How to piece out deals

[Dylan Earl]

Hey everyone - I wanted to ask about a property I am looking at and how you would go about piecing out the deal.

Listed at: 479k 4br with unfinished basement (could fit 2) very very good location, close to university and bus routes. 

Comps: $550-600k  .... it's outdated, located on a busy Main Street and in a student area where families aren't keen to be. Perfect investment prop for students. I don't think it's going to last long on the market. 

My analysis: Offer $490k - we would have to do 20% down. Expected profit per mo: $350. (Based on expected rents of $3200 (2000 up and 1200 basement) and expenses $2850). However, my wife and I were only qualified for 400k so the difference of 90k makes it difficult to determine how to "piece out" the deal

Example: I could request 90k as an interest only loan but the term and interest rate (ie. 3 years at 8%) cost still exceeds the potential revenue of $350/mo. So it seems like I have to offer them an equity trade. I guess it would be based on who pays how much of the down payment...? Curious to know how you would go about structuring this type of purchase!

 Talk about tough to make these type of things work!!

[Hai Loc]

Originally posted by @Dylan Earl:

Hey everyone - I wanted to ask about a property I am looking at and how you would go about piecing out the deal.

Listed at: 479k 4br with unfinished basement (could fit 2) very very good location, close to university and bus routes. 

Comps: $550-600k  .... it's outdated, located on a busy Main Street and in a student area where families aren't keen to be. Perfect investment prop for students. I don't think it's going to last long on the market. 

My analysis: Offer $490k - we would have to do 20% down. Expected profit per mo: $350. (Based on expected rents of $3200 (2000 up and 1200 basement) and expenses $2850). However, my wife and I were only qualified for 400k so the difference of 90k makes it difficult to determine how to "piece out" the deal

Example: I could request 90k as an interest only loan but the term and interest rate (ie. 3 years at 8%) cost still exceeds the potential revenue of $350/mo. So it seems like I have to offer them an equity trade. I guess it would be based on who pays how much of the down payment...? Curious to know how you would go about structuring this type of purchase!

 Talk about tough to make these type of things work!!

 This looks like a Brock student home. Not many financing options in Canada like there is in the US. You can try a B lender