raindropsandroses

Siouxie has the right of it, if you want security of income, holiday cottages is a better way to go, and buying an established business is better.
That said no way would I say its less hassle, two of my friends have housekeeping cottage businesses (several self catering cottages grouped on one plot of land). It is certainly a more than full time job, you are expected to be at the beck and call 24/7.

Friend A has eight cottages, Friend B six. Both are fully booked 1/2 years in advance, but neither makes more than $32k per year profit in a very good year.
The cleanup is often just as disgusting as with my tenants too, except you're faced with it on a more regular basis. Being abused as they can't get decent cell phone signal, or the free cable you're providing doesn't have the channels they want.

At least with renting you can have tenants paying utilities and not running up huge bills. The other issue is that an increasing number of booking websites for cottages allow guests to claim back money if they're not happy, so more and more are starting to. Friend A has had twelve of those in the last year, friend B five. Friend B is bilingual though as has a lot of returning French speaking clients who vacation there year after year, so she's been able to weed out the undesirables!
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raindropsandroses

Don't worry Lion, I didn't take it as judging, I'm happy to help/answer questions if I can so feel free to ask away.

We very thoroughly vetted our tenants, all has excellent references etc. We also briefly tried using property management companies to find/vet tenants, that was even worse so we only tried it twice!

Until we started housing low income tenants there is no way our rental income would have covered even our grocery bill, let alone anything else. We were making around $70 - $100 per month profit in total, not per apartment.

Each month, two days before the rw t was due without fail there would be a barrage of complaints about mythical issues with the property and they would refuse to pay rent until they were fixed. That's illegal, a tenant cannot withold rent for any reason, yet still they'd do it. So you would have to go through the official process of starting to evict them for non payment.
They'd leave it until the last possible day to pay. Some still wouldn't and you actually do have to evict them, but tenants know the system here and it isn't quick or easy to evict them.

Yes the police are very helpful if there are threats, but most tenants know enough to stay just on the right side of the law whilst making your life and expensive misery.

The average we've had to pay to get units ready to rent again after tenants leave or are evicted is $6000 per unit, not including the lost rent during the period its vacant.

The other issue is that banks often only count 50% of the rental income as income, and insist on seeing two years of consistent income and tax returns before you can use that income to qualify for any loans credit cards (as the ones you get with the banks Newcomer to Canada packages are pretty rubbish with high interest) etc.

We recently has to take out a $16,000 loan to repair one apartment after an eviction, but luckily we have my husbands job to qualify loans etc on as they wouldn't have approved us otherwise, and by that point our repair and emergency fund had been bled absolutely dry repairing previous damages.

There is also the fun dynamic of being a social pariah and the very icy reception I now get in the bank/grocery store/just going about business in town as we have ended up evicting someone's brother/cousin/friend/friend of a friend, and the landlord is always the bad guy no matter what the tenant does. Also, being an immigrant landlord? Well you may as well be the Antichrist walking the earth, owning several properties as an immigrant does not go down well. You will be seen as making money by treading on good honest hometown boys/gals, even when they're scumbags who are bleeding you for every cent.

Thankfully we do have a circle of friends, primarily parents of our son's friends, though I have lost people who I thought were good friends as I evicted someone they knew.

That side is pretty depressing.

Sorry, that was pretty doom and gloom!

raindropsandroses

Now we're working with low income tenants we make around $1100 per month profit in total, which is a decent enough supplement our household income.

Not a great rate of return over the apartments, but we aren't doing it primarily for income, we are primarily doing it to build assets.

Were we doing it for income it just wouldn't be feasible, I don't actually know any landlords who make anything other than a small (if any!) amount of supplementary income.

Definitely find regular jobs, and do land-lording on the side if you want to, but I would wait until you've been in Canada for a couple of years so that you have the length of Canadian credit and job history to be as to get emergency loans should you need to.

