Duplex BRRRR, Hamilton, Ontario

[Terry Nguyen]

Hey BP,

Wanted to document my first real estate investment. Purchased a Single Family Home (SFH) in Hamilton, Ontario with the plan the concert it to a Duplex. Not only is this my first investment property, it's also my first Joint Venture (JV), I partnered with 2 other people (friends of mine).

All 3 of us have construction backgrounds. My partners used to and currently work for Mattamy Homes. I’m an electrician in the commercial and residential field.

House details:

2 1/2 Storey SFH Detached w/ basement

3 Bed

1 1/2 Bath

2 Car Parking

1,250 SQFT

Plan:

Duplex Conversion

Unit One:

Basement and Main Floor

3 Bed

1 1/2 Bath

Open Concept Living and Kitchen

En-suite Laundry

Fully Renovated with High End Modern Finishes

$1,650 + Hydro/Month

Unit Two:

Second Floor and Loft

3 Bed

1 Bath

Open Concept Living and Kitchen

En-suite Laundry

Fully Renovated with High End Modern Finishes

$1,850 + Hydro/Month

Numbers:

Purchase Price: $425,000

Down Payment (20%): $85,000 - Cash

Closing Costs: $7,000 - Cash

Mortgage: $340,000

Renovation: $100,000 - Cash

Permit Drawings and Application: $14,000 - Cash

Total Cash Invested: $206,000

Now we have the property, it’s going to be fully renovated and time to rent and re-finance. Let’s see how that will look for us.

Time to BRRRR!

After Repair Value (ARV): $650,000

Re-Financed Mortgage (80% LTV): 80% x $650,000 = $520,000

Payback first mortgage: $340,000

$180,000

Total Cash Invested: $206,000

-$26,000

Total Cash Left in Deal: $26,000

If things go to plan then we will take out 87% of our capital ($180,000) and then we can repeat the process and go look for another property!

Now we control a $650,000 Duplex for $26,000, awesome!

Do we cashflow? Let’s look.

Rent: $3,500

Expenses w/ Mortgage: $3,135

Positive Cashflow: $365 per month x 12 = $4,380 per year

Alright, Positive Cashflow!

What's our ROI?

Cash on Cash (COC) ROI: $4,380/$26,000 = 16% COC ROI

Overall Return: including Cashflow, principal pay down and assuming 3% capital appreciation in Hamilton based on historic rates: $4,380 + $10,257 + $19,500 = $34,137/$26,000 = 131% OVERALL RETURN!

Real estate is something else. I should have bought properties when I was 18. But it’s good to get my foot in the door and keep moving forward!

This is property #1! Starting renovations closer to October, stay tuned, it will be documented as best as we can. Pictures and videos, it will be a fun one!

Any comments and questions please ask, always looking to learn more and connect with like-minded people.

Cheers

Terry