Legal Duplex - looking for a JV money partner

ihocking

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REIN Member
The Property:
We have under contract a Legal Duplex in the town of Collingwood, Ontario. It needs new shingles and the rents are a little below market (Approx $500 per month between the two units). It occupies a corner lot. The contract price is $499k. We own two other second suite properties a few doors away that are not quite as nice as this one could be with some cosmetic fixing up. One of those two was just refinanced with an appraised valuation of $535k. This home has two garages, the one at $535k has none.

The Ask:
We are looking for an investor to provide the downpayment and closing costs , approx $110k and when needed, the cosmetic funds to 'poof' the units. Estimated $20-$25k per unit.

The Opportunity:
As the tenants move out we intend to lightly renovate the existing property, upgrade flooring, paint and possibly kitchen and laundry. This will enable us to raise the rents by at least $500 per month. Just using a basic CAP rate analysis this would suggest an increased value of approx $100k. We are buying the property $35k under where we believe it would revalue today without any extra $$. Our projections would show this as a cash flowing property with significant capital upside for relatively little outlay. The aim would be as soon as both units have been cosmetically improved to refinance and return whatever we can to the money JV investor, thus reducing the capital outlay significantly and hence increasing the ROI substantially.

An increased opportunity exists if the money partner is also able to qualify for the mortgage. We are prepared to offer the following:

Downpayment only 20% Equity stake
Downpayment and reno costs 30% Equity stake
Downpayment, reno costs and mortgage 50% equity stake

Based on our previous experience in the area and knowing the rents/valuations/potential etc we are forecasting a substantial return on investment for the JV.

Elevated Wealth Creations (That's us) would be providing the oversight of the deal, orchestrating the contractors, (We found the deal and it's under contract) and if desired our company would provide property management at a reduced rate.

Call me at 705 791 4837 if you would like to know more
Ian
 
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