The Numbers
These are averages for the last 12 months:
Gas: $150/mth (I got a high-efficiency furnace, so let me re-confirm these numbers later and see how it balances out this Winter; it could be better!)
Hydro for main house: $120/mth
Hydro for cabin: $88/mth (the cabin is heated by electric baseboards)
Water for main house: $104/mth
Water for cabin: $15/mth
Insurance: $90/mth approx
Taxes: $278/mth
Mortgage Payment: $2345/mth
TOTAL COSTS = $3190
RENTS COMING IN AT THE MOMENT:
Upper: $725 (this lady has never
had an increase in 11 years)
Front: $750
Back: $650 (usually pay more, but I give them a break because they take care of the house for me; they do odd jobs)
Basement: $600 (usually pay $650, but this guy is my back-up helper around the house)
Cabin: $750
TOTAL INCOME: $3475
THEREFORE, THERE'S A CURRENT PROFIT OF $285 PER MONTH.
Anyway, I'm sure you can see some areas of improvement:
raise some rents,
put in low-wattage light bulbs
better heating options for the cabin
put in coin laundry appliances; that could raise your profit by $100 or more per month
SOME OTHER FACTS TO CONSIDER:
Currently, over $1000/mth comes off my principle. If you were to assume my mortgage from me (that's what I did to get this house), you could be reducing a big chunk of the mortgage starting right away.
If you bought and fixed up the exterior in a week or two, you could possibly boost your equity by about 50k in 2 weeks.
Or...you could fix up the house slowly and THEN you could flip it.
Think of the BEFORE and AFTER pictures you could add to your portfolio with this house! You'll need those if you plan to be a real estate Guru one day....
(I can help arrange the financing too; by this I mean that I can refer you to some very good mortgage brokers who will take care of everything; they might even help arrange the assumption)
One other thing:
There was a big real estate investing firm that owned this house at one time. In their early days, they used to focus on buying up 2 or 3 houses in a row and then knock them down in order to build townhouses or apartment buildings. They did a lot of this in the Richmond Hill area.
They also owned the house behind my house, and all they needed was the corner house to sell, but that guy hasn't budged at all (he's in his late 60's, I think). Eventually, this real estate firm changed its focus and now builds high-rise condos and is making multi-millions instead of a million here & a million there on small-time deals.
So, they sold off my house, and the house behind me is now owned by another small-time investor like me, who would really love to knock down our houses and build some townhomes, etc. So, this guy is on-board with the idea, but the retired guy on the corner still doesn't want to sell (yet).
That real estate firm president says that if we can convince the guy on the corner to sell, he'd be happy to oversee the project of re-building. He even has a profit-analysis already written up on the plan....
Anyway, I just bring that up in case you thought that sounded like a good strategy.
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