I am very happy to join the forum, I am from Toronto and looking forward to learn more about real estate investment and grow together with you guys :)
I have a property in Toronto, given its zoning already allows for duplex, I am thinking about converting the existing property to a duplex. following is some basic info:
2 story semi detach,
location: close to middle town,
purchase price: CAD 900000
lot size 21*100,
1500-2000 sqrt feet interior,
3 rooms on second floor,
6 feet high basement,
3 separate entries(front door, back door, basement),
1 detached garage in the yard but facing forward(not laneway), parking is in front of the house
already installed gas furnace,
property was built in 1910s
ARV based on nearby duplex: 1.2m+
there are several work involved in this project, including change service power to 200A, egress window for basement, open one window for main floor, separation wall to form two units, and create bathroom for main floor, separate meter if basement size is allowed.
another thing I am undecided is whether it is worth to underpin the basement to at least 8.5 inch or not, giving the basement is very small (about 400 sqrt feet)
I am only on the first stage of the project, where I just started to gather information and source for an architect and project construction team. Someone told me the building at this age can be very different internally and hard to deal with, thus I feel like there is something about this project requires way more than what I know
I love to hear your opinion about this project, is there anything I need to pay extra attention to or any pitfall should I avoid. I am still looking for an architect and project construction team, anyone has any recommendations about this type of project please ?
Thanks everyone !
@Tony Li What is your plan with this property long term? Look at your long term plans and the tenant profile you want. It is usually better for cashflow and risk to have 2 units, however you can get higher rents from family who don't want to hear or share walls with another family.
Run your numbers on the cost to unpin and total reno, and the time to get the funds back. Remember to factor in holding cost and buffer for reno to run longer. $300K growth is a lot of room. I would see if the bank will refi you after the reno since the ARV is good so you get all the reno money out. Although the basement is 400sf, you can rent that as an added office/work space or bachelor.
Suggest you also look at waterproofing, egress and insurance concerns. Also talk to your accountant as this may affect your taxes. I have someone I can refer to you about basement/foundation/construction work - just message me.
@Huong Luu thank you for your reply
I plan to do the conversion, refi, and rent it out for the years to come, just like a typical BRRR project.
I think the hard part is that being my first BRRR project, it's complicated to do it all by my own, and I have hard time to source a reliable contractor to monitor the whole process. Few GC I have reached out have shown me very distinctive cost for the same work, and some of them don't even want to touch any building like this old. I understand I get what I pay for, but without seeing a GC's competence first, it's hard for me to judge their price quote. For example, planner A wants $6000 for drawing and building permit application, and planner B wants only $1500, and even ask them to come on site would cost $500 each time. Any suggestion on picking a right GC?
I would love to get recommendations from you, I really appreciate your help, I will send you a message soon :)
If you message me, I will send you a GC contract and breakdown excel sheet that you can have your GC fill out so you are talking the same language as them. I would suggest you contact a few flippers and see who they use. One technique a flipper taught me was to include a delay clause in the contract and a decreasing incentive. Many contractors will not accept the work due to the penalty, so you need to be able to negotiate the time of when this comes into affect and the extra buffer for time and cost overrun, along with adding in extra funds for the incentive. It is better to pay the incentive and have the work done on time and good quality so you can make rent income over cutting the cost and then having the place empty for a longer period. I have a contractor I use for my properties in Toronto, so would be happy to make the referral.
You can also set your project up on milestones, so they get paid a percent at each step.
@Huong Luu message sent :)
Hello Tony, congratulation for your move. My name is Oscar and I live in the GTA and I am planning to buy my first property before the end of the year. If you are interested we can link up and exchange on strategy.
Quick update on the project 2021/06/09
Step 1 survey
survey has started two and half weeks ago, current Toronto market has high demand on surveyors, thus all the survey companies are fully booked, three week is about the shortest time frame I can get
Step 2 engineer drawing
this step can be done parallelly with step 1. The time it cost is less then the time cost to do survey. In a perfect world, step 1 and step 2 can be done at about the same time. Timing may vary depend on the scale of the project. For example, if underpin basement is involved, it would take longer and cost more. if HVAC changes involved, you would be need to consult other experts in order to properly reflect this change on the drawing
Step 3 building permit application
The engineering/design company will take care of this after they finish the drawing and get survey from surveyor. This will be submitted to the city, currently wait time should be less than 1 month projects scale like mine. If there's any changes needed, engineering/design company would edit their drawing and resubmit again
Step 4 hiring construction team
This can be done parallelly with step 3, Once engineering/design company finish drawing, you can take the drawing to consult with different construction team, let them give you a quote about the cost of project, and pick the best one suits your needs
I am currently still waiting on the drawing to be done. But I have started to prepare for Step 4. From there onward, I will update when I get there.
thanks for all your support of this post, and really appreciate anyone who offered me help on this project. Please don't hesitate to advise me if you have goods ideas or point out the things I did wrong