E138 Inside a Power of Sale Deal Breakdown

Become an REI Hot Seat Insider: ⁠https://submit.jotform.com/info_Admin_info831/rei-hotseat-insider-sign-up-formIn episode E138 of the REI Hot Seat, Andrew Hines, David Hulshof, and Jacob Campagnaro do a deep-dive deal analysis on a 23-unit power of sale multifamily building in St. Thomas, Ontario. They walk through the nuances of underwriting this type of distressed property, which is fully renovated but vacant and missing appliances and a boiler. The conversation covers how power of sale transactions differ from typical sales—banks require MLS listings, strict bidding timelines, and offer "as is, where is" sales with no representations or warranties, making due diligence crucial but limited. They discuss challenges like renting out 23 units quickly in a cooling market, strategies such as furnished midterm rentals for visiting professionals, and the need for substantial upfront capital for carrying costs and renovations. Using conservative assumptions, they model expected rents, costs for appliances and a boiler, and stabilization timelines, concluding that after refinancing (CMHC takeout), an investor might leave roughly $370K in the deal while achieving 12–13% cash-on-cash returns—potentially higher when factoring in mortgage paydown. They stress that while this is not for undercapitalized or inexperienced buyers, it’s a solid opportunity for sophisticated investors able to manage the complexities and risks. The episode ends with reflections on investment timelines, emphasizing that successful real estate strategies increasingly demand patience, scale, and careful underwriting in a market where easy flips are no longer the norm.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/E138 Inside a Power of Sale Deal Breakdown1:16 - St. Thomas Power of Sale Deal Intro3:40 - Power of Sale Process Explained9:02 - Rent Projections & Absorption Risk11:08 - Furnished/Midterm Rental Strategy12:46 - Renovation & Stabilization Costs15:06 - Refi Analysis & Cash-on-Cash Returns17:14 - Long-Term Investment MindsetDisclaimer: 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.