Small Town Short Term Rental Investing

Christine Corrigan

Francois: I'm really excited about tonight's guest. She's got such a nice story. So, Christine Corrigan is talking about Small Town Short-term Rental Investing. So, Christine is a nurse. She's been a nurse for about 10 years and a mom with young kids and she's an investor.

And she just started recently. We met in Moncton this summer in person. We've been chatting on Instagram and over phone calls and video calls. So, welcome Christine. Thank you so much for joining us this evening.

Christine: Thank you. Thank you for having me. I'm very excited to be here.

Francois: Good. And I mean, so, out of your busy schedule as a mom and everything, how did you get into investing? I mean, you're already busy enough. I'm sure.

Christine: Like every parent probably, but, well, basically we started when we got married three years ago. So, we had a lot of consumer debts. Like we had bought a new house, had the first kids and then, so we decided to pay a lot of debts.

So, I'm sure a lot of people heard Dave Ramsay, all that stuff. So, we paid quite a six-figure debt in less than a year. Yeah it was possible. So, when that was all said and done, it was like, okay, now what? So, we are really focused on our RRSPs. And then when COVID hit, we started thinking like, okay, we need to think.

Diversify our portfolio because we can't all have it because my husband is self-employed with his own business and I'm a nurse, but I'm casual. So, the same thing in the pension is very small. So, I have to put some in to diversify like other than what I would get from the hospital. 

So, that's how we kind of landed in real estate and took us a year before we decided to do anything mostly because we were scared and there was like a lot we need to put in to start, and you're not sure about the returns but when I get fixated on something, I really go and that's kind of hence why, how we paid so much debt in such a short time, but now it's all real estate and I'm all for it.

Francois: That's excellent though you told me your story about your first deal. And if, if you don't mind sharing on your screen, I think you have a picture actually I never got to see it. So, it was nice to see it earlier today because we've discussed it for a while, but anyway, you found an off-market deal, which is great.

Christine: Yeah. So, that was actually my first purchase. Yeah, I had a nice little funny story for the first set property under contract. 

Francois: Christine, just to also put people into context, you live in New Brunswick, you were born and raised. And that's an interesting insight as well because I'm an Ontarian Francois Ontarian, and I invested in New Brunswick. There's a bit of a cultural difference and it's good you being there and everything, I think it adds something.

Christine: So, Francophones, as you can obviously see from my accent from New Brunswick, definitely speak English as well. My husband's Anglophone I was raised in Yellow River Crossing, which is Northern New Brunswick close to Campbellton the housing area.

And I moved to Moncton for school, a University. That's where I went to do my nursing degree. And then I moved back to Campbellton then in Alberta, then back to Brunswick and now I'm in Bathurst, New Brunswick, which is where I have one of my properties and the other one's in Moncton.

Francois: That's great. Perfect.

Christine: So, here's how I got started, but I guess I already went through that.

So, when we finally decided to invest, I guess here's the New Brunswick map that you can see there. So, I'm from closer to Campbellton. So, really up at the connected border is where I'm originally from. I live in Bathurst which is in the North East. And then for most people the city that you'll most likely would have heard of is Moncton, Fredericton and St. John, which is all Southern New Brunswick, but those are definitely our biggest cities in the province. 

So, my first property under contract, so my husband is definitely risk adverse. So, I'm definitely more like the one that I'm going all in and in my mind, my mindset is always that even if I have a curveball, I'll work with it. I'll make it work. Like I'll rearrange my plan and all that stuff. But since my husband's more risk-adverse I thought, why not go for a turnkey property? So, we found this property in Bathurst. So, it was local. So, I'm like, oh, that'll be good for him because it'll be closer. He can see it. We will have to manage renovations.

The asking price was 250 and we put an offer in and we had it under contract. It was a divorce or thats what they were telling us, I'm not sure if it was true or not. It was a divorce, but time for due diligence, we did an inspection and it turns out that there was mold in the Attic, 

But the other units were really nice and renovated and all that stuff. So, I'm really glad we did the inspection on that one. So, we ended up backing out of the deal. So, that was my first time. Like dip into just dipping my toe in is not too far, but it turns out that property, which is a little tidbit I want to give people is that be careful when people advertise off markets deals, because that property that I backed out of, I seen like a month or two after on one of the Facebook groups that someone was advertising it as an off-market deal. And they were asking 20 grand more than what I originally was. So, that's just a little something that a lot of times I find people that come from out of province. When you see it was a triplex, by the way, for 215, you see the prices and you're like, oh, it's so cheap.

