INVESTMENT OPPORTUNITY
Legal Duplex 3 bedroom and 2 bedroom
Barrie, Ontario Closing Date: Dec 20
Contact Information
Andrew Brennan
Mailing Address: 70 Fairway Crescent, Wasaga Beach, ON, L9Z 1B8 Res. Phone: 705-429-6446 Cell Phone: 705-220-5166 Fax: 705-429-4827 Email: [email protected] Table of Contents
A. Objectives and Summary
B. Property Numbers Summary
C. Property Proforma
D. Pictures A. Objectives and Summary
1) Purchase a cash flowing Real Estate Investment property in the growing Barrie, Ontario market.
2) Legal duplex within walking distance to downtown Barrie. Property is approximately 1Km from city hall.
3) Private 2nd mortgage of $18,000 has been arranged to reduce the overall investment amount.
4) The market rental of the property will provide a positive cash flow position for the property Estimated positive cash flow based on attached profroma – additional reserve funds have been budgeted. $502/ cash flow per month (see attached details) Expected annual profit of 35.5%
5) Investment amount is $46,000 (will pay the interest on your borrowed funds to invest). This will cover all down payments, closing costs, repair materials, and reserve funds.
6) Based on the current value with an increase of 3% per year for market appreciation the expected value is $301,411 in 5 years. B. Property Numbers Summary
A. Summary
B. Property Summary Information & Strategy Legal Duplex Barrie, Ontario
The Numbers
Purchase Price $260,000
Total Investment $46,000
Estimated Renovations/appliances $2,000 Year 1 Annual Cash Flow $6,024
Year 1 Mortgage Reduction $4,080
Year 1 Profit (cash flow & mortgage reduction) $10,104
Year 1 Return on Investment with cash flow 21.9%
Estimated 5 Year Property Value $301,411
Estimated 5 Year Mortgage Balance $203,849
Estimated 5 Year Profit (3% growth/year) $51,562 (Estimated 5 Year Value - Mortgage Balance – investors funds) Estimated Annual Return on Investment 22.4%
Estimated 5 Year Profit with Cash flow, Mortgage reduction and 3% appreciation $81,682
Estimated Total Annual Return on Investment Including Cash Flow 35.5% Property Summary: The Property
Age 40 Years estimated Sq Ft 1,000 (1,750 finished) Units 3 bed 1 bath – 2 bed 1 bath Parking Double driveway – parking for 6 cars Garage Single detached garage Appliances Included 2 Fridges 2 Stoves washer dryer Taxes $3,000 Construction Frame Roof Asphalt Shingles The Benefits Key Features: Excellent return on investment. Investment amount of $46,000 is required to own an arm-chair investment opportunity. Included in investment, all funds required (down payment, reserve funds, renovation fund, and closing costs) Desirable investment area located close to downtown and short drive to college. High demand for properties in this area. Many improvements completed in the last 5 years Extra income from rental of garage and coin laundry Barrie is rated in the top 10 cities in Canada for real estate in investment
Property Management and Exit Strategy
Property Management: Brennan Property Investments will provide full service Property Management Renovations: Lower unit needs new flooring in kitchen and bath. Few minor repairs throughout the property required Exit Strategy: Long term hold C. Property Proforma’s
A. Cash Flow Summary
B. Total Investment Projection Legal Duplex Barrie, Ontario
Purchase Price $260,000
Financial Breakdown After Re-Financing
Investor’s investment $46,000 First Mortgage $208,000 (new financing, fixed rate @ 3.3%, 30 yr Amort.) Private 2nd Mortgage $18,000 (interest only, 12%, 3 year term)
Income Monthly Annual Total Rent $2,450 $29,400
Expenses Property Taxes $-220 $-3,000 Insurance $-120 $-1,440 Utilities $-350 $-4,200 Vacancy/maintenance $-170 $-2,040 Total Expenses $-860 $-10,320
Cash Flow Before Debt Payment $1,590 $19,080
First Mortgage Payment (interest + principle) $908 $10,896 Private 2nd Mortgage interest $180 $2,160 Cash Flow $502 $6,024 Mortgage Principle Reduction $340 $4,080
TOTAL PROFIT $842 $10,104
PRE-TAX CASH ON CASH RETURN 13.1% Legal Duplex Barrie, Ontario
ESTIMATED INVESTMENT PROJECTION
Down Payment ($52,000-$18,000) $34,000
Renovations – Appliances $2,000
Approximate Closing Costs
Inspection $450
Title insurance $400
Legal Costs and Land Transfer $4,150
Tenant Acquisition Costs $0
Staying Power Fund (bank account reserve) $5,000
Total Required Cash Investment $46,000
Joint Venture Worksheet:
Real Estate Expert Tasks Financial Investor Tasks
Real Estate expertise and leadership Initial Investment of $46,000 Real Estate contacts (Realtor, Lawyer, Accountant, Insurance Agent, Home Inspector Qualifies for mortgage and on title Local Real Estate market knowledge Covers 50% of negative cash flow (if any) Locates property Signed joint venture agreement Negotiate purchase price Work with Mortgage Broker Manages property Experienced with tenant selection Provides labour and or over sees repairs Volume discount with trades people Covers 50% of negative cash flow (if any) Signed joint venture agreement Book keeping and bill payment
Exit Strategy:
Hold property for 5 years to build appreciation and increase ROI Upon sale of property financial investor receives all remaining investment capital outstanding ($46,000) first, then balance is split 50/50 Each investor has the right of first refusal to buy the other out