When’s the last time you had an opportunity to own an entire street?
– 2nd largest Nova Scotia community
– Local university (Cape Breton University)
– Rents currently ~30% below market
Purchase 6 detached 2 story building for $249,000. JV partner to fund DP (and closing costs) and potentially renovation. Renovation costs could also be acquired via private lending opportunities.
– Current plan of ~125K in renovations to update, kitchens, flooring and washrooms in each building. Synergies due to standard floor plans expected.
– Funding could be JV partner or private lending
With usage being student rentals renovations would be targeted off season. Once renos are complete expected rents will go from $6,100 to $7,930 (average rents of $1,322).
NOI increase of $24,957 a year! Equals $280K in value increase!
Option 1 (Capital Recovery) – Refi with 75% LTV payback all investor capital (including renovation costs) and $11K in addition. Hold property with a cash flow of $1,882 per month.
Option 2 (Cash Flow) – Refi with 60% LTV payback renovation costs and a portion of investor capital leaving ~$68K in the properties. Hold property with cash flow of $2,299 per month.
Option 3 (Sell) – Sell properties and pocket return. Sell price ~$530, all capital return, renovation loans paid out, profit of $69K (ROI 32%)