What We are Up To
As mentioned in last month’s newsletter Collapsing and Decision Making: June’s Investor Journey, we received news on our “Dollhouse” that was so upsetting. When we found out AFTER we had renovated everything, refinanced and thought we were done, that part of the building was in danger of collapsing, it was heart-wrenching. I thought I was done sharing and talking about the Dollhouse.
Instead of curling up and burying our heads in the sand, we set out figuring solutions to solve the problem. For the safety of the tenants in these two affected units, they had to vacate. We then called in a structural engineer to see what options we had to fix/save this portion of the building. There was slightly good news and mostly bad news from this.
The foundation and most of the exterior wall on that part of the building could not be saved. The slightly good news was that he had a connection to a company that lifts apartment buildings. I had wondered if we could lift and support the upper unit and then rebuild the underneath, however, I wasn’t sure that was a thing with multifamily buildings. Turns out it is! The issue with this lift is that the two affected units are perpendicular to the main house and cannot be lifted high enough to dig the foundation as they share part of the same roof and adjoining walls.
Here are some photos showing the terrible condition of the supports and “foundation” all of course which was hidden behind the exterior walls. Why someone thought you could pour a little cement strip and place it right on grass as a foundation was a good idea, I will never know. And all of this started when our tenant notified us that her door and window was leaking.
My structural engineer is also an investor, so he understands the math necessary to make things work. After he had evaluated the dire condition of the foundation and exterior wall, we talked about ways to solve this problem and make this pay for itself at least, if not potentially cash flow a little more. We came up with a plan to jack up the upper unit and remove the lower unit as it can’t be saved economically. There is not enough space under it to dig a proper 6.5 ft foundation which is needed to be below the frost line.
The plan to turn lemons into lemonade: (or the beauty of clay into lemonade!)
Jack up the upper unit and remove the lower unit so there is room to get machinery in to dig the foundation
Dig a proper foundation 6.5 feet down below the frost line
Remove the garage at the front of the house, to allow us to design a better floorplan for the lower unit that is more spacious and has 3 bedrooms instead of 2.
The floor of the lower unit is approx. 3-4 feet above the ground and since we have to dig 6.5 feet down for the foundation, this is enough space to add an additional unit that with a couple of window wells, can also be a large spacious 3-bedroom unit that is partially above ground and 6 feet in the ground.
Build the two 3-bedroom units under and around the supported upper unit
Fix the exterior walls
Rent out 3 units (2 of them brand new)
Sounds simple right?!
Many steps need to happen to make this a reality.
Step 1: Determine if the ground under the building is clay or rock as much of Saint John is built on rock which would be cost-prohibitive to dig through and would stop the project before it began.
a. Contacted the various utility companies for gas, electrical, water and
cellular to ensure we would not interfere with wires or pipes in the two
areas we wanted to dig.
b. Rent equipment to dig a 7-foot hole
c. Get dimensions and areas to dig from the Structural Engineer
d. Property Management company dig two holes to see if we can go down
6.5 feet without hitting rock.
This has taken a few weeks to coordinate and make happen. I was on pins and needles the morning of the dig waiting for the phone call to say if we were on clay or rock.
Drum roll please….. we are on clay!!!!!! Yahoo!!!!!! This was the first step that needed to happen before any of the kajillion other steps that need to happen could proceed.
Step 2: I called the city inspector I have been working with to see what he thought about the possibility of adding another unit to the Dollhouse.
a. He acknowledged that the city needs more housing, and 3 bedrooms are
in demand, he doesn’t think it will be a major issue, however, he is not the
planning department.
b. The property is already zoned mid-rise residential so more units can
technically be added, the issue is the square footage the current building
already occupies as the units are all large.
c. He already has a change of use application in at the planning
department to change the building use from a 5-unit to a 6-unit.
We have already turned it into 6 units, and have now found out that the
contractor we were working with had not pulled the permit when he
did this.
Note: Education expense aka lesson learned, ask to see the permits that
are pulled before work begins.
d. The inspector will contact planning to see what additional if any
information would be needed to a change of use to 7 units.
It would be fantastic to not have a huge approval process to go through for a 7th unit. This unit will be needed to make this expensive renovation pay for itself. Our hope is that the city will work with us, as we are trying to fix a situation that was built long ago without proper permits, there is a need for more housing, and the city is wanting to get the West side fixed up. We may not get the approval right away, however, want to know if there is a possibility before proceeding further.
Note: Education Expense: When purchasing a building, match up permits pulled with work that has been done. Whoever turned the carriage house into these 2 units, did not pull a permit and also did not put in a foundation nor build them properly. Don’t rely on an inspector or lawyer to catch this.
Step 3 – Step Kajillion – Stay tuned for updates!
Note: Education Expense: It is soooo important to have the right people on your team that can help you navigate the problems that will arise.
My hope in sharing this is that you will learn some things to look out for as we have learned and to also show that investing is not all sunshine and roses and is often hard work! We have lots of other things going on, however, that will wait for next month’s newsletter, so you don’t need to stop reading to have a snack! ;)
Because of the time freedom I have developed, and the ability I have to work from anywhere, I was able to spend a week in New York with my oldest daughter. We went to attend the high school graduation of a young lady she met 11 years ago on a school trip, volunteering at an after-school program in the Bronx. The graduation rate in that neighbourhood is very low so it was extra special to see her graduate with special recognition and awards. She is also continuing to college.
