Starting out in real estate is daunting.
There are legal contracts, large sums of money being negotiated, mortgages, and plenty of emotion throughout the whole process.
Hearing how seasoned investors started out is helpful in many ways.
You can learn from their mistakes. You get to see their emotional process in the beginning. And you get to see how real estate transformed them from who they were then into who they are now.
So we’re kicking off a series of articles from our iWIN Coaches, who are all investors as well, about their first investment property.
This week we start with Paul Yeung.
Paul’s a real estate salesperson on the iWIN team. He’s invested in some pretty cool stuff, including single family homes in Las Vegas. Paul has several investments in Ontario, too.
Here’s how his first real estate deal in Ontario went.
What convinced you to buy real estate?
Real estate investing was always talked about in my household growing up. My parents started investing when I was in my teens and that always triggered my curiosity and interest in real estate. After I graduated from University and saved enough money from my first job, I decided it was time to invest in real estate.
What strategy did you start with?
Pre-construction condo. Buy and hold, straight rental.
How did you find your first property?
Advertising signs for a newly built condo close to where I lived in North York.
What are the basic deal numbers?
Purchase price was $232,000 for a 1 Bedroom condom with 1 parking spot & locker in 2010.. Here’s an interesting note, comparable units have recently sold for around $500,000.
After possession, the only additional cost for me was installing window blinds, so about $1000.
In 2014, rents were $1350/month.
In 2018, rents were $1850/month after tenant turnover
In 2019, rents were $1950/month after the next tenant turnover
Currently, the unit is listed for $1850/month. COVID has dropped condo rents in Toronto over the last few months.
Assuming rent is $1850, here’s the monthly cash flow numbers.
|insurance||$10.00 (yes, my insurance is only $115 for the entire year)|
|other expenses||$50.00 (budget for minor repairs)|
|Positive cashflow|| |
*Note: Condo fees include water, heat & cooling. Tenants pay for hydro.
What was your emotional process through the life of the deal?
Delays…it took much longer to complete construction than I originally expected – 4 years to be exact!
With a pre-construction condo, there is a period called “Intern occupancy” where you have to pay an occupancy fee until the majority of the units in the building are occupied.
Luckily, I was able to fill the property with a great tenant right after taking possession. For the first 3.5 years, the property was cash flow neutral as I didn’t increase the rent – having a good tenant was more important than earning extra rental income.
After they moved out, we were able to rent our unit at market rent, $1850.
I am grateful I purchased the unit when the housing market was relatively calm. It would be really difficult to cash flow with a similar property in our current market conditions.
Looking back, what do you wish you knew then that you know now?
Talk to more like-minded individuals about real estate investing.
Also, look into condo resales – I could have purchased one or two more properties during the time I was waiting for the pre-construction to complete.
How do you get started in real estate now?
If you’re interested in learning more about how you can invest in Student Rentals, click below to sign up for our Free iWin Launch program where you can schedule a 30 minute coaching session to discuss your goals and work on your investing success plan!
**Calculations are approximations. Buyer to do their own due diligence and not rely on the accuracy of the calculations above.