E137 Avoid These Due Diligence Mistakes on Your Next Deal

Become an REI Hot Seat Insider: ⁠https://submit.jotform.com/info_Admin_info831/rei-hotseat-insider-sign-up-formIn episode E137 of the REI Hot Seat, Andrew Hines, Jacob Campanaro, and David Hulshoff dive deep into analyzing a 12-plex building deal in Waterloo while engaging in their signature candid banter. They begin by exploring the paradox of rising vacancies in Ontario despite housing shortages, attributing it to factors like people consolidating households due to affordability issues, Ontario's slowing population growth, and a glut of new rental condos hitting the market. The conversation shifts to the specific deal: a purpose-built 12-unit building with predominantly large three-bedroom, two-bath units—a rare configuration offering potential rental upside despite a higher per-unit acquisition cost. Throughout, they emphasize the reality of underwriting conservatively in a buyer’s market, noting CMHC financing advantages, potential value-add opportunities even in fully occupied buildings, and the importance of filtering out overhyped deals with unrealistic seller numbers. The team also reflects on broader market dynamics—including the challenges with pre-construction inventory flooding rental markets, regional vacancy variations, and the long-term investment appeal of Ontario despite short-term headwinds. The episode closes on the importance of building spreadsheets, questioning assumptions, and maintaining a disciplined approach to ensure deals truly work without relying on optimistic projections.Don't forget to join the Insiders list for access to off-market deals and other unique opportunities.Andrew's linktree : https://linktr.ee/theandrewhinesREI Hot Seat Instagram: https://www.instagram.com/reihotseat/Jacob Campagnaro Instagram: https://www.instagram.com/jacob_campagnaro/David Hulshof Instagram: https://www.instagram.com/davehulshof.realestate/E137 Avoid These Due Diligence Mistakes on Your Next Deal01:45 – Overview of the Waterloo 12-Plex03:20 – Rent and Price Per Unit Analysis07:34 – Cap Rate and Income Breakdown09:13 – Laundry Revenue Deep Dive12:06 – Due Diligence and Underwriting Process16:59 – Causes of High Vacancies19:01 – Burlington Vacancy Example25:08 – Buyer’s Market Opportunities25:58 – CMHC Financing Strategy28:56 – Cash Flow and Lift Potential31:14 – Long-Term Appreciation and Exit StrategyDisclaimer: This episode, as with every episode of this show, should NOT be considered as advice. Investment advice is NEVER given on this show. Always consult a competent investment advisor before making an investment decision.---Andrew Hines is a seasoned real estate investor, business-builder, educator, and podcast host, well-recognized for his extensive experience in the field. Andrew graduated with an HBA from the Richard Ivey School of Business in 2008 and spent three years teaching introductory business at Western University as a Lecturer. He has been investing in real estate since 2011 and completing value-add projects since 2015, primarily in the luxury student rental space. Andrew started a project management company for building out new-construction townhomes in 2016 and has since built over 50 residential units throughout Southwestern Ontario. Andrew is an advocate for treating real estate investing like a business and uses his experience in his educational endeavors, coaching numerous investors on strategies to achieve financial independence and scale their portfolios effectively.His podcast, "The Andrew Hines Real Estate Investing Podcast," serves as a platform for sharing insights, strategies, and success stories, connecting a community of like-minded individuals passionate about real estate investing. With a background that blends practical investing experience and investor-focused work, Andrew has become a pivotal figure in the Canadian real estate investing community.