As I've said, we had a large sum set aside for emergency repairs and damages but it was burnt through in under a year.

raindropsandroses

I meant to answer that yes, I met every tenant in person first and they seemed like lively, respectable professional people with good jobs and great references.
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I am pretty cynical too​​​​, but there is just no telling, and being a CFA (come from away) I've found scumbag tenants gravitate towards you as they think they can pull the wool over your eyes more so than a local landlord.

Lion Heart

Hey raindropsandroses - thank you so much for the info, genuinely appreciated.

What types of units do you own? I assume they are duplex/Triplex type units?

Most of the ones we have seen tend to rent in the $500-$750 per unit per month including utilities. If full that's around $15,000 a year on a duplex or $23,000 on a triplex.

How, in your experience, does that get depleted to much so there is essentially nothing left?

Our thought process was if we had 2-3 of these we'd be circa $60,000 rent income per annum, minus utilities (which are a lot!!!)

I'm guessing that's around half after utilities so best case $30,000 income, but with bad tenants and repairs etc there's very little of that actually left at the end of the year?

I'm genuinely (!!!) surprised to hear there are that many scumbags there in Nova Scotia that make this a common occurrence. Everyone seems so nice when you visit!!!

It makes me lose a little faith that Nova Scotia is a nice place to live if it's full of these types of people purposefully screwing other people over.

You have me panacking now!!! lol

raindropsandroses

No worries, I'm happy to help if I can

So, here's a break down of our properties...

3 triplexes, all nice buildings in very good condition (well...tenant damages not counting).
All are two bed, one bath, each have two parking spaces and are in excellent central locations and are on town water and sewer.

We charged $600/month excluding utilities, and all included snow removal.

For the sake of each we'll discount the cost of utilities we had to cover whilst we renewed the contracts.

$600 x 9 = $5400/month or $64,800 per year in total.

--> subtract income tax, depending on what other income you have it will probably average out at least 15%. So -$9720 per year on just the rental income.
--> subtract property tax ($3200, $4500 and $3650 per year respectively for our three properties) = - $11,350
--> subtract water and sewer charges if not included in property taxes, we pay $120/month per building, so $360/month or $4320/year in total.

So you're down to $39,410 without paying for any utilities, snow removal, damages, periods of vacancies, late rent etc.

Out of our nine apartments, not a single one paid rent on time every time it was due. In fact we only had two on time payments in total, until we started working with low income tenants.

Add to that that when we had our "best" tenants move out, they were moving to Ontario, we still had to put $1800 into getting the apartment ready to be rented again, and we lost a months occupancy even though we rented it the day we advertised it. They left it is pretty good shape too.

Then there are the ongoing repairs and maintenance issues, the needing to put money aside for a new roof as they will need doing in time, plus things like water heaters, appliances etc.

Now you pay income tax at the end of the tax year, so that's not a monthly expense as such, though you need to put money aside for it, and property taxes are paid quarterly or annually depending on the municipality. We pay ours monthly by direct deposit.

If you divide $39,410 by 12, and then again by nine apartments that's $364.91. So you have $364.91 to cover snow removal, any utilities you might cover (electric, heat etc). Then the money has to cover damages, periods of vacancy, ongoing maintenance and repairs, and if you want it to be your main source of income you aren't left with a lot.

Plus if you are using it as your main source of income you have the stress of waiting to see if your tenants pay rent, and so whether you can afford your own bills and groceries. Not fun.

raindropsandroses

Sorry, hit return by accident!

So, $364.91 x 9 = $3284.19 per month. If your tenants all pay on time, you don't have to do any repairs or maintenance, there aren't any periods of vacancy and you aren't having to cover any utilities.

You could live on $3284 per month, but you will have to live very frugally. You can live on less than that, but its not a barrel of laughs. Then all that needs to happen is an oven to break and that's $500 to replace, or you have tenants move out and have to spend $1000, $2000, $8000 repairing the damages and getting it ready to rent again, all the while loaing money as it isn't occupied.

You can claim some expenses back in your taxes, but nowhere near enough to be helpful.

