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Updated over 2 years ago,

User Stats

3
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1
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Brody Swanson
1
Votes |
3
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Canadian Real Estate - First Property

Brody Swanson
Posted

Hey All,

I am looking to purchase my first investment property (Canada) and was wondering everyone's thought on the deal as I am not sure whether this is good or not the best. I was hoping to get it for around $300,000 which I know the buyer will take as my friend is the real estate agent of this property. This is a multifamily home with 2 bed, 1 bath, kitchen, living room, and laundry on each floor (upstairs and downstairs). The house was built in 2015 and has A/C and furnace. The house almost always has tenants renting and it sounds like rent for the whole house is $2,500/month ($1,250 per floor). I have cash for the $60,000 down payment. The economics I came up with look as such (please let me know if there is something I am missing or forgetting about):

Monthly Mortgage Payment (assuming 5.5% @ 30 year amortization): $1,353

Monthly Property Taxes: $246

Monthly Insurance: $200 (was not sure what to use here)

Monthly Maintenance: $100

Monthly Rental Income: $2,375 (assuming a 5% vacancy rate - normally rent is $2,500/month)

Monthly Free Cash Flow (assuming no major maintenance): $476/month = $5,712 annually

ROI: 9.52%

Cap Rate: 7.8%

Side Questions:

How long of an amortization period should I use?

Should I use a fixed or variable rate right now with interest rates increasing dramatically?

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