SFH conversion to SDU

[Mark Moran]

I just bought a single family home that I would like to create a secondary dwelling unit. I bought the house for $563 + 10k closing costs. I expect the renovation to cost around $80k and take approximately 4 months. I will be doing a significant amount of the work myself as well. I will be building a 2 bedroom basement apartment that will rent for $1600 ‐ $1800 and an upstairs 3 bedroom that will rent for $2200 ‐ $2400.  

I expect my borrowing costs to be around $2000, insurance $150, water $80, property tax $400, maintenance $150 for a total $2630.  This gives me an expected cash flow of around $1000 to $1350 a month.

I do feel the initial purchase price is high and that affects the cash flow significantly. I did do one SDU in the past with better numbers due to much lower purchase price. Any thoughts would be appreciated.

Also, is there a point where it makes sense to set up a property management business because I would like to hire someone for maintenance and also someone to help with construction. I only have 5 units at this point.