It's a good deal but it's not necessarily a good deal for our market. And I know people say like, oh yes, the prices are going up and all that stuff. But to even 215, is a stretch and I'm sure somebody probably bought it for more than that since they ended up selling it for more. Okay.

So, here's my first purchase. So, this one I found off market. So, because my deal for the Bathurst property had fallen through. I was talking about it at work and one of my coworkers will say, well, actually, my brother-in-law is selling a property in Moncton like, do you want me to tell him to call you.

So, he ended up calling me and this was a property that he had. So, it was a fourplex that he was asking for 245 initially. So, it was 245. And we got the deal under contract and I was using a mortgage at the time. And it was a newer employee that worked at that firm that I was assigned to, and being a new investor and not knowing a whole lot.

What's normal? What's not? Everything was always delayed and delayed and delayed. And I didn't know, like in my mind I thought, oh, it's normal. It turns out it wasn't normal. And that girl got fired. And in the meantime, my purchase and sales agreement had expired. And since we sort of knew the guy, we thought, oh, there'll be okay we have like a handshake deal, but then the guy turned around and he was like, oh, it's taking too long. I want to increase my price now. So, he ended up asking for 262 for the property, which little did he know was still an awesome deal, but I didn't tell him that.

When he was initially asking the 245 in his mind, he was saying. You could tell that he was thinking that he was asking a really high price for it. So, even with 262, it was a really good deal. I still went through with the deal. So, a lesson learned from that mortgage broker.

Now I always follow up with the brokers to see where everything's at to make sure that nothing is delayed. So, that's the property. So, it was a fourplex. Everything was under market rent by a lot. So, for a two bedroom, the landlord was renting it for 750, everything included, it was really under market value.

So, I ended up increasing the rents and that was utilities included. So, I removed energy land. I increased the rent by 295 and utilities were not included. But for the tenants, when I got it, one unit was already empty, which is why I asked the guy to leave it empty because I wanted to renovate it. And then the second one ended up the girl gave her notice before I even gave her notice of the rent increase. So, I had two empty units, which I wanted to renovate and refinance because my whole strategy for this one was definitely a BRRRR.

I ended up putting in ballpark 38 and 40 thousand dollars in the property. I only renovated two units and did the hallway, which was in a really rough shape, the laundry room and then the outside. It was really minor, just cosmetic. I didn't tear down any walls.

I was just painting new floors, all that stuff. So, all in for this property, I was at 97. Like the down payment, lawyer costs, all that stuff. And my Airbnb, I'm in the process of refinancing that one, because this property was only bought by the time the closing date came around. It was just in May, 2021.

So, that was my first ever purchase. It was a rollercoaster ride to start. But now that I'm closer to the end of the refinance, I feel very confident and how the deal went, even if it took longer and it threw a few curve balls, it definitely turned out good.

Yeah, it was a good deal. The appraisal came back and it came back at 376. So, it was really good. My husband and I were really happy with those numbers. So, the cash out is going to be 92.

Francois: We have a question from the audience. So, Amanda's asking, how did you increase their rent by $200 a month? Isn't there a guideline for increasing rent? So, I assume Amanda's from Ontario. She could explain the beauty of New Brunswick.

Christine: So, in New Brunswick, we don't have those laws, the landlord tenant laws that limit you on the rent increase.

So, in Brunswick you can basically increase pretty much by any amount, as long as you stay within market rent. And then you have to give three months’ notice. Basically, you've seen it like lately in the news, we've seen a few that were exaggerated, but if you stay in market rent, the tenants might complain a bit.

They might leave, but most times investors want to BRRRR that property anyways. So, you're not that upset if they leave. Like if you're ready to assume an empty unit for a month or two then by all means you can increase it whatever amount you want. So, I increased it by $200 and I removed the utility.

So, technically for the tenant ended up increasing probably like 350. Yeah. But for them stayed and they didn't say anything. They're still there. And I think part of it too, they're probably happy with their renovations as well. Even if I didn't renovate their unit, it's much nicer and cleaner now.

Francois: Can you show us, I think you have some pictures after this.

Christine: Yeah. So, my purchase numbers are here. So, this is what he had it at. So, like what's his 750 that utilities included. So, you see NB Power is what we have for electricity. So, 650 a month is ballpark what he was paying.

Yeah, that's crazy. And when I asked them about it, because they were all separate meters already in the building. I didn't have to add that. And he just said that initially, because he was managing himself. And initially what happened was that he knew the tenants and a lot of them were single mothers and he wanted to give them one payment.

