I run a fairly good sized real estate operation and this is a great summary of strategy, and it works in many different markets and demographics. There’s a great deal of nuance and detail but you should paywall all of it if this is your plan/niche.
I’ll add just a couple things- you should have a deep understanding of YOUR market and product and many times politics will play a role at one point or another especially if you venture into development.
Anyone have experince running 100% remote operation for buying and renovating? I'm based in Canada and been looking into US real estate since limited ops here, but looking to here some more first hand experiences (postive or negative of how feasible that is)
Yes sir, you have quite a few interested europeans as well, would be great to get some different POV in articles too. (Applying for green card don't worry :) )
What markets do you operate in? Really hard to run this playbook ($2,500) in the primary Canadian markets. Need massive capital for tiny returns that make it hard to justify the risk.
Yeah in Canada you can't even get to positive cap rates and a lot of this assumes you have the contacts / ability to project management renos that would add to rental income at a cost less than the income generated.
I think the strategy is for sure useful and will work if you can execute. More income + levered returns is generally a good path.
I wonder how much of the guest posters contractors that he uses for his current book of investments was sourced from his time working in RE PE at a different shop.
You actually think there’s a way to make this work in Canada and not get your head blown off? This seems like picking up nickels in front of a steam roller
The strategy is heavily contingent on your ability to add value to the property and boost rental income. You'd have to buy, reno and then put on the market and get a renter. I can't speak for the US but tenants have a retarded amount of rights here so you have to ask if the risk reward is there on this type of investment and what level of returns you want relative to the headache.
Canadian RE prices have run so much that cap rates are low single digits and if you add leverage to that you're actually hurting your returns unless you can boost rental income by charging more.
Everything can make sense at a price but I've done some rough math on properties and can't make the numbers work.
Beauty of the US is that the majority of the country is developed and RE opportunities are everywhere. In Canada, majority of GDP and debt creation funnels into RE, there's only 2 real cities (Toronto and Vancouver) so its really tough to make it make sense given how high prices are relative to income.
90% of residential purposes are made with gifted equity from previous generation so the benefit of getting leverage and buying doesn't make sense as much given prices are so high.
I’ve been considering starting my own thing, but have struggled with building out HNW equity for deals. Spent many years at REPE but not chasing $MM-$B deals for personal side. Would you look have network for middle market not multi deals?
When it comes to renovations/adding value to a property, do you just hire a general contract (GC) to do renovations on a property and tell GC what needs to be done (if yes, how did you learn that part, the renovation part I mean in order to have enough knowledge telling GC what to do)? I imagine you are not doing them yourself, right? I am asking in connection with your ability to increase rents which is driven by upgraded property itself.
Great post- follows from solid X information.
I run a fairly good sized real estate operation and this is a great summary of strategy, and it works in many different markets and demographics. There’s a great deal of nuance and detail but you should paywall all of it if this is your plan/niche.
I’ll add just a couple things- you should have a deep understanding of YOUR market and product and many times politics will play a role at one point or another especially if you venture into development.
RE is a big relationship game.
Well done and congratulations!
Anyone have experince running 100% remote operation for buying and renovating? I'm based in Canada and been looking into US real estate since limited ops here, but looking to here some more first hand experiences (postive or negative of how feasible that is)
It's weird we have so many people from Canada, don't know the rules when doing international, all the stuff we post generally assumes American
Remote work is always harder since people will drag out the timeline on your projects
Yes sir, you have quite a few interested europeans as well, would be great to get some different POV in articles too. (Applying for green card don't worry :) )
We can't do that because we don't have experience living there ser. We've had guess posts before but we dont write about things we dont know well
What markets do you operate in? Really hard to run this playbook ($2,500) in the primary Canadian markets. Need massive capital for tiny returns that make it hard to justify the risk.
Yeah in Canada you can't even get to positive cap rates and a lot of this assumes you have the contacts / ability to project management renos that would add to rental income at a cost less than the income generated.
I think the strategy is for sure useful and will work if you can execute. More income + levered returns is generally a good path.
I wonder how much of the guest posters contractors that he uses for his current book of investments was sourced from his time working in RE PE at a different shop.
You actually think there’s a way to make this work in Canada and not get your head blown off? This seems like picking up nickels in front of a steam roller
The strategy is heavily contingent on your ability to add value to the property and boost rental income. You'd have to buy, reno and then put on the market and get a renter. I can't speak for the US but tenants have a retarded amount of rights here so you have to ask if the risk reward is there on this type of investment and what level of returns you want relative to the headache.
Canadian RE prices have run so much that cap rates are low single digits and if you add leverage to that you're actually hurting your returns unless you can boost rental income by charging more.
Everything can make sense at a price but I've done some rough math on properties and can't make the numbers work.
Beauty of the US is that the majority of the country is developed and RE opportunities are everywhere. In Canada, majority of GDP and debt creation funnels into RE, there's only 2 real cities (Toronto and Vancouver) so its really tough to make it make sense given how high prices are relative to income.
90% of residential purposes are made with gifted equity from previous generation so the benefit of getting leverage and buying doesn't make sense as much given prices are so high.
What’s your take on BTB’s advice to only focus on low and high end (avoid middle class units)?
Just buy btc
If you find a property and see that the stabilized yield doesn't reach the 150 BP increase do you generally pass on the property?
I’ve been considering starting my own thing, but have struggled with building out HNW equity for deals. Spent many years at REPE but not chasing $MM-$B deals for personal side. Would you look have network for middle market not multi deals?
Excellent! I booked a call.
Good post.
When it comes to renovations/adding value to a property, do you just hire a general contract (GC) to do renovations on a property and tell GC what needs to be done (if yes, how did you learn that part, the renovation part I mean in order to have enough knowledge telling GC what to do)? I imagine you are not doing them yourself, right? I am asking in connection with your ability to increase rents which is driven by upgraded property itself.
Do you need rates to be fixed, or can you execute in a market that only uses floating rates?