This month marks the 1-year anniversary of one of our joint venture projects. So I thought I would share a little breakdown of the project and our returns.
This property is a 50/50 co-venture and is currently operated as a student rental property in Peterborough, ON.
We purchased this home in May of 2019. At the time of the purchase the home was a 4-bedroom, two bath home. Through some quick renos and small adjustments to the mechanical equipment layout, we were able to push the house up to a 6-bedroom, 2 bath home with large kitchen and living room.
We purchased the home for $375,000 and we added an additional $20,000 in renos, furnace, laundry and plumbing upgrades. We also instituted a $5000 reserve fund for this property.
So, from a capital perspective we have $100,000 CAD currently in this property.
We spent May, June and part of July 2019 completing the minor renos required and working with the Municipality legalise and gain our licensing for this property. We staggered in tenants during this time but were fully tenanted by August 2019.
This property cashflow’s very well as each of the six rooms are rented for approximately $600/mnth; due to our fantastic property management we have had zero vacancies in our 6 bedrooms in Year 1. This cashflow enables the property to cover its own expenses completely, pay the mortgage each month and still deliver cash to us and our investors monthly.
So, let’s have a look at the returns that this property has seen since it’s purchase:
Cashflow:
$8,855 for year one (after all expenses and debt service.)
However, this will increase in Year 2 since we won’t be undertaking planned renos (which in turn forced vacancies in the summer of 2019.)
Mortgage Paydown:
Mortgage started at $296,000 now after year one, it is at $289,000. By using an advanceable mortgage, we have nearly all $7000.00 available on the associated HELOC to access for emergencies, vacancies, or repairs.
Appreciation:
The value of this home went from $375,000 up to now $425,000 (at least.); this value could be as high as $460,000. Conservatively though, let’s say $50,000 in appreciation; through both forced (via up-grades) and market appreciation.
We aim to refinance these funds out in the next 6-18 months based on market conditions. After the refinance this property will still cashflow very well.
Grand Total:
When these are combined our total return is $65,855 CAD.
Remembering that our initial cash investment was $100,000CAD makes that a nearly 66% return in Year 1!
Congratulations to our co-venture partners on this one!
If you are looking for similar HANDS OFF returns please send me a message.
Here’s to many more years of successful investing!