Duplex BRRRR, Hamilton, Ontario
Hey BP,
Wanted to document my first real estate investment. Purchased a Single Family Home (SFH) in Hamilton, Ontario with the plan the concert it to a Duplex. Not only is this my first investment property, it's also my first Joint Venture (JV), I partnered with 2 other people (friends of mine).
All 3 of us have construction backgrounds. My partners used to and currently work for Mattamy Homes. I’m an electrician in the commercial and residential field.
House details:
2 1/2 Storey SFH Detached w/ basement
3 Bed
1 1/2 Bath
2 Car Parking
1,250 SQFT
Plan:
Duplex Conversion
Unit One:
Basement and Main Floor
3 Bed
1 1/2 Bath
Open Concept Living and Kitchen
En-suite Laundry
Fully Renovated with High End Modern Finishes
$1,650 + Hydro/Month
Unit Two:
Second Floor and Loft
3 Bed
1 Bath
Open Concept Living and Kitchen
En-suite Laundry
Fully Renovated with High End Modern Finishes
$1,850 + Hydro/Month
Numbers:
Purchase Price: $425,000
Down Payment (20%): $85,000 - Cash
Closing Costs: $7,000 - Cash
Mortgage: $340,000
Renovation: $100,000 - Cash
Permit Drawings and Application: $14,000 - Cash
Total Cash Invested: $206,000
Now we have the property, it’s going to be fully renovated and time to rent and re-finance. Let’s see how that will look for us.
Time to BRRRR!
After Repair Value (ARV): $650,000
Re-Financed Mortgage (80% LTV): 80% x $650,000 = $520,000
Payback first mortgage: $340,000
$180,000
Total Cash Invested: $206,000
-$26,000
Total Cash Left in Deal: $26,000
If things go to plan then we will take out 87% of our capital ($180,000) and then we can repeat the process and go look for another property!
Now we control a $650,000 Duplex for $26,000, awesome!
Do we cashflow? Let’s look.
Rent: $3,500
Expenses w/ Mortgage: $3,135
Positive Cashflow: $365 per month x 12 = $4,380 per year
Alright, Positive Cashflow!
What's our ROI?
Cash on Cash (COC) ROI: $4,380/$26,000 = 16% COC ROI
Overall Return: including Cashflow, principal pay down and assuming 3% capital appreciation in Hamilton based on historic rates: $4,380 + $10,257 + $19,500 = $34,137/$26,000 = 131% OVERALL RETURN!
Real estate is something else. I should have bought properties when I was 18. But it’s good to get my foot in the door and keep moving forward!
This is property #1! Starting renovations closer to October, stay tuned, it will be documented as best as we can. Pictures and videos, it will be a fun one!
Any comments and questions please ask, always looking to learn more and connect with like-minded people.
Cheers
Terry