The purchase and ownership of an apartment building (a multi-unit building with a common exterior entrance and more than four units) in Toronto can be challenging but very rewarding. My father’s experience has been in the development and operation of small infill buildings with eight to forty-five rooms or units.
The first building my dad bought together with his partner, was a four storey 1950’s apartment building in the High Park area of Toronto that had been gutted by fire and was sitting vacant for several months. My dad completely renovated the building to create forty-five rentable units and he and his partner have generated a steady income by collecting rents for the past seven years. The building has a very attractive cash flow which was recently improved by refinancing the mortgage at today’s extremely low rates. My dad and his partner have gone on to develop six more buildings and now employ a full time property manager.
It is often worth considering joining with a partner or partners when acquiring an apartment building or buildings. This can reduce the risk involved and bring various strengths of the participants to the table. A partner or partners can help share initial costs. For example, Apartment building start around $750 000 and in order to purchase a building like this your looking at approx. 250 000 of total cash required. This would include things like down payment, land transfer tax, legal fees, inspections and mortgage broker fees.
My father incorporates a new company for each apartment building he owns and operates. This protects him from the risk of any one property that might have unforeseen issues, such as environmental pollution, affecting the overall wellbeing of his investment properties.
Income properties like my father’s with positive cash flow or the potential to improve cash flow and generate a comfortable return, are a great way to build financial wealth. They are also a good alternative to investing in the stock market. As long as you plan for interest rate fluctuations, vacancy and bad debt and maintenance they can be a phenomenal investment.
When you are ready to take this next exciting and challenging step in developing your real estate portfolio I am ready to help. With the assistance of my father, and drawing on his and my combined experience I will help you in the whole process of evaluating apartment investment opportunities, securing financing, appraising opportunities to improve cash flow and all other aspects of apartment building acquisition and ownership.
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