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Alessandro Zamai
  • Investor
  • St Catharines, Ontario
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How does this deal look?

Alessandro Zamai
  • Investor
  • St Catharines, Ontario
Posted Dec 3 2016, 22:59

Hey Folks,

I've been a long time lurker here on BP and happy to share details on potentially my first Buy and Hold property. Really excited to get your feedback on this deal. Thanks in advance!

Quick background:

My parents own 12 units in the same townhouse complex I live in here in St. Catharines, Ontario. They have no problems finding good, long term tenants and rarely have units vacant. I am 29 and will have my home paid off by November 2017 but already have extra cash flow available to invest. 

Property and financing details:

A neighbour in this complex passed so my brother, and I are considering purchasing it as our first investment property. The units are part of a condo corp whose fees covers water, snow removal, basic landscaping etc. We also have the added benefit that my parents have offered to finance the purchase with their HELOC (Prime + 0.5%) as well as manage it for us at no cost.

Questions:

  1. I'd love some feedback on this deal and your thoughts on it for a long-term rental
  2. How would you include payments for the HELOC in your rental analysis? Should I assume that my cashflow (not including vacancy and maintenance funds) would be directed to the HELOC?

Analysis 

Spreadsheet is available here

Purchase price = $145k

Rent = $1,375
Taxes = $125
Condo Fee = $265
Insurance = $33
Vacancy = $138
CapEx = $62

Cash Flow = $752

Cap Rate = 6.2%
Expense % = 45%

Thanks,

Alessandro

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