House hacking in Ottawa?

[Addy]

I had a thread asking what area would be best suited to move to based on our specific needs, but the area I had in mind has me thinking it's not affordable even with renting out part of the house.

I'm wondering if we should be taking a bit of a different approach to our property purchase and consider property based on its ability to self fund, rather than our very specific needs. Keep in mind we have other properties and with an insane amount if research I was able to buy properties that are able to more than self fund themselves (ie they pay for all expenses including prop taxes, mortgage payments, insurance, maintenance and $ towards capital repairs. We did put 20% down to avoid CMHC insurance fees, but this and the legal fees on purchase is the only money we put out of pocket.

I'm having difficulty finding properties like this in Ottawa. If you google "house hacking" you'll get an idea of what I'm conserving doing in Ottawa. This includes renting rooms or an apartment (or two) in the house we buy. We need two rooms for my family to use, but the rest can be rented out.

We enjoy having room mates btw.

Do you think it's possible to buy property in Ottawa and with only 20% down have it fund itself or at least come close to this?

[m0nkyman]

Sure. Look under commercial, not residential. Lots of triplexes that can self fund given 20% down. One example https://www.realtor.ca/Commercial/Mu...8E2-Sandy-Hill

[canabiz]

One avenue which may or may not work for you is to consider hosting an international student.

A couple of my buddies are doing this and they are getting about $800/month. This includes room and board. The students share meals with the family and participate in as many family activities as they can. It is a very enriching experience for my buddies and they plan to continue hosting other students in the future.

[acottawa]

I think the challenge you are going to have is that multi-unit buildings will be priced based on the assumption that all the units will be rented, so if you're planning to live in one of the units "rent free" and pay all of the expenses with the rent from the other units you are going to have to buy a place with a lot of rental units (as monkeyman suggests), or find some sort of market failure (a single family house that could be converted to a duplex or triplex for example).

[Addy]

Originally Posted by m0nkyman

Sure. Look under commercial, not residential. Lots of triplexes that can self fund given 20% down. One example https://www.realtor.ca/Commercial/Mu...8E2-Sandy-Hill

Thanks for posting this. I will look further into commercially listed multi family vs the residential listings. It will be a new venture for me as we have only ever rented out detached houses, single condo's and rooms (in the houses we have lived in). I think a small commercial building may be something we will look at seriously, thanks again.

[Addy]

Originally Posted by acottawa

I think the challenge you are going to have is that multi-unit buildings will be priced based on the assumption that all the units will be rented, so if you're planning to live in one of the units "rent free" and pay all of the expenses with the rent from the other units you are going to have to buy a place with a lot of rental units (as monkeyman suggests), or find some sort of market failure (a single family house that could be converted to a duplex or triplex for example).

What you say is true, we will have to carefully look at the numbers and get advice (I assume anyone selling a building is doing so either because they have pain in the butt tenants, or they aren't making money or there's a major repair in the near future or something else that they may be hiding) on how to make things work. If we are putting out a bit of our own money that's fine, we just want to reduce our costs as much as possible, and part of this would be renting out one room if we had a three bedroom for example, but still we may end up not being able to cover everything especially major repairs.

Now we have to see if the financial institutions will even consider loaning us the cash. I know it's not as easy to quality for properties that are not a typical primary residence, so it may be we simply can't quality, but I'll give it a try and see what our mortgage broker says.

[YOWetal]

Originally Posted by Addy

What you say is true, we will have to carefully look at the numbers and get advice (I assume anyone selling a building is doing so either because they have pain in the butt tenants, or they aren't making money or there's a major repair in the near future or something else that they may be hiding) on how to make things work. If we are putting out a bit of our own money that's fine, we just want to reduce our costs as much as possible, and part of this would be renting out one room if we had a three bedroom for example, but still we may end up not being able to cover everything especially major repairs.

Now we have to see if the financial institutions will even consider loaning us the cash. I know it's not as easy to quality for properties that are not a typical primary residence, so it may be we simply can't quality, but I'll give it a try and see what our mortgage broker says.

I would doubt a multi unit would actually help you cut your costs. Except maybe a basement apartment. Otherwise even breaking even with 20% down is tough in most parts of Ottawa. Also consider if you buy something cheaper your 20% becomes 30%. Put another way you can buy a nearly new 2 bedroom condo for low 400s. If you buy a double 2 bedroom unit it will probably be in the 800s. So you rent half out that pays for the extra and you actually would have been better off with the condo as you could have put 40% down. Your upside might be better with a building and you own land but a 20% correction in scenario 2 wipes you out bringing your equity to zero.

Lastly keep in mind that interest rates are incredibly low so 5 years from now your cashflow is likely to be lower (of course everyone also said that 5 years ago).

[Addy]

Yes, I agree, breaking even with only 20% down is very difficult, maybe even impossible (although I hate to use the word impossible).

