All Forum Posts by: Nick Hazelwood

Howdy guys, just found this post. How did this deal turn out? I am considering making a proposal to an owner with a similar scenario.

Was this spreadsheet ever completed? If so I would be very interested in giving it a try!

Hey Andrew,

How much do you include in your analysis for closing costs when selling after your repairs? I am looking at a similar, but smaller, deal and am curious.

Thanks

For a flip in Alberta how much of the sale price do you plan for selling costs?

Thank you for the replies everyone, this has helped a lot and really opened my eyes! I appreciate the advice.

Hi everyone,

This will be my first rental property that I am looking at purchasing in Grande Prairie, Alberta.  I am considering this property because it has dropped 40-50k in the passed year and these types of homes are no longer being built. The seller bought the property at a presale 2 years ago for 406k than it shot up and than sunk again with oil prices. With the separate garages I think they will rent better than without in the future. The rent rates have dropped 15-20% in the passed year so using these lower rents, I hope that if I can make it work today than it will cashflow awesomely in a year or two because the units used to be rented for 1650 and 1400.

Purchase price = 410,000 (conservative)

1.5 year old house, Upper unit is 3/1, lower is 2/1. Separate utilities, laundry and each has a one car garage with individual access. The basement is leased for 6 months at $1150/month.

I can get a 5% down mortgage for a primary residence so this would be after living in the unit a couple months and than changing it into a rental. 

Up front costs would be down payment and closing costs = $24, 600

Monthly Expenses

Mortgage payment (including CMHC)=$1850

Property taxes = $333

Insurance = $100

Tenant pays utilities. (common in this area)

Rounded a bit, this is $2283/month.

Income

Upper Unit = $1450 (realtor said a conservative estimate would be 15 but I think that this would be more accurate although it is not rented out yet.)

Lower Unit = $1150 (leased for another 4 months)

Total= 2600$

Income-Expenses= $317

To be safe I have always been told to have a security margin, usually 10% of the income in case of vacancies or other issues.

$317-$260= $57

Is this the correct way in analyzing this property? BEFORE my safety net of 10% income, it looks like I should get a ROI of 15% which I really liked but now after the safety net it is closer to 3% and no longer looks like a good deal. As this is a new home in a nice area I think that it has GREAT potential for the upcoming years, both for growing equity and cashflow, but I don't think that is the right way of thinking as it is being a speculator.

As of today, what does bigger pockets think of this deal?

Thank you so much for any help that is offered!