On December 19, 2019 we closed on another property in Peterborough, ONT.
We purchased the property with a co-venture partner for $300,000.
At the time of purchase the house was a 3 bed, 1 bath with living, dining and large kitchen. The home was in need of some love, but had solid bones and sat on a double wide lot.
Our plan was to renovate the existing home into a 5 bedroom + 2 bath, student rental property with a shared kitchen and living room. To do this we would shrink the kitchen and lose the dining room.
In addition to these items we also needed to upgrade the electrical, flooring + paint and add some HVAC.
**Important to remember: DO NOT to over-renovate rental properties! Tenants like nice, tasteful renovations but you don’t need the higher end finishes that an owner may place in their own home.**
HUGE RETURN ON INVESTMENT!
This type of deal is our favourite, as they offer so many paydays:
- Forced appreciation from strategic renovations.
- Monthly cashflow from tenant rent.
- Ongoing mortgage pay-down and market appreciation.
- Sale of the severed lot.
- The ability to refinance to redeploy our capital to the next opportunity.
As of Jan 28th, 2020 the renovations have wrapped up; So here are our numbers:
Purchase: $300,000
Closing: $4,000
Reno/appliances: $28,000
Total: $332,000
Currently, the home is valued at appx. $390,000; that’s $58,000 in equity, created in a little over a month!
Additionally, we now have a fresh, newly updated, rental house ready for tenants which will generate around $2800/month in rents. This will see the house cash flow around $600-$800 monthly while having the tenants pay down our mortgage every month.
Lastly, we’ve just begun the process to sever our wide lot (with the city’s support.) Once this process is completed and we will be able to sell this lot for somewhere between $80k-$130k.
Now that’s a nice cherry on top!
