because of how terrified my property manager is, that I haven’t done anything either for a very-very long time.

I know that every month without a second tenant costs me A LOT of money. The money that I don’t have. I am doomed unless I stop chickening out, step up, and take massive action. So I did….

Home Alone

This property is in Chatham, which is 3-hour drive away from home. I decided to come for a weekend and clean / paint / fix the back unit, so that it’s ready to be rented. If my property manager is too afraid to handle this, I’ll just deal with it myself.

I got to Chatham and kept to myself. I didn’t see the tenant face-to-face during the entire day. I cleaned, vacuumed, planned remaining action items around the unit, went to shop for small decorations for the upcoming showings, etc.

Source: Home Alone Movie - Bad Guy!

At sunset, I was starting to panic.

The darker it got outside, the more panicky I felt.

Finally, my brain started spinning and painting petrifying pictures…

I could hear my tenant having a guest over. They were watching TV…




My crazy-irrational thoughts went kind of like this:

“… There’s a door between the two apartments.

It doesn’t have a lock.

What if my tenant is indeed as horrifying as my property manager believes her to be?

What if she sneaks in during the night and kills me in my sleep?”

What if, there’s a lot of them next door?

How would I stay awake through the night to make sure that I’m prepared to run out of the house and call 9-1-1, if necessary?”

Survival Plan

Source: Home Alone Movie

I decided to set up my sleeping station on the main floor. I placed my sleeping bag strategically in the kitchen. As close as possible to the two exits: the main entrance and the patio door.

I couldn’t see The Door between the two units when I was laying down, but I’d only need to lean forward just a tiny bit to see it.

I tried very hard to stay awake.

I wanted my tenant to fall asleep first. The TV was still mumbling through the wall.

After a day of driving, cleaning, shopping, and working, with every minute passing by, it was getting more and more challenging to keep my eyes from shutting.

I put a Windex bottle next to my pillow. In the worst case, I’ll spray it into her eyes and run for my life!

I positioned a rolling chair right next to The Door with the intention that it would start rolling and make a rolling noise as soon as someone walks through The Door. And that'd wake me up!

I turned my computer on. It would be a lot more cheerful if I had youtube… but I didn’t want to use too much data on my phone.

Deadly silence on my side of The Door.

I turned on the only movie I had on my computer. Beauty and The Beast.

Bad decision! I dozed off before the first song ended…

OMG! She is Right Next to Me!

This is it.

I heard the sound of the rolling chair in my sleep.

It’s happening.

I opened my eyes, ready to run for my life:

“Oh, my gosh. I am so sorry! I just wanted to turn the AC up. I didn’t know you were here! I didn’t mean to scare you! Why are you sleeping on the floor? Would you like me to bring you a mattress?”, said my tenant. I could tell, she felt awkward.

As far as I can tell after meeting and spending some time with my tenant one-on-one, she is practical, to the point, and doesn’t plan to harm me or anyone else in any way.

I’m not sure what the actual misunderstandings and miscommunications have been about between the tenant and my property manager, but the "Horror Tenant" issue did cost me a lot of money, time, and stress.

Lesson learned –  Don’t let other people’s fears become your fears and put you into hibernation mode for months. If you have a problem, take action to start solving it.

$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!

Oh-oh! Power Has Been Shut Off

Taking out melted
two-week-old food
out of someone else's fridge
does NOT feel glamorous

Hi! Did you have a good summer?! I hope you did!  I'll post a few articles today. I did a lot of camping in August, and stayed offline most of the time. It's time to catch up now.

Yay! We got a New Door - door #18!

At the end of July, we acquired a new asset. It’s a condo townhouse in Barrie, ON, which we will fix up, clean, refresh and rent to a nice family.


This town house is different for us because it’s our first condo – comes with a pool, gym, and snow/grass services. Very nice!


On the flip side – vacancy costs a lot more than with our typical freehold town homes: Condo fee is quite an expense to carry in addition to mortgage payments!

Oh-oh! Did I miss something??

Since we’ve done quite a few acquisitions, you’d think that everything would go smoothly! but…


I didn’t call the power company to open a new account fast enough and they shut off the power!


This mishap was a definite oversight on my part: I had a lot on my to-do list and held off with all the administrative set up for too long, so that I could finish higher priority tasks. Now, I am sitting at the house and waiting for my hydro appointment.


Since it’s summer and there is no tenant yet, being without power isn’t really a big deal.
No hydro during winter when you already have a tenant would feel a lot more stressful. And that has actually happened last December at another property when a furnace suddenly died.

Having said that, previous owner of the place was leaving quickly and left all her groceries in the fridge. I can tell you for sure - Taking out melted two-week-old food out of someone else's fridge does NOT feel very glamorous. I had to triple-bag the garbage. Yucky....

Any Costs?

Luckily for me, there is no re-connection fee.

The only cost is my time – I have to drive to/from the property and stay here during my scheduled 4-hour appointment time block.

This trip pretty much takes up an entire day! I can imagine how stressed I would've been, if I was still working and had to ask for time off to take care of this.

I am keeping fingers crossed, and hope my cell phone and laptop battery will last until the technician arrives.

Here we go… The technician is here! Hurray!

Should've Would've

Here's what I should've done.

Within a couple of days after closing, I should've called all vendors, enabled new accounts and set up auto-payments for the following services:

• Hydro
• Gas
• Water
• Tax
• Condo Fee

In addition, I should've notified each provider of my intention to rent the unit and to have tenant pay the utilities down the road.

In this case, many vendors have a process for rentals to make sure the account automatically goes back into the owner's name without re-connection fee, as tenants come and go.