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Background: My husband is a licenced electrical contractor in Ontario. I am a (former) admin assistant with about 20 years experience. We (mostly me) have been renting out single unit dwellings, mostly detached houses, for the past 15 years with mostly very good tenants. We had one bad tenant, but we have learned a lot from that experience and now screen our tenants more thoroughly. We have also had lots of room mates over the past 18 years and even though this isn't a landlord tenant situation, it has taught us some valuable lessons as well.

We are considering the jump from single detached houses to buying a small multi unit apartment block, something with most likely five units. We have a family friend who my husband and I trust thoroughly, who is willing to be a "silent investor" (what that means TBD). This family friend is an astute businessman, fairly well known and experienced in commercial buildings and commercial contracts, and I look forward to him mentoring me through some of the issues that will be new to me. I know there are more rigid inspections to be done in multi unit buildings, such as monthly fire inspections that need to be logged, etc.

For further details, we are considering buying near the UofO in Ottawa and living in one unit (a 2 or 3 bdrm unit for us and our two children). Our target market will be UofO students and young professionals working downtown. We don't mind apartment living, and love the idea of living in the thick of the city. We are aware there will be potentially some huge drawbacks, such as noise, bad tenants, etc but it's always a risk and its a risk we are willing to accept.

Do any of you currently, or in the near past have owned a small apartment block? What have your experiences been? Would you recommend it or recommend steering clear?

PS: I know of a few ontario based landlord forums, but one, I forget the name of it, I paid a yearly fee and signed up, and was immediately refunded the fee and my account cancelled with no explanation given to me... so I'm not sure what that was all about but I'm now not interested in trying to sign up again if their customer service was that crappy. I'm hoping to connect with a few smaller landlords willing to share their personal experiences with me.
 

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There are a lot of differences between commercial lending and individual mortgages.

There are also a lot more hoops to jump through on the purchase (environmental studies, health board clearance, fire inspections, etc.).

Costs are higher for everything. Mortgage interest rates, contractors, equipment, inspections, taxes, etc.

You'll need to develop a new list of contractors.

Be sure your target market want to target you.

"Silent" partners rarely remain silent.

You can overpay for an apartment just as easily as you can overpay for a single family home. Price and condition are always the key.

A well run apartment can generate a lot of profits (due to economies of scale), but they can also cost you more for the same reason and because you have all your eggs in one basket.
 

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Before you do this, you should make sure you get your ducks in a row because there is a lot of things going on in the Sandyhill area. I noticed that they just converted the hotel on the corner of King and Rideau into student housing, so you should make sure it isn't causing issues with rental property in the area. You should also check into plans that UoO may have for their own residences. Ottawa used to be a no brainer for rental property because there was almost no vacancies, but that's changing.

I'm certainly not telling you not to do it, but as JAG points out, it's easy to over pay, and you want to avoid that at all costs.
 

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The best cash flow seems to be in the 5 - 20 unit range. 2-4 units are attractive to the "live in one, let the others pay your mortgage" buyers who are not sophisticated about money and will overpay. More than 20 are attractive to big investors and companies with deep pockets who get the lowest interest rates. Also, go too big and you get into elevator buildings which have their own drawbacks.

I used the GRM or Gross Rent Multiplier for a quick rule of thumb, cap rate for a more detailed look. ROI is not the only thing to look at but it must be one of the most important things.

Student housing has problems of its own but can be very lucrative.
 
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