So, he did it to help them, which I get. So, these were the cashflow numbers. So, I do have a property manager for that property. I don't manage myself and I put 5% for reserve for like my vacancies or just like in case of emergency and then 5% as well as what I calculated my numbers for maintenance and repairs. And the property tax. I'm sure some people ask, but in New Brunswick, the property tax, if you don't live in the property, your property tax is almost doubled, which a lot of people think at first, how like, oh, that's so scary. But as you can tell with all the properties, because the purchase price is so low, even with that double property tax, you still can make it work easily to cash flow.

Francois: Yeah more cash flow, like you need a solid cash flow to make it work. 

Christine: It wasn't in a bad shape. It just wasn't updated. I find carpets are gross. I would never want to put carpet in my own house.

For the tenants it's much cleaner too, and I don't have to change it between tenants and the doors that brown color definitely needed a coat of paint. There are steps to go down to the bottom two units and the laundry room, as you can see the washer right there, like it just wasn't, the guy was just, yeah, the guy just like had it for, I think, 20 years.

And I didn't see the point in investing much in it, but yeah. 

We changed all the floors pretty much throughout. There’re a few spots that we didn't have to. And the paint of course made a huge difference in that. And then the trim, some light fixtures, some weren't the contractors were really big help in that renovation because I was not on site. So, even if I am in New Brunswick, this property was in Moncton. So, Moncton is two hours drive, which is pretty close because I go there multiple times a month, but for the property, like I'm still working and then with the kids. So, I went a few times to check in, but the guys would just send me pictures, ask me what I wanted and were really good about it. 

I didn't even change the countertops at all. Didn't put backsplash, I changed the doorknobs, painted the cabinets. No, it was really just minor. And that's how we were able to keep the costs so low for the renovation.

Francois: Yeah, that's bright and clean and everything's functional. Look at this, the cash flow. So, just removing utilities made a huge difference in your cash.

Christine: Yeah, absolutely. So, my mortgage payment will definitely increase and that's just with my refinance. And then, like you said, there would be power going down by so much. brings me to a cash flow of 810 per month. It is a BRRRR. That's like money coming in for free basically. 

Francois: So, your next project is very different from this. Then you went home, so Moncton is about two hours away. Then your next project is actually in Bathurst, like right near your home.

Christine: Yeah. It's only like five minutes away. So, when I started looking in Bathurst I was just looking because we always look all the time. This one I found in MLS I had visited a few in town. One had amazing views, but then by the time the realtor showed it to me, she's like, oh, sorry, we have an accepted offer because I thought at the time when I visited the water view made it that one of doing Airbnb with one unit. So, when I bought this one, I kind of lost that idea, fell to the side because the location isn't amazing for this one.It is in the city, on a busy street, but it's not close to the water or it's not close enough to downtown that you'd walk or anything like that.

But it's a duplex. So, side-by-side duplex it's a really rough shape, but the purchase price was amazing. So, the asking price was 99,900. And when I told the realtor, I wanted to go see it. She said that the other realtor told her it's a real fixer-upper and I'm like, yes, that's what I want to see.

Yeah. So, anyway, she kind of reluctantly brought me there, but when we went in it wrecked, the lady that was there for a really long-time walls were yellow and it was really gross, but like, yeah, I can work with that. So, my final purchase price was 85,500. So, yes, we can buy under markets in New Brunswick.

Maybe less in Moncton and St. John, but in the smaller areas, you can definitely still buy under market. It sells faster than it used to, but the market's not like the prices have skyrocketed, like not as strong of a market.

So, all in rehab was about 55 still in progress. So, I estimated some of those costs.

So, all in was my down payment and carrying costs would be 75. And my projected is between 130 and 150. So, I do have an appraiser in Bathurst. That's a family friend, so, no idea what I'm going to get. Like it's not for sure, obviously, because he initially thought 150, but there's been a few recent sales in the area that I think might bring it to the floor.

We'll see that's in the starting of the refinance for that one already as well. So, this one, the cash out refinance will be zero because the money left in the deal 20 to 40. So, depending on what my appraisal comes back, that the thing with this one is when I started to renovate it, like I was going to keep the kitchen cabinets because they weren't in rough shape.

Francois: You're going to paint like the other ones.

Christine: Yes, that's my initial plan. These were the numbers. Maybe I'll do that first that these were the numbers. So, the guy that had it was charging 525 per side utilities not included. So, we're still very much under market for Bathurst like you don't get high rent. You wouldn't get like Moncton numbers, but it is a three bedroom.

Francois: Oh, wow for 525. Okay. it was still under priced.

