INVESTMENT OPPORTUNITY

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Branden Murphy
5 years ago
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1 INVESTMENT OPPORTUNITY 4-plex 3 bed unit, 3-1 bed units Orillia, Ontario Closing Date: March Contact Information Andrew Brennan Res. Phone: Cell Phone: Fax: andrew@bpirealestate.ca

2 Table of Contents A. Objectives and Summary B. Property Numbers Summary C. Property Proforma

3 A. Objectives and Summary 1) Purchase a cash flowing Real Estate Investment property in the surrounding Barrie-Orillia area. Barrie-Orillia is rated in the top 10 areas to invest in Canada. 2) Cash flowing fourplex located in Orillia, ON. Expected total annual profit of 45.0% over a 5 year period for the property. 3) Accepted purchase price is $345,000. Have arranged a private 2 nd mortgage for 8% of the purchase price. 4) The market rental of the property will provide a positive cash flow position for the property Estimated positive cash flow based on attached profroma additional reserve funds have been budgeted. $590/ monthly cash flow after $383 vacancy and maintenance allowance (see attached details) 5) Investment amount of $50,750. This will cover all down payments, closing costs, repair materials, and reserve funds. 6) Based on a value of $345,000 and with an increase of 3% per year for market appreciation the expected value is $399,949 in 5 years.

4 B. Property Numbers Summary A. Summary B. Property Summary Information & Strategy

5 4 Plex Orillia, Ontario The Numbers Purchase Price $345,000 Year 1 Annual Cash Flow $7,080 Year 1 Mortgage Reduction $5,424 Year 1 Profit (cash flow & mortgage reduction) $12,504 Estimated 5 Year Property Value $399,949 Estimated 5 Year Mortgage Balance $274,207 Estimated 5 Year Profit (3% growth/year) $78,992 (Estimated 5 Year Value - Mortgage Balance investors funds+ bank reserve) Estimated 5 Year Profit with Cash flow, Mortgage reduction and 3% appreciation $114,392 Estimated Total Annual Return on Investment Including Cash Flow 45.0%

6 Property Summary: The Property Age Unknown Sq Ft Approximately 3,500 Units 3 bed, 1 bed, 1 bed, 1 bed Parking 6-8 cars Appliances Included 4 fridges 4 stoves, 2 coin washers, 2 coin dryers, dishwasher Taxes $ 3,024 Lot size 56 x 191 Construction Frame Roof Asphalt Shingles The Benefits Key Features: Excellent return on investment. Investment amount of $50,750 required to own an arm-chair investment opportunity. Included in investment, all funds required (down payment, reserve funds, renovation fund, and closing costs) Excellent location. Close to shopping and water front Coin Laundry on site Expected above average population growth. Barrie-Orillia is rate as one of the top 10 investments areas in Canada Property Management and Exit Strategy Property Management: Renovations: Exit Strategy: Brennan Property Investments will provide full service Property Management Minor renovations Long term hold 5+ years

7 C. Property Proforma s A. Cash Flow Summary B. Total Investment Projection

8 4 Plex Orillia, Ontario Purchase Price $345,000 Financial Breakdown After Re-Financing Down Payment 12% $41,400 First Mortgage (new financing, 3.3%, 30 yr Amort.) $276,000 Private 2nd Mortgage $27,600 Income Monthly Annual Income all sources $3,670 $44,040 Expenses Property Taxes & Insurance $-460 $-5,520 Vacancy/maintenance $-383 $-3,792 Property Management $-206 $-2,472 Utilities $-550 $-6,600 Total Expenses $-1,599 $-19,188 Cash Flow Before Debt Payment $2,071 $24,852 First Mortgage Payment (interest + principle) $1,205 $14,460 2 nd Mortgage payment $276 $3,418 Cash Flow $590 $7,080 Mortgage Principle Reduction $452 $5,424 TOTAL PROFIT $1,042 $12,504 PRE-TAX CASH ON CASH RETURN 13.9%

9 4 Plex Orillia, Ontario ESTIMATED INVESTMENT PROJECTION Down Payment $41,400 Approximate Closing Costs Inspection and appraisal $1,200 Title insurance $400 Legal, Adjustments and Land Transfer $6,250 Renovations $2,500 Rent credits at closing -$5,000 Staying Power Fund (bank account reserve) $4,000 Total Required Cash Investment $50,750

10 Joint Venture Worksheet: Real Estate Expert Tasks Financial Investor Tasks Real Estate expertise and leadership Investment of $50,750 Real Estate contacts (Realtor, Lawyer, Accountant, Insurance Agent, Home Inspector Qualifies for mortgage and on title Local Real Estate market knowledge Covers 50% of negative cash flow (if any) Locates property Signed joint venture agreement Negotiate purchase price Work with Mortgage Broker Manages property Experienced with tenant selection Over sees repairs and maintenance Volume discount with trades people Covers 50% of negative cash flow (if any) Signed joint venture agreement Book keeping and bill payment Exit Strategy: Hold property for 5 years to build appreciation and increase ROI Upon sale of property financial investor receives all remaining investment capital outstanding ($50,750) first, then balance is split 50/50 Each investor has the right of first refusal to buy the other out

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