What do you guys think of this listing?

[Spenny]

Hi all

I am wondering what your thoughts are on this listing? Someone I know is considering buying it.

Any thoughts/red flags/questions to ask would be greatly appreciated. Especially having to do with a private sale.

I should mention that they want to live in it, and maybe pick up a tenant or two. So not strictly a rental property.

Price$459,900.00
Bedrooms (#) 5 bedrooms
Bathrooms (#) 3 bathrooms
Size (sqft) 3000
Description:
It is a great community to raise your kids and have a home based business. In addition, because it is Zoned R/O and is a multi-unit residential dwelling, it also generates rental income and has great potential for an In-Law or Granny Suite and/or Homebased business Office.

This cira 1890 Victorian building has great curb appeal with a variety of possible uses. The R/O Zoning allows Residential/Office use: Multi-unit building with residential and/or office income. Over 2,400 square feet above grade. 600 square feet finished basement. 550 Square feet of boiler/service room. Currently set-up as income property with multi-family residential units and 550 ft office space, currently generating $36,000 (gross) per year from existing favourable tenants.

Enjoy favourable property tax rates ($2750/yr) and a better bang for your buck, and way more house than you ever imagined! Buy now.

Inside & outside professionally upgraded. This house has stood the test of time. The Victorian details including: high ceilings; oversized trim, casing and baseboards; double brick construction with all the detailed brickwork add to the prestige of this low maintenance building. Ground floor units have been upgraded with plenty of closet and storage space. It's a turn-key package. Separate entrances and utility metres. This Victorian home, landscaped yard and gardens are often admired. Enough to entertain any gardener but not enough to overwhelm. Cozy and private patio, three covered porches and a second floor balcony. This package also comes complete with 875 square feet of concrete block constructed workshop/garage/storage with it's own 100 amp hydro service. Added income potential exists for this space as well.

This is a perfect opportunity for business owners or entrepreneurs to live in a rapidly developing community with excellent market potential. Live & work from your residence with a home based business or enjoy the income stream from this property. This premium exposure could be what you are looking for! In addition, if you are considering a in-law or granny suite, this would be a great option.

This is a private sale. Don't be afraid of a private sale. It's easy. Lawyers look after the whole thing. Call for a private showing today. No open houses are planned for this property.




Thanks

 

[Rickson9]

The list price is over 12x gross rent. That's all I need to know to pass on this. I'm not that interested in burning my money.

 

[Matt Crowley]

As an investment it doesn't make sense. But it is partially a personal residence so it is a bit of a different analysis.

What is the current layout of the building? I can't tell from the description / pictures if all the house is just zoned for legal suite or if it has a developed suite in the basement. What other legitimate income sources are there? I don't know St. George like you do.

When I do the analysis for myself on a house I want to live in, I look at it this way:

Revenue (rental suite, excluding my suite)
- Expenses including repairs and maintenance (entire house)
= NOI
- Debt service (5% down, with 3.6% CMHC fee)
= Cash flow (this will be negative)

Now, to hit $0 on cash flow, how much do I have to "pay" every month? First check is to compare that cost to renting something similar and investing the balance into something different.

Next, I look at what else I could afford. Cash flow (negative number) + property insurance + property taxes = comparable monthly mortgage payment (as a negative number).
So if the total comes out to $1,500 / month, then I can do some reverse calculations assume a 25 year amortization and 2.2% interest rate and determine the maximum mortgage I could afford: ~ $346,000 (including CMHC fees).
So 346,000 / (1.036) for CMHC fees = ~ 334,000 mortgage before CMHC fees
Home value I can afford: 334,000 * 1.05 (because I put 5% down) = $351,000

Summary: So my options can be looked at this way: Either I can buy this $450k home and live on the main floor or I can a $350k home and have the whole home to myself and pay the same monthly amount.

When it comes to having somewhere to live, I think you need to have a personal finance "budget". It has a lot to do with the life you want to live and that is something I can't answer. Everyone needs a place to live, it is really a matter of preference as far as how much you want to spend on it.

 

[Thomas Beyer]

Some relevant info is missing. Location and land value matters more than rent to price ratio.

Missing is: where is this ? Do people move to this "desirable community " and if so, why ? Schools ? Jobs ? Highways or LRT nearby or planned soon ? How big is the lot ? What surrounds the house ? Is this a desirable area with limited supply ? Are older houses in the neighborhood being torn down and new ones built ? If so, at what price points ? What is the lot worth ?

 

[Dustin Racine]

The woodwork and detail is very nice but I would be concerned about the age of the home. Better get a very thorough home inspector. Want to make sure there's no major structural issues. I would definitely ensure you use a home inspector who can scope the sewer line, make sure the sewer has been replaced with abs and isn't clay or no corrode pipe. Ensure there's no collapses, roots, etc. Use a moisture detection device to ensure the basement hasn't had issues with flooding, foundation cracks, etc. Make sure it is structurally sound. I would ask to see some utility bills too. The building houses of some old houses leak heat like crazy. How is the property heated? Forced air? Boiler with infloor heat, baseboard heaters? As mentioned, given the age of the home future in-fill development could be possible. Check to see what new in-fill homes are selling for. I guess really just doing your homework and ensuring all your bases are covered. Best of luck!

 

[Rickson9]

Your friend should just call it an emotional purchase and stop pretending that there's any financial benefit.

 

[Thomas Beyer]

Your friend should just call it an emotional purchase and stop pretending that there's any financial benefit.

Well said. Most residential assets are bought for the social benefit of the new owner where financial gain is secondary.

 

[Spenny]

Thanks everyone this has been very helpful! I will pass these lessons on.

I think it is an emotional purchase, but I also think that they are aware of that fact.

I'm wondering if anyone has any thoughts on how to, or not to, proceed with a private sale as proposed in the description?