Christine: Yes, it was. So, the mortgage here is higher because I ended up going with a private lender. NB Power. I don't have to pay property management or managing it myself, just because it's so close.

I just thought it would be easier for me to do. And then my reserves and maintenance, same thing. So, the cash flow here was negative with all my bills and stuff. 

So, in my mind with the kitchen cabinets I was just going to paint them but then, when we started doing the reno, we would just open the cabinet doors and you could smell a cigarette. Like it wasn't salvageable. It just ended up tearing everything apart. And then I was putting so much money into the renovation cause we all know a kitchen costs a lot of money.

That's when it came back, like the idea that Airbnb came back. So, it was like, well maybe I'll try it. And if it doesn't work, then I'll move to a long-term rental. Okay, doable easy. So, same thing with this one 

Francois: And the blue toilet that is the weirdest thing I've seen in a long time

Christine: Stick on tile wallpaper. And you can see by the back that's the back of the building like around the windows, how much it was here. So, this is after.

Francois: Wow, amazing. You went much more like a stylist decor and you opened it up, like in the kitchen, the uppers are gone.

Christine: Yeah, exactly. So, since I decided to try Airbnb, I find in my personal opinion, you don't renovate a rental, like a long-term rental. The same way would rent, renovate at Airbnb? Because I found Airbnb, like the people that stayed in Airbnbs wanted like modern and nice and open and bright and like you want it.

You want somewhere that you would want to sleep in. So, that's why I went a little above and beyond and made it more modern. And that's why my renovation costs were a little bit higher. Yeah, exactly. It went up like, not that I put like courts or anything like it wasn't. That's high-end, but it's still like the light fixtures are some that maybe I wouldn't have chosen if it would have been long-term rental.

And then even just like all the furniture, like I had to buy, I included that in my renovation costs. So, that's how it ended up being so high, but it looks really good. Those are professional pictures I had put on Airbnb.

Francois: That also makes a big difference because they take good angles.

Christine: Oh yeah. It made a big difference. So, as you can see, there's an arcade in my Airbnb. So, the location is in this city. It's not far from my house, but it's close to a hockey arena or the arena, I guess there's not just hockey there. But, so, my goal was that if I have nothing to offer like the outside, I had to have something inside that would bring tenants, like bring guests to come stay at my Airbnb.

Francois: Entertainment and there's a theme. We're going to see it in the next picture.

Christine: Yeah. So I really wanted to go to a family like it was really to have a family place to go. So, that the parents could relax and the kids would like to get on. We go and play and like not, but them, because that's how I would want it if I went on vacation.

And actually I got my idea for a theme room from one of your podcasts as well. When you did it, I can't remember the name, but it was a guy in Florida.

Francois: Yes. Matt Younger, he does theming and Florida and yeah, that is so cool that it influenced this. And I didn't know about it until months later I'm like, oh, cool.

Christine: Exactly because I didn't want to go because he does more business. So, he's a little bit more subtle, but still a little bit. So, here's the bathroom that was a big gear. Well,

Francois: Wow, the blue is all gone. The stick on tile and the ship lab looks nice and clean.

Christine: Yeah, it was the contractors that did a really good job. And the bathroom's actually really small, but just having it white and like more open.

Francois: It makes it look larger and the small-scale vanity as well, everything is smaller. So, it fits the room better.

Christine: And then here's the theme room. So, we have three bedrooms, I put two queen beds so that we could have either the parents or whatnot. And then the other downstairs is the three bedroom. And I did an Avengers theme because I have two young boys. So, I'm in that zone right now.

I thought but I didn't want it to be too corny. So, that's why I only did like the Captain America shield on the ceiling and then the Hulk wall, which of course I got my ideas from Pinterest where else? But it came up really good. It was a lot of work. It was like the renovations were done in two weeks and then just setting up the place after. It was like there was a lot of sweat equity in this part of the process, but I'm very happy how it turned out.

And then as you can see, I don't know if you can see in the corner, but there's a climbing wall as well in the green.

Francois: Yeah, that's really cool. So you must have had to reinforce the wall and do a few things.

Christine: Yeah. So, there's like boards in the back and then it's on the studs and the plywood over it and oh yeah.

I had the contractors that helped me with that to make sure that I don't get sued after. Yeah. But yeah, so, here are my numbers after refund it. So, those are just projected because I haven't done my refinance yet. So, I did my projection with long-term tenants because I know that I just put my Airbnb live on September 1st. So, it's only been a month.

So, I don't want to rely solely on that because I know that if something I don't know shit hits the fan, then I want to turn it into a long-term tenant. Then I know that the property is still cash bubbles with that. So, for those tenants, the ones that are already long-term tenants, I did increase the rent to 800.

