Rate my duplex deal and give me some feedback (Canada)

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Rate my duplex deal and give me some feedback (Canada)

Account Closed
Member since 2020 · 1 post · 0 votes

Hey everyone, I'm looking at some expert/experienced feedback from fellow Canadian investors, or investors in general are all welcomed.

I purchased an over-under Duplex in Dartmouth, Nova Scotia for $358,000 recently. Most duplex in the area (5 KM vicinity) have sold around $275,000 to $330,000. An older downtown duplex goes for 400,000K + and my duplex is 10 min drive to downtown anyways. 

Why did I offer this much? The property was completely renovated top to bottom. New floors, new roof and sides, electrical rewiring, sewer pipes, foundation repairs, water heaters, new walls, doors, electric panels, kitchen, bathrooms..etc you name it. Almost new built basically. It was very hard finding comps. It was bought as a very rough looking over-beaten single family home bungalow for $156,000K pre-covid. Seller made a killing. 

In terms of cash flow, the property was empty when I bought it. I rented it to professionals out bringing in $1,400 cash flow positive a month after all expenses and mortgage paid. Cash on cash (downpayment + other expenses) I bring in about 20% annual return not including principle. So I would say around 26-30% return a year with principle.

As an FYI: All properties in this city have appreciated 15% to 20% since Covid started and rent for a two bedroom experienced the highest increase in North America according to many reports due to low supply and vacancy rate sits at 0.9%

The appraisal came in at $395,000 when I initially had 390K offered on it and went down after due to no electric setup in the garage.

The area itself is close to downtown and major attractions within just 10 minutes.. but it isn't one that will experience development as it is surrounded by mostly empty industrial zoned land for years and years and mostly older homes that are ready to be renovated and bought for cheap.

My question to all is.. I'm troubled... it has been a month since I bought and I always think about cash flow is killer VS the fact that I may have overpaid.

What do you guys think? GOOD DEAL? BAD DEAL?

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Christopher H.
Lender · Okanagan, BC · Member since 2017 · 105 posts · 77 votes
5y

@Oudai Altabbaa

So you bought a turnkey for 359k that is now worth 395k and 20% cash on cash? Am I understanding this right?

And your concerned if you got a good deal or not?

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  • Christopher H.
    Lender · Okanagan, BC · Member since 2017 · 105 posts · 77 votes
    5y

    @Oudai Altabbaa

    So you bought a turnkey for 359k that is now worth 395k and 20% cash on cash? Am I understanding this right?

    And your concerned if you got a good deal or not?

    1Reply
  • Joe Scaparra
    Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes
    5y

    @Account Closed, you ask Rate My Deal!  Most of the time, people asking fall into either two categories, bragging or concerned, did I make a good deal.  I am not sure which one you are.   If you were concerned, most would post the deal before buying to get feedback.  But I regress.........I'll take a stab since you are requesting feedback.

    You ask Good Deal or Bad Deal? The answer is I don't know, NOT ENOUGH INFORMATION!

    I first need to know What is your Goal and What is your Why?  Compared to what; is this a good deal?  Forget how it stacks up with nearby properties, how does it stack up against your GOAL and WHY!  Also for us to do a true evaluation give us the numbers!  Do I have to trust that your cash on cash return is 20% because if that is true that is GREAT! But show us the numbers as to how you got there so we can verify!  

    What are your rents each side?  How long did it take you to secure renters?  If we assume your PROFITS are $1400 a month, can we assume that is 50% of the income paid each month?  So are your gross rents $2800 a month but you paid $358k.  If so the property is not making the 1% rule ......I just don't know because you haven't given us the raw numbers.  You openly admit you paid more than the average duplex in the vicinity.  Because it is fixed up nicely are you getting significantly more rent than the other properties?  Remember a house made of Gold that is empty is WoRTHless to a cash flow investor.  Just saying.  

    I am not sure you should be troubled as your appraisal says you didn't over pay for the property. What does concern me a little is your comment "it is surrounded by mostly empty industrial zoned land for years and years and mostly older homes that are ready to be renovated and bought for cheap". If not an inviting place to live; ] might it offset the attractiveness of the property. Is the tenant you seek willing to pay more for a better than average property but the same tenant is also willing to sacrifice a questionable location sound logical to you? Bottom line if it is going to be difficult to find renters did you factor a bigger vacancy rate in your numbers? What did you factor in for maintenance and CapEx.

    You see the bottom line is that IF you are truly getting 20% cash on cash return all these questions I have asked have been well accounted for. And truly if you are getting 20% cash on cash factoring maintenance, vacancies, CapEx, taxes, mortgage and Property Management then you are doing GREAT. My motto is Trust but Verify.......I trust you but now I want to Verify YOU! Cheers.

    1Reply
  • Phil Leighton
    Investor · Halifax, Canada · Member since 2019 · 11 posts · 18 votes
    5y

    Hey @Account Closed, I'm in Dartmouth as well. Based on your numbers it looks like a great deal for the area- anything close to downtown has and will continue to appreciate extremely well. Feel free to reach out if you want to connect sometime. 

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