Nightmare on Rental Street: Case Study on a Triplex I Bought because of all the Gurus

Ten years ago, I took a stab at real estate investing and jumped into my second rental property, an ugly fixer upper, while juggling a full time engineering career and LIFE.

The property started out as a winning rental property, but then grew into a nagging toothache, exploded into a cavity and finally ended as a bloody root canal.

Financial Nirvana Mama

I wrote this war story not to scare you away from real estate investing but to share the REALITY, the ups and downs so that you are armed with knowledge.

I’ll be sharing:

1) My 10 Year Journey so that you can get insight on realities of real estate investing.

2) Math it up and show you how you can calculate your own investment returns;

3) Highlight my top 12 lessons learned on a painful investment like this one so you are armed with knowledge and can make better investment choices.

If I BOOST your investing journey in some way with EYES WIDE OPEN or at the very least steer you in the right direction, then I’ve done my job by sharing this article.

So let’s dive in on how it all started.

Why I Bought This Property Because of all the Gurus

This house was located in a fancy pants neighbourhood, in one of the most expensive neighbourhoods of Ottawa and it CASHFLOWED.

Remember the global financial crisis in 2007?? A year before the Lehman brothers were broadcasted all over the news for bankruptcy protection, I purchased this property and I truly thought I scored BIG!!

And have you heard of the rule of thumb that gurus preach over and over again, where:

IF 10% of the purchase price is equal to annual rent, then it’s a good deal??

This property was close to that golden 10% rule.

Low and behold -> Annual Rent/Purchase Price -> (34560/390000)*100% is equal to 8.8%

And with a bit of sweat equity, the rents could easily be raised to market value to get closer to the 10% golden rule.

Best part, I got a 40 year mortgage and a low interest rate.

And if you looked at the other factors of this property, it would APPEAR to be AWESOME rental property.

Let’s look at all the WINS this property had, on paper:

  1. Excellent neighbourhood

  2. Growing neighbourhood

  3. Excellent transit

  4. Superb bike paths, trails, parks

  5. Walkscore of 87/100, Bikescore of 100/100,