Monkyman suggested we consider multi-unit buildings, and I like this idea. We are now considering. I don't know enough yet to say if it may work for us, but we won't know until we learn more and crunch a bunch of numbers. Luckily for us we have an interested silent partner. I don't yet know the expectations of this silent partner, but he is a trustworthy friend of my family and an astute business man in the Ottawa area, so I am fairly confident if he likes the numbers on a multi-unit building, then we will as well.

My husband is an electrician, (actually an electrical contractor not just an electrician), which will help with repairs somewhat, and I have a fair bit of experience in landlord tenant rentals, so hopefully we have a good base of knowledge and skills for this type of venture.

Originally Posted by YOWetal

I would doubt a multi unit would actually help you cut your costs. Except maybe a basement apartment. Otherwise even breaking even with 20% down is tough in most parts of Ottawa. Also consider if you buy something cheaper your 20% becomes 30%. Put another way you can buy a nearly new 2 bedroom condo for low 400s. If you buy a double 2 bedroom unit it will probably be in the 800s. So you rent half out that pays for the extra and you actually would have been better off with the condo as you could have put 40% down. Your upside might be better with a building and you own land but a 20% correction in scenario 2 wipes you out bringing your equity to zero.

Lastly keep in mind that interest rates are incredibly low so 5 years from now your cashflow is likely to be lower (of course everyone also said that 5 years ago).

[Addy]

Originally Posted by canabiz

One avenue which may or may not work for you is to consider hosting an international student.

A couple of my buddies are doing this and they are getting about $800/month. This includes room and board. The students share meals with the family and participate in as many family activities as they can. It is a very enriching experience for my buddies and they plan to continue hosting other students in the future.

This is a good idea, we have done this when we lived in Vancouver and it worked out well for us. I just don't know, with us having two young kids at home if I want to cook for other people again, but it's something I'll give some thought to, thank you.

[TheGoods]

Not sure how much you have for a down payment but if you are considering a multi-unit / commercial unit, you will most likely need to put down 25%, even at 20% on a $950k property, that is $190K down payment.

If the purpose is to reduce your monthly expenses, if you have that type of down payment, why not just buy a home / freehold townhome in that price range, you can actually find 3 bedroom homes in that price range with no condo fees. You would be foregoing the biggest expense, which is your mortgage payment, and you can rent the second bedroom and that would easily pay for the property taxes, heat and hydro. You can also buy a fairly new terrace home in the low $100k on the Quebec side, but there will be about $100 per month in maintenance fees on top our your other payments.

[YOWetal]

Originally Posted by TheGoods

Not sure how much you have for a down payment but if you are considering a multi-unit / commercial unit, you will most likely need to put down 25%, even at 20% on a $950k property, that is $190K down payment.

If the purpose is to reduce your monthly expenses, if you have that type of down payment, why not just buy a home / freehold townhome in that price range, you can actually find 3 bedroom homes in that price range with no condo fees. You would be foregoing the biggest expense, which is your mortgage payment, and you can rent the second bedroom and that would easily pay for the property taxes, heat and hydro. You can also buy a fairly new terrace home in the low $100k on the Quebec side, but there will be about $100 per month in maintenance fees on top our your other payments.

Hold up you can buy a habitable 3 bedroom house for $190k? Even in the worst part of Vanier or around Donald st. that would surprise me.

Also don't think that is where they want to live. Agree with your main point. Buy something for $500k (either a duplex in a very nice area or a house in an good area) with 200 down leaves a small mortgage ($1200 mortgage + 400 a month for taxes) so $1600 a month which is the same as renting a nice 2 bedroom apartment.

[TheGoods]

Originally Posted by YOWetal

Hold up you can buy a habitable 3 bedroom house for $190k? Even in the worst part of Vanier or around Donald st. that would surprise me.

Also don't think that is where they want to live. Agree with your main point. Buy something for $500k (either a duplex in a very nice area or a house in an good area) with 200 down leaves a small mortgage ($1200 mortgage + 400 a month for taxes) so $1600 a month which is the same as renting a nice 2 bedroom apartment.

There are plenty of single-family homes (probably at least 100 on mls) on the Quebec side, Aylmer, Hull, Gatineau, some in very nice areas. As for Ottawa, I stated townhome, do a search on MLS, you will find at least 100 in inventory, some are freehold, some are not and you can find single family homes on the outskirts of Ottawa such as Greely. Some are not in the most desirable areas. If the purpose is to reduce your expenses, you might not get the most desired areas or there will be a commute. Search on mls and you will be surprised what you will find under $200k, at the end of the day.

https://www.realtor.ca/Residential/M...yTypeGroupID=1

https://www.realtor.ca/Residential/M...yTypeGroupID=1

As for Vanier and Overbrook, they get such a bad rap; it is not that bad, way better than other areas such as Heron Gate as one example. You should see how many new homes are built (infill), the area is not what it used to be.

