All Forum Posts by: Micah Ng

@Tyler Walker Thanks for your input. What do you think of my assumptions for insurance and repair costs?

How would I go about estimating insurance instead of guessing based on averages?

Hey all, 

I'm relatively new to BP and real estate in general, and I've starting to learn how to analyse rental properties for when I am ready later on. As a first year in university I'm definitely not buying any property anytime soon, but I would like some feedback so that I can get it right when I finally do.

I used a REI property Analyzer excel spreadsheet that I found on a forum post.

Property Info:

Address: 1009 Hickory Rd, Windsor, Ontario 

Note: This property is located in East Windsor, which is a better part of town.

Property type: Triplex - 2 upper units, one bedroom each. 1 Lower unit with three bedrooms.

Costs: 

Asking price: $249,000 CAD

Assuming $10,000 CAD for closing costs, taxes, appraisals

Mortgage: 20% Down, 30 Year amortization @ 4%

Total initial investment: $59,800

Calculated NOI:

Listing data claims the property is earning $2800/mo in rental income; CMHC rental reports suggest the average rental income for 2x 1 bedroom units and 1x 3 bedroom units will bring in closer to $2500. This is the figure I will use in my calculation.

$30,000 in annual rental income + utilities are paid for

less $600 for the average ~3% vacancy rate (2.7% according to CMHC)

less $2000 for property taxes ($1867.90 according to City of Windsor, effective 2018 Jan 1)

less $1000 for insurance  ( Assumed figure. Average in Ontario is $780)

less $3000 for property management

less $4,500 for Repairs + CapEx ( 5% for repairs, 10% for CapEx)

Leaving $18900 at the end of the year

Calculated Cash Flow

 $18900/Year

Less  $11400 for mortgage costs ($947 a year)

Leaving $7500 a year before taxes, or $625 in positive cash flow 

COC Return:

7500/59,800 = 12.5%

Cap Rate:

7500/249000 = 3%

Please let me know if I've analysed this property correctly, and what I've missed or could improve.