Toronto Investment Property MAKEOVER! From Run-Down to Maximized Rents Plus Laneway Suite Potential
Introduction
You hear us talk a lot about numbers on this channel and it’s really just theory if you don’t get to see real projects. So in this video, we’re going to change things up. We will take you to one of team’s latest projects – a detached house in Toronto with laneway suite potential and show you things in action.
At the moment, we’ve finished substantial renovations in the main unit and we are in the process of renting it out.
So we’ll go with Simon to tour his latest project, show you some before and afters, talk about what else is in the works and then come here to work out the numbers.
Cost & Cash Flows
First and foremost, to have a fundamental secure investment, the main house should still carry itself if we don’t build the laneway suite and this one definitely does. We bought this with extra laneway potential for the same price as a house that doesn’t have this potential, so this makes the purchase a better deal.
Now because we need access to the basement for the laneway suite build, we will have to keep the basement vacant.
The main floor renovation took around two and half months, and now it will rent out pretty easily for $3,600. So even though the finished house will be positive cash flowing, we will see negative cash flows for around a year and you have to know and be comfortable carrying this as you build the laneway suite.
Next, Simon will be working on the laneway suite. Once that’s done, the 1,000 square foot brand new purpose built 3 bed house should rent for around $3,600. Then we add in the basement bachelor for $1,500, the entire property will be cash flowing very well.
Post-Build Value & Refinancing
This is not a small project by any means and that’s why the are for more experienced investors. The purchase had a 20% down payment and closing costs totalling $200,000. The main house renovations total $135,000 after everything is done and the laneway suite will be around $400,000.
So all in all, it will cost close to $735,000 of capital, and Simon is putting this upfront out of pocket from a combination of savings and refinanced funds from other properties.
At the end of the project, the property should be worth at least how much Simon put in and likely more and that’s the value of sweat equity. We can talk about this now but a lot of things can change with the market a year from now. So we decided to hold off on this for now.
But don’t worry, we actually have another completed laneway suite build done so we’ll be making a separate video that talks more about laneway suites and post build values coming very soon.
How We Can Help
As you can see, real estate investments in Toronto can still make sense in this market. What we are finding is that as buyers are coming back and looking for cash flowing properties, it’s getting harder to find deals compared to a few months back.
Basically, if you want the best deals and bargain power, you would have to get to sub markets most buyers can’t and in this market it would be higher priced purchases close to $1.2M or more or major projects like Simon’s.
And if you want to learn more about these types of opportunities in today’s market, we would be happy to show them to you so just reach out to us!
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