[kwoldtimer]

How much impact will the CRA's new enforcement of the capital gains provisions on principal residences partly used for rental apartments affect the math? I suppose it will be nothing new in the case of commercial buildings but could put a slight dent in the calculations for houses incorporating an apartment?

[acottawa]

Originally Posted by TheGoods

As for Vanier and Overbrook, they get such a bad rap; it is not that bad, way better than other areas such as Heron Gate as one example. You should see how many new homes are built (infill), the area is not what it used to be.

It would be pretty hard to find a 3 bedroom townhouse in overbrook/vanier for under 200k. There is a large 70s era condo/townhouse complex behind Winners that sometimes has units under 200, but then you're looking at almost $300 in condo fees. On the east side, Jasmine crescent area is probably the closest location with sub-200 housing, and that area has a lot of challenges.

[TheGoods]

Originally Posted by acottawa

It would be pretty hard to find a 3 bedroom townhouse in overbrook/vanier for under 200k. There is a large 70s era condo/townhouse complex behind Winners that sometimes has units under 200, but then you're looking at almost $300 in condo fees. On the east side, Jasmine crescent area is probably the closest location with sub-200 housing, and that area has a lot of challenges.

I did not state that you could find a $200k home in Vanier /Overbrook, all I stated that Vanier and Overbrook gets a bad rap. You actually proved my point, if you cannot find a house below $200k, how bad is the area? I see it as an area going through gentrification, the area of Overbrook close to the water, there are plenty of new homes and it is spilling on the other side of Vanier Parkway.

[canabiz]

Originally Posted by TheGoods

There are plenty of single-family homes (probably at least 100 on mls) on the Quebec side, Aylmer, Hull, Gatineau, some in very nice areas. As for Ottawa, I stated townhome, do a search on MLS, you will find at least 100 in inventory, some are freehold, some are not and you can find single family homes on the outskirts of Ottawa such as Greely. Some are not in the most desirable areas. If the purpose is to reduce your expenses, you might not get the most desired areas or there will be a commute. Search on mls and you will be surprised what you will find under $200k, at the end of the day.

https://www.realtor.ca/Residential/M...yTypeGroupID=1

https://www.realtor.ca/Residential/M...yTypeGroupID=1

As for Vanier and Overbrook, they get such a bad rap; it is not that bad, way better than other areas such as Heron Gate as one example. You should see how many new homes are built (infill), the area is not what it used to be.

If the OP is looking for tenants to stay in her place, it may not be easy to find a quality one and the location is Greely. I am not saying it is impossible but the pool will be quite limited.

Originally Posted by TheGoods

I did not state that you could find a $200k home in Vanier /Overbrook, all I stated that Vanier and Overbrook gets a bad rap. You actually proved my point, if you cannot find a house below $200k, how bad is the area? I see it as an area going through gentrification, the area of Overbrook close to the water, there are plenty of new homes and it is spilling on the other side of Vanier Parkway.

I have read and heard about Vanier gentrifying for over a decade. Pardon my cynicism but where and when are they going to relocate the low-income housing?

[Addy]

There's an interesting house for sale at 330 Nepean, six bedrooms four bathrooms. I'm assuming this is an area where it would be pretty easy to rent rooms, being a fairly easy walking distance to downtown (about 1 km to Spark Street Mall area).

[acottawa]

Originally Posted by Addy

There's an interesting house for sale at 330 Nepean, six bedrooms four bathrooms. I'm assuming this is an area where it would be pretty easy to rent rooms, being a fairly easy walking distance to downtown (about 1 km to Spark Street Mall area).

I lived near there for several years the location is very convenient. I think it is currently a bed and breakfast, so there may costs to change its use. Also it is very close to a large hydro Ottawa facility.

[YOWetal]

Originally Posted by canabiz

If the OP is looking for tenants to stay in her place, it may not be easy to find a quality one and the location is Greely. I am not saying it is impossible but the pool will be quite limited.



I have read and heard about Vanier gentrifying for over a decade. Pardon my cynicism but where and when are they going to relocate the low-income housing?

I doubt Vanier will have a rapid gentrification. It has long been the upcoming neighborhood. I don't think prices have gone up more than the city average over the past 10-15 years. Whereas a true gentrifying area like Linden Lea/New Ed next to Beechwood or Hintoburg certainly have.

If it does reach the tipping point, market rate low-income housing will tend to move further and further from the center of the city.

[1overcosc]

Originally Posted by canabiz

I have read and heard about Vanier gentrifying for over a decade. Pardon my cynicism but where and when are they going to relocate the low-income housing?

I would like to see Vanier be used as an Ottawa example of integrated housing, where subsidized public housing and gentrified private housing coexist in the same spot.. like what's happened at Regent Park in Toronto, for example.