Interesting Duplex deal in Kingston

[Bo Taylor]

Hey BP,

Looking at an interesting Duplex deal in Kingston and wanted to hear what you guys thought.

Property:

- Address: 123 Russel Street

- Duplex with 2 above grade units

- Both units are 2 bed 1 bath

- 25 min walk to Queens U

- 15 min walk to groceries, entertainment on princess

Financials:

- Asking Price: $279,900

- Revenue:

- Potential Rent: $1100 per unit ($26,400 annualized)

Operating Expenses:

- R&M: $200 per month

- Prop. Management: $162 (8% of monthly rent)

- Insurance: $125 per month

- Prop Taxes: $250 per month

- CapEx Reserves: $83 per month

- Mortgage: Assuming 20% DP ~$872 monthly payment

Risk and Return Metrics:

DSCR: Minimum of 1.4x in year 1

Debt Yield: Minimum of 7.05% in year 1

Levered IRR: 12.63%

Levered Equity Multiple: 2.82x

Levered CoC: Year 1 - 4.48% Year 10 - 8.56%

Levered Cashflow in Year 1: $3,404

Levered Cashflow in Year 10: $6,502

Potential Asset Management Strategies:

- Finish lower basement to convert to triplex and add add and additional 2 bed 1 bath unit

- Renovate current units to raise rents by 20%-25%

- Manage property personally to decrease OpEx

I don’t currently have the funds to go after this deal so I thought I would throw it out here and get your opinions on it. Do you think this is a good deal? Would you go after it if it were in a market you usually invest in?

[Ben Redden]

On paper the numbers are pretty good, but the location is not for most. Low price due to the area. Dealing with the city to legalize another unit can be costly and I don’t think you’d get much return back. If you could get students then it may work, but it’s pretty far from campus. Worst case scenario you would have to get normal tenants and most rentals in the area are welfare and low income. I’d much rather try to find a house in a different area, even though it will be more expensive. Just my opinion though!