Despite the heat waves that New York was having, we enjoyed ourselves immensely taking in 3 Broadway shows, attending a Yankees game, and walking and eating our way through the various boroughs of New York. Doug was in Connecticut at the same time and was able to drive to New York for one evening with us. What a treat! As you know, we love to travel and spend time together as a family and with retirement years approaching, we have plans to do lots of this. That is one of our big Whys. Feel free to reach out to talk about how you can increase your financial situation to have the retirement you desire.
I’d love to hear what you are working on and any “Education Expenses” you have gone through. Respond to this email or send me a message. We all learn by sharing!
What I am listening to on Audible
The Entrepreneur Roller Coaster
by Darren Hardy
I listened to this book a few years ago and felt it was time to listen to it again with all of the ups and downs we have been going through. Some days I feel like I am sitting in the front seat of the roller coaster, arms up in the air laughing and having the time of my life, other days I feel like I am at the top of the upside-down circle, hanging upside down and holding on for dear life.
Here are a few key takeaways:
Buckling Up and Getting Ready to Ride The Rollercoaster: Darren talks about how hard being an entrepreneur is and that it won’t be all fun and games. It is hard work. You need to be able to face challenges, build resilience, continually learn and improve, and ignore the naysayers. It is critical to have a strong why that will help you be on fire on the great days and keep you going when the going gets tough.
Fill the Seats and Embrace the Thrills: It is critical to have the right people on your rollercoaster, and this is something I have learned in depth this past year. This applies to partners, employees, and industry professionals you work with. When the rollercoaster plunges over the top of the hill, who do you want riding with you? You want people going in the same direction as you who see the vision and can help bring it to reality! You also want people focused on the main thing, not distracted by non-essential things.
Have Fun. Throw Your Hands in the Air and Smile for the Camera! Face those fears, move forward and remember what matters most to you. Enjoy the thrill and don’t forget the essentials to ride the entrepreneur rollercoaster- be driven, disciplined, accountable and I would add be present!
Some of My Favourite Resources For Canadian Real Estate Investors
1. Book: "Real Estate Investing in Canada" by Don R. Campbell
Description: This comprehensive guide provides valuable insights into the Canadian real estate market, investment strategies, and tips for success from one of Canada's top real estate experts.
Why It's Valuable: Practical advice, case studies, and a deep understanding of the Canadian market. The landscape is always changing though fundamentals remain the same.
2. Education: Trust Your Talent Academy
Description: The most comprehensive Financial education in Canada giving you the education, mentorship, support and community to help you invest profitably and sustainably in real estate and paper assets.
Why It's Valuable: Education and mentorship by successful, currently active investors who know the markets, and a supportive community of investors who share knowledge, challenges and support each other. They also offer valuable networking opportunities online and many times throughout the year.
3. Website: Canadian Real Estate Association (CREA)
Description: The CREA website provides up-to-date real estate news, market statistics, and resources for investors and realtors.
Why It's Valuable: Access to accurate data, trends, and industry news relevant to the Canadian market.
Link: CREA
4. Website: Renx.ca
Description: The Real Estate News Exchange (RENX) is an online service that provides news, columns, breaking news and commentary about the Canadian built environment.
Why It's Valuable: Free online, RENX is for anyone with an interest in the Canadian property industry and related topics. It is particularly suitable as a source of information for real estate professionals.
• Link: Renx.ca
5. Podcast: "The Real Estate Investher show"
Description: Hosts Liz and Andresa, share experiences, interview other investors and service providers, and offer tips and strategies for living a balanced life and successful real estate investing. While the show is US based, most of it is applicable in Canada.
Why It's Valuable: actionable investment and life balance tips.
Link: The InvestHER Podcast
6. Tool: Realtor.ca
Description: Canada's leading real estate listing service, providing comprehensive property listings, market insights, and investment opportunities.
Why It's Valuable: Easy access to property listings, market data, and tools for evaluating investment opportunities.
Link: Realtor.ca
7. Tool: Canadian Mortgage App
Description: This app helps investors calculate mortgage payments, affordability, and investment returns, making it easier to evaluate potential properties.
Why It's Valuable: User-friendly interface and powerful calculators for informed decision-making.
Link: Canadian Mortgage App
8. Forum: BiggerPockets (and also their podcasts)
Description: An online community where real estate investors from around the world, including Canada, share advice, experiences, and resources.
Why It's Valuable: Networking opportunities, diverse viewpoints, and a wealth of information.
Link: BiggerPockets
9. Event: Local Real Estate Investor Clubs and Meetups
Description: Join your local meetup group for real estate investors in your area and the area you invest in, offering networking opportunities, educational events, and market insights.
Why It's Valuable: In-person networking, local market insights, and expert presentations.
Link: Look up your Real Estate Investor Club and meetup in your area
Summary
These resources have helped me in my journey as a Canadian real estate investor with essential information, practical advice, and valuable tools to make informed investment decisions. Share your favourite resources to enhance your knowledge and stay updated on market trends.
Useful Tip:
I recently came across this program when I was looking for a way to record tasks I do every day. I wanted to be able to screen record the steps to create Standard Operating Procedures for them for delegation. I was inspired by Buy Back Your Time by Dan Martell to tackle this project.
Komododecks.com not only records what I am doing, I can be on video with it if I want, and with the paid version it automatically creates guides (steps) for me that I can go in and tweak. Time saving!
I have just started using it and I am loving it.
We’d love to hear from you!
If making your money work harder for you by investing in real estate without all the hassles is something that interests you, or if you want to partner alongside us and learn as you participate, reach out to us to book a no-obligation call or email michele@correaequitypartners.com.
We can discuss your goals and see if we are a fit to work together and invest with purpose.
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