My two partners and I raised $60,000 from a line of credit on one of the partners’ homes back in 1998. In 1999, at the age of 25, we bought our first apartment building in Winnipeg, Manitoba with 27 units in almost new condition. A year later, we took our cash flow and invested in an 11-unit foreclosure. (The first time we ever paid above asking!)
Another year later, we purchased a duplex, and then two years later in 2003, we purchased our first rehab, a 47-unit building with an elevator and parking garage using funds from refinancing the first three properties.
Because of rent controls in Manitoba, if you do major renovations, you are allowed to raise the rent based on how much you spend. So we raised the rents, and in 2006, we refinanced again and purchased a 71-unit building in need of rehab.
Now here is the icing on the cake: I began to research government grants or forgivable loans in our city and applied for these funds. In 2005/2006 we were able to get $800,000 in forgivable government loans. We are expecting to have completed our latest project by spring 2007.
So what has our hard work and research given us in return? Well, if all goes according to plan, we will have accumulated $8 million in properties, and a cash flow to provide for our families for many years to come. This was all done in step-by-step plans, over a nine-year period. Our intentions were never to flip, but instead to invest in solid, well-built apartment blocks in downtown Winnipeg.
Our goals are simple and extremely well thought out. Our intentions are to accumulate a portfolio of about 200 suites, which we feel we can continue to manage ourselves, and continue to provide the level of service that we do to our tenants.
Each apartment building is equipped with video security cameras that I can access through my laptop via the Internet from my home or almost any other location. Not only does this provide security to the tenants, but allows us to keep on top of subcontractors and caretakers.
The part I like best is that when I am showing prospective tenants the suites, the bad apples look elsewhere because they don’t want to live in buildings with so much security. Plus, our buildings are all electrically heated, and tenants pays for their own heat and lights, phone, cable, etc… We only pay for water.
Our buildings are in excellent condition, which makes for little maintenance. We know all our tenants on a first-name basis, and they can all call us directly on our cell phones 24/7. This has lead to an excellent relationship with our tenants, which then leads to very little turnover, and a 0% vacancy.
So we decided to approach our business in a safe, comfortable, workable manner. Each time we added another property, our relationship with our bankers grew, and now they are practically throwing money in our laps to invest in more property. We have certainly come a long way, and with carefully planned future goals, we should be able to withstand any economic climate.
It has been a hard and exciting journey. and the rewards are too numerous to mention. Now it is time to give back, and we are thinking about establishing a scholarship program for our tenants and their children. This is just a small example of the numerous rewards, but this is how a small business like ours leaves a legacy that you just can’t put a price on.