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Updated over 4 years ago on . Most recent reply

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23
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8
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Mike Singh
8
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23
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BRRRR - Duplex Conversion Deal Overview

Mike Singh
Posted

Hello everyone , 

I'm currently looking to do my first BRRRR and wanted to get some thoughts on the following deal. The strategy will be a traditional BRRRR by converting a single family home (detached bungalow) into legal duplex conversion in St. Catharines . For anyone outside of Ontario , this is an upcoming city with a lot of potential and is about 1 1/2 hours away from Toronto .

  • Purchase Price : $415 000
  • Downpayment: 20% - $83 000
  • Estimated Mortgage Payment- $1276 per a month 

For the renovations , I'm looking to do the following : new floors , upgrade kitchen , replace all interior doors , new furnace , create legal 2 bedroom basement unit (add extra hydrometer , add kitchen), add laundry on both floors .  I'm averaging that this will cost around $100 000. 

  1. ARV based on surrounding area : $620 000
  2. Mortgage after refinance : $1906 per month 
  3. Rent 3 bedroom unit : $1600 + hydro
  4. Rent 2 bedroom unit : $1300 + hydro
  5. 3% Vacancy : $87 per month 
  6. Property Tax : $329 per month 
  7. Insurance : $115 per month
  8. Property Management 8% : $232 per month 
  9. Utilities (Gas , Water) : $150 per month
  10. Cashflow yearly : -$72 per month
  11. Cash left in BRRRR : $35775

    This property won't meet the 70% rule or 1% rule and the cashflow would be negative . Would love to get some feedback on this deal and find out if my numbers/ calculations make any sense . 
  12. Also if anyone knows any great contractors in that area , feel free to reach out :) 

Most Popular Reply

User Stats

18
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13
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Heather Johnson
  • New to Real Estate
  • Citrus Heights
13
Votes |
18
Posts
Heather Johnson
  • New to Real Estate
  • Citrus Heights
Replied

This seems like a high-risk deal to me. Even though the area is up and coming if things slow down, you may find your self in a difficult situation. Negative cash flow and money left in the deal...not ideal. I just listened to a good segment yesterday that you might want to consider. It has good advice on how to be wise as a property owner. 

https://youtu.be/WwUK9kmIzi8

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