Hamilton - Strathcona duplex rental good deal?

[Vivian Liu]

Hi, i am a new investor trying to get into duplex rentals and I came across these 2 listings in Hamilton

https://www.realtor.ca/real-es...

https://www.realtor.ca/real-es...

I ran the numbers and they look workable, am I missing something

Below uses 2nd listing for analysis:
I put 20% down with 2% interest/30 yr, and 20k closing cost, total capital outlay = $150k

for income:

3 bedroom at 2000, 2 bdrm at 1500, 5% vacancy

operating expense:

Insurance 800

Repair and maintenance 4000

property tax 4000

collectively, this gives starting Cash ROI of 5%

is the area bad? What am I missing..?

thanks!

[Mehdi Motevalibashi]

Well, it all depends on your goals. If you are looking to get your capital back - the $150k capital outlay, you're gonna have to add value by buying lower that market value or by fixing up a place.
This property at $660k is at market value and seems to be move in ready so not a whole lot of room to increase the value. That means you will have to leave that 150k in this deal.
Regarding the cash flow, this is how I analyse a deal:
Income (rents) = 3,600 (2000+1600)
Expenses = 3,702 
(mortgage: 1952, tax: 333, insurance: 66, bills minus hydro: 200, maintenance: 350, capex: 250, management: 250, vacancy: 180)
Cash flow: 3,600 - 3,702 = -102!
CoC Return: -0.081%
I used BP Rental calculator - see screen shots below.

I'd like to purchase a property that after repair is worth 600k. I'd buy it at 400k, spend 100k to fix it, rent it out and refinance it at 80% of the 600k (480k). it means I'd leave 20k in this deal and can get the rest of my capital back to invest in the next deal.