Mortgage plus financing or my own capital?

[Ryan Kucey]

Hey guys, hoping to get some opinions on what option is best for me in my first duplex purchase. It'll be a house hack that I plan to live in just long enough to still be able to have the 5% down. I already have the property but we don't take possession until Nov 2.

Purchase Price: $240,000

1bd Basement apartment rent as is: $1,000/mo

1bd Basement apartment rent after renos: $1,350/mo

Renos needed: 1,500 sq/ft flooring, two IKEA kitchens, two bathroom renos, paint, interior doors. Possibly adding a second bedroom in a 16x12 utility room downstairs.

Option 1:

We do $240,000 + $25,000 - $40,000 in mortgage plus improvements from the bank. Effectively, we'd have a mortgage for $265,000 - 280,000, which would cost us around $180 - 200/mo more in mortgage + interest. All renos would have to be done with a contractor. I have one already, he figures it's a 4-6 week project.

Option 2:

We do $240,000 and do most of the renos ourselves, no mortgage plus improvement from the bank. There are only a few things that I'd need to hire out. I figure we can probably get the project done for $20-25K in material and odd trades jobs. This would also prevent us from adding a second bedroom downstairs, at least for now.

The issue with Option #2 is that the $20-25K would have to be funded out of my own pocket and set me back from buying the second property a year or two. The quality of work would also be lower as I don't pretend to be as skillful as a contractor.

A lot of variables here I know, but I'm interested to know if anyone has advice. Also open to other options not mentioned. Thanks!