Skycraper Dreams

Good news!  My mortgage application has been approved and I’m going to be able to tap into some of the home’s equity and pull out some extra cash.  This is incredibly good news, you see.  Both of my rental properties are currently up for sale and my projected ‘net income’ (before capital gains taxes) would be no more than $20,000.  With my new mortgage I’m able to access more than $25,000 in cash without any tax implications (until I sell).  On top of that, I’ll actually double the monthly profitability of the building, keep my assets, and the passive cash-flow.  Oh, and of course the head-aches, but this stuff doesn’t happen without some effort.

This dream scenario is possible because I bought the building with 100% financing three years ago.  That meant I traded a down-payment for an exorbitantly high interest rate of 7.35% with Xceed Mortgage.  This is a self-insured mortgage, meaning that CMHC didn’t provide the insurance for this high-ratio mortgage, Xceed did.  I still had to pay an insurance of sorts in the form of a ‘fee’ that roughly equaled what I would have paid CMHC.   This high ratio mortgage, on a 3 unit rental property, that was not owner-occupied would never have met

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Steve Cash-flow, Financing, Rental Profit, Rental Property Financing, Interest Rate, mortgage, Mortgage Payment, Profit

This an update to Saturday’s post on evicting one of my tenants.  It seems I’ve had a change of heart as I’ve now agreed to put off the eviction and ’see how it goes’.  Now, I could totally have just postponed the problem to a later date or I could have well and truly turned a corner with this tenant.

I did deliver the eviction notice as promised and the discussion with the tenant was initially quite tense.  However, things settled down and we were actually able to work out a compromise.  My primary motivation for evicting this tenant was not actually the late rent, but her overall attitude toward me.  She’s been a difficult tenant, often refusing to communicate and once threatening to phone the police.  Couple this with a ballooning debt and I didn’t have much interest in keeping her around.

However, after our conversation she seemed genuinely interested in making our relationship work and getting caught up with her rent.  Oh, and if I did end up evicting her, the likelihood that I’d be able to collect any of my debt would have diminished greatly as she no longer had any incentive to pay me.

So, this is a bit of an experiment.  Hopefully she gets caught up with her rent and I only hear from her once every 6 months about a broken something or other.

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Steve Eviction, Rental Property Eviction

I’ve been having ongoing payment issues with one of my tenants for a number of months now.  Normally I will work with the tenant and arrange a payment program to get caught up, but this tenant is different.  The last time I actually spoke to her in person she threatened to call the police because I was ‘harassing’ her by asking for my rent money.  Since then our communication has been strictly by email, and she never answers the phone or returns my messages.  I’ve grown very tired of funding her living expenses with no thanks and lots of head-aches.

In Nova Scotia, I can give a tenant 15 days notice to vacate the premises Read more…

Steve Eviction, Rental Property Eviction, tenancy board

Since I’ve listed my rental properties for sale all hell has broken loose in terms of being able to collect my rent.  At the moment I’ve got two tenants behind on rent, a third with a bounced cheque, and a fourth who just moved out and owes me for 1/2 a month.  Just when you think all is going well…

To go back a bit in time, one of my tenants who’s been great in every other way (except she’s never been on time with rent) just recently moved out.  One month ago I did my usual phone call to find out when she’d be able to pay me, but instead of giving me date for payment she informed me that she needed to move.  This wasn’t entirely surprising since she’s had such difficulty making rent, but filling vacancies is the most time consuming landlord activity I deal with.  I advertised the apartment with very little interest until I offered a rental incentive of 1/2 a moth’s free rent.  So instead of being out another whole month’s rent, I’m only out 1/2 and the flat is now rented with a great tenant.

I have another tenant in the same building who’s been paying me rent in small increments and never on time.  As of July 1 she now owes me $1,125.  Read more…

Steve Rent, Rental Property Bounced Cheque, Rent

Ever since I purchased my first rental property I’ve been mentally conflicted about the best way to grow my rental portfolio while making money (cash-flow positive) and creating equity.  In my experience positive cash-flow investments seem to be mutually exclusive of potential for great equity gains, especially in the short term.  The investment opportunities I’ve come across that are revenue positive without the requirement of a large down-payment tend to be in ‘rough’ neighborhoods where the purchase price is low enough to generate great returns on your rent. Conversely, up and coming neighborhoods tend to yield much higher purchase prices and rents need to be in line to compensate.  When I run the numbers, they just don’t seem to make the grade.

The trouble with the hood (as I like to call it) is that the investment is great on paper, but in reality it’s much more work.  Read more…

Steve Cash-flow, Rental Property Cash-flow, equity, Rental Property