Hey @Rafael R.,
I have some follow-up questions about the numbers in your spreadsheet. I know you're asking about whether it makes sense buying it at $850k and you're basing the calculations in the spreadsheet on that being the purchase price. But, I also see it says in the spreadsheet that the "fair market value" of this property is $950k. Where is the extra $100k of value coming from?
The property requires some upgrades to the hvac system 10k , minor cosmetic upgrades 15k, foundation and grading 10k, Landscaping and misc 15k properties in the area are going for single families with inlaw suites are going for 1.2m I put conservatively 950k appreciation 50k forced.
You also reference a mortgage interest rate of 5.2%. Is that based on an actual mortgage quote from a lender? If so, who's the lender, because that's an awesome rate?! Everything I'm seeing online right now is in the 7.25+% range. Also, I noticed that you're using a 25-year amortization in the spreadsheet. Is there a reason you're not going with a 30-year amortization? A 30-year amortization would decrease your monthly mortgage expense a little bit (though the higher interest rate will also increase it, so you'd have to factor those things to see if they make a difference).
I received a quote from Mortgage broker of prime 5.25% on a 5 year fixed with Scotia Bank Ontario Canada Thinking of doing a two year fix as there is talks of cuts. 25 year Amortization because i am looking it go less than 20% down. My understanding any insured mortgages only eligible for 25 year Amortization.
Aside from the questions above, and assuming the final results you mentioned, I think the main question is when you say you want it to be a "long term investment" do you mean that you will live in this property long-term? If not, and if your plan is to house hack it for a few years and then move out and keep it as a rental, I'm not sure it makes sense as an investment. The purchase is way too high relative to the rents (assuming $2500/mo/unit is market rent). The monthly mortgage cost under your current calculations is going to be $4,744. The total rents are $5,000. That means that there is just no money left over to cover expenses, even if you account for some rent appreciation over time.
With the upgrades may be able to get 2700-2800 mortgage + fixed expenses = 5632 which leaves % for contingency
At minimum, you should budget 30% of gross rents for vacancy, repairs, maintenance, and capital expenditures. And that's on top of the fixed expenses like taxes, insurance, water/sewer/garbage, etc. So, from a long-term investment standpoint, this seems to be a significantly cash-flow negative deal.
With all of that said, if the plan is for this to be a "forever home" for you and your family, that obviously makes a big difference. If you plan to live in this property for as long as you own it, then it might not be a bad deal because it will allow you to live in a good area and a desireable school district and you'll be able to offset the expensive mortgage cost with rent that you get from your tenant.
Defiantly not forever home but good opportunity to enter one of cities top neighbourhoods