It only comes into effect on November 1st with the three months’ notice, but they were actually like tenants. If you increase it dramatically, I think tenants are going to be scared and not scared, but pissed off.

Francois: Like you did, and you have a conversation. That's what I do with my tenants as well. You'll hear more later on, but you have that conversation and you work with them, then it works.

Christine: Yeah, exactly. And that's what's like my tenant said, that her brother wasn't a property elsewhere in New Brunswick. And she said that when the property was sold the new owner, kick her brother out if he wanted to renovate.

So, they were actually just scared that they were going to get kicked out. So, what I increased it to 800, they just said like we knew we were under market. So we were okay with it. So that was it. Yeah. So, and then also that I like helping them out with. On the power bill as well, because I'm doing a lot of installation.

I'm redoing the siding. It's going to help decrease that bill for them. So, it's going to compensate a little bit anyway. So, those are my new numbers and I did my rent income calculation with if I had two tenants at 800.

Francois: Wow. Everything is gravy like all the Airbnb. How much are you charging per night? Just as an example, because that's a fairly large unit for Airbnb.

Christine: Yeah. So, the 500 would just be if I had a long-term tenant. So, if I had an Airbnb, these would be my big difference. Yeah. So, my bills like my expenses increase. Yes. Because then I have the cable that I have to do. And then the snow and lawn I included for the reason that if I kept at Airbnb, I was going to do that side anyway.

So, it wasn't like they're just going to do both sides at the same time and then take the tenant happy on the other side. Like I want the property to look good as well. So, that's it. And I put the cleaning costs there. But the cleaning costs back. Like in Airbnb.

Francois: Oh yes. Yeah. You charge a separate cleaning fee, but it's good to keep it. You never know. You could have very messy guests and surprise.

Christine: Exactly, so, the Airbnb for New Brunswick or I guess not for the budget, but for bachelor's I use airDNA. I don't know if you've heard of it Francois?

Francois: Yeah. Great tool. So, they even report on Bathurst, New Brunswick. Wow. That's impressive. No offense, but I did not expect that.

Christine: Yeah. So, they do. There's not a whole lot of Airbnbs here. I think there's maybe like it's less than 20 for sure. And that's like the Bathurst area. So, that covers like, I'd say like a 50-kilometer radius, like it might've been. Yeah. So, the competition is really non-existent. Well, not non-existent, but yes.

And with airDNA, it gives you all this data that you would want to analyze. What yeah. Like anything for Airbnb. So, it does give you as well, the occupancy rate. So, for Bathurst, it was saying the occupancy rate was between 40 and 60. So, what I did is I put it at 50. When I ran my numbers.

Just to be like in the middle. So, at 50 with the nights then I would drive. So, another tool I use for Airbnb is Price Labs. So, this one helps with the pricing. So, some nights I charged 120 a night and then other nights can go up to 225. So, it really depends on what's going on in the area.

And how many searches there are in Airbnb and then it adjusts my prices automatically. So, for this calculation I just do it, I can't remember which I use. I think I used 164 just to put it in the middle and I did already have one month's rent. So, that ballpark with the number would be like 160.

So, with 50% occupancy, that would be the number that it brings me in. If I get more bookings than the 15 days in a month, then that brings my cash flow even higher. So, for me, even if I booked three weekends that I mind, so, I'm like, that's perfect. Like it's still more than I would make with my long-term tenants.

So, it's really a no-brainer for me to keep it as an Airbnb now. And one thing with Airbnb is in my area. Anyways, there's not a lot of modern looking, three bedrooms are rare and most of them aren't renovated. So, to have that makes me stand out.

Francois: And the professional pictures and the entertainment. I see Sarah on the screen. Sarah does a lot of Airbnb. What did you think about those pictures, Sarah? Like it's exciting. It's a fresh nice place.

Sarah: I think it's awesome. I think you've got, sometimes it's just about like, you know, finding your market and being one of very few, and I'm guessing that you get, you know, a lot of people maybe that are in between houses doing some construction, or you might get that down the road you know, waiting for a house to be ready for them.

Maybe they're in between. So, like you might get some, you know, other than. Some locals that are looking for something to say, I think it's awesome. I think it's incredible. I mean, the cash flow that you get out there is really cool. And I want to say, thank you, Christine.

That was a great presentation. Thank you very much for sharing and it makes me want to invest out in New Brunswick.

Christine: Well, you're welcome if you have any questions.

Sarah: We'll bring you back for sure. Well, thank you so much.