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raindropsandroses

People here are lovely, unless you're their boss or their landlord lol!

Perhaps things are better in other parts of NS as a landlord, NOT Cape Breton though - don't be a landlord there at any cost, experiences of friend who are landlords there make my issues with tenants seem like something from The Waltons in comparison!!! From what I know its a pretty rubbish experience anywhere you are.

This isn't our first rodeo being landlords either, we were landlords in other countries prior to moving to Canada, but the way some tenants behave here beggars belief.

When all our friends told us to stay away from being landlords I thought they must be exaggerating the horror stories, turns out they were understating! I naively thought that if we were good landlords, and helped our tenants and vetted them thoroughly we'd have minimal trouble, as has been the case in other countries. Not so!!!

At least with renting to Housing Nova Scotia low income tenants we are guaranteed some rent each month. The tenants put a percentage of their monthly income (30% usually) towards their rent, and then Housing NS make up the rest of the rent, but Housing NS pay that rent directly to the landlord each month.

Lion Heart

This is very useful and much appreciated info!!!

May I ask where in Niva Scotia your rental units are located?

Would charging more for the units help to filter out the riff raff?

raindropsandroses

You're welcome

We're​​ South Shore. If you charge more the you have higher vacancy and non payment rates, as your tenants just stop paying/are late paying (and eviction is not a quick process) or move out. A tenant who resents paying more than market rate (even if they get more for their money) is a special kind of bad news and trouble.

I did some work as part of my community involvement on the sweet spot for rental rates, and generally at market rate or fractionally below provides greatest long term profits. High turnover of tenants is one of the fastest ways to lose money as a landlord.

Actually <<sweeping generalisation alert>> the "riff raff" tend to be much better tenants, its the middle class professionals you want to avoid - they think the world owes them something and would rather spend money on a new four wheeler than make their rent payments. That is an awful generalisation and makes me cringe, but it's proved true in our neck of the woods.

raindropsandroses

I should also add when I said greatest long term profits, what is more accurate is to say that the landlord doesn't make losses.

Lion Heart

It might be a stupid question, but in what ways are tenants different to here in the UK?

It sounds like you've had some really bad ones. Is there a culture of scum bags purposefully going around abusing the system to screw landlords over, and that's basically what they do move house to house and pay as little as possible at each until they get kicked out?

Is it not possible to check if a person has a previous eviction against their name?

raindropsandroses

Sorry I don't know, I've never been a landlord in the UK. We left the UK a lot of years before we moved to Canada.

I don't think so, I just think there's a culture of hating landlords and so nobody feels bad about not paying rent, trashing your landlord's property, stealing from your landlord etc. And if you're a landlord there's a culture of "well what did you expect?" You get zero sympathy as a landlord. Everything is your fault for being a fat cat taking advantage of poor disadvantaged souls.

Nope, no way of checking previous evictions, and no accurate way of checking references either as many will get friends to pretend to be previous landlords, and landlords often agree to give glowing references in exchange for tenants leaving without trouble.

As you get to know the area better you get better as knowing who owns what, and so working out when references are fake. Yet reason for not becoming a landlord straight away!

Sorry this is written in a hurry!

dbd33

Isn't it inevitable that, if you move to a small economy, buy up the housing stock and seek to live on the earned incomes of the locals, they will resent you? I can't imagine Jared Kushner trying to live in one of his housing projects.

There may be a good living in parasitic capitalism but it's not something that would make one popular. Holiday cabins would be less of a problem in this regard as the renters have no stake in the community; the owners may still be resented but by the neighbours rather than the tenants.

Lion Heart

Wow, amazing and eye opening stuff, thank you.

Is South Shore directly east of Amhurst? It's the only one I could find on the map?

Is that quite a rough and ready, or fairly respectable area? I've not been to that part.

We went via Springhill on the drive back. That felt a bit rough around the edges, and they have a prison there too. I'd imagine being a